In today’s newsletter:
Why has Milei been politically successful?
The Fertility Gap
The Mansion Tax
A week ago, Argentina’s President Javier Milei underwent his first real, national test of popularity since his ascension to power. Since taking the wheel, Milei has been swift and radical in his action to cut the size of the state, slash government expenditure, and bear down on inflation. Ahead of the midterms last week, there was plenty of consternation about his chances. One piece in The Spectator claimed he was ‘on the brink of disaster’. Could a president who has taken such radical steps, and cut spending quite so much and so quickly, reallystill have the electorate onside?
Well, yes. Milei’s party won over 40% of the vote in what the BBC described as a landslide. I had the pleasure of interviewing Milei’s friend and adviser, Axel Kaiser, about how this came about and what it meant for Argentina for the IEA Podcast this week. One thing he said particularly struck me - that the culture in Argentine politics has now changed in favour of liberty. The ideas Milei advances are many of the same ones we do at the IEA; of Smith, Hayek and Friedman, among others. And Argentina has bought into them, particularly among the young. This is not just a case of an electorate voting for who will promise the biggest giveaways - quite the opposite, Argentina still has problems that need tough medicine. But Milei and his party have, at least for now, convinced the voters that liberty is that medicine. Kaiser was optimistic about the nation’s future because of it.
He was, unfortunately, far less optimistic about Britain and Europe. He did not see a way out of our current doom loop - and it is often hard to disagree with him. We are a long way away from debating the ideas of Milton Friedman on a national campaign trail. Increasingly, it seems like the UK is living in a fantasy land, with a populace that wants higher spending and lower taxes and a political class that is too willing to play along. The Chancellor is the unlucky one tasked with actually managing that. She will be more worried about the bond markets than anyone else, but she’s picking the wrong path. Instead of risking her political capital to raise taxes, she must prioritise spending cuts.
That is why this week at the IEA, we launched the British Afuera project, which you can read about below. We are re-igniting the work we did in 2011 with Sharper Axes, Lower Taxes for the modern day, with an Argentine spin. We will be discussing in these (virtual) pages over the coming weeks and months exactly where the Chancellor should be stripping back the state. Not looking for loose change down the back of the sofa, salami-slicing to make slim savings, but putting a stop to government action entirely in some areas. This is the Afuera approach. And while it remains to be seen what Milei will do next, and whether it will be the right course of action, he has proven one thing: radical change is possible. If you have the right plan, and are able to set it out clearly and credibly to the voters, even if the message is tough, you might just be rewarded.
Callum Price
Director of Communications
Introducing: British ¡Afuera!
British ¡Afuera! is a new series of pieces applying the principles of the IEA’s ‘Sharper Axes, Lower Taxes’ and Argentinian ¡Afuera! to Britain today.
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IEA Podcast: Director of Communications Callum Price, Managing Editor Daniel Freeman, and Editorial Director Kristian Niemietz discuss the Renters Rights Act, differing theories of growth, Milei, and the upcoming budget — IEA YouTube
Mind The Fertility Gap
British women are falling at least 0.4 children short of their own stated family goals, according to fertility data through 2011, with this gap likely widening as fertility now hits record lows of 1.44 while desired family size remains stable at 2.2
New report shows how pro-natal policies that focus on cash incentives, such as baby bonuses, subsidies, and maternity pay, may have some short-term effect but are often found wanting and prohibitively expensive
Evidence shows policies affecting economic freedom, including labour market, childcare and housing liberalisation, can have profound effects on fertility through their impact on work-family compatibility
Britain’s Demographic Future: The Fertility Gap, Managing Editor Daniel Freeman interviews report author Clara E. Piano, IEA YouTube
The real reason Britain stopped having babies, Head of Media Reem Ibrahim, CapX
Ultimately, the fertility crisis is a symptom of deeper economic malaise. A world where young people feel too financially constrained, and too overregulated, to start families. Government spending can’t buy more babies. But economic freedom can remove the barriers that stop people from having them.
Deregulate to boost birth rates, new research suggests, Manchester TV, Lancashire Times, Cumbria Times
News and Views
Argentina’s Economic Revolution: Milei Wins | Axel Kaiser | IEA Interviews, Director of Communications Callum Price interviews Axel Kaiser, IEA YouTube
Brexit has pushed up inflation, claims Reeves, Economics Fellow Julian Jessop, The Telegraph
Julian Jessop of the Institute of Economic Affairs think thank said the reports were “(presumably) coming from Treasury/No10, not the OBR, so may well be some ‘expectations management’ here”.
He said: “Reeves is unlucky that the OBR has decided to make this (overdue?) change now, but it’s also telling that it doesn’t think the prospects have improved under Labour.”
Head of Media Reem Ibrahim appeared on GB News alongside Bev Turner and the Heritage Foundation’s Nile Gardiner, GB News
The Policies No One Voted For: The Nanny State Disaster, Director of Communications Callum Price chairs a panel with Charlie Dewhirst MP, Shadow Secretary of State for Business & Trade Andrew Griffith MP, and Head of Lifestyle Economics Christopher Snowdon, IEA YouTube
Reeves Mauled on Mansion Tax, Economics Fellow Julian Jessop, Daily Mail
Julian Jessop, from the Institute of Economic Affairs, warned that the tax could increase uncertainty and be complex to administer.
He said: ‘Many asset-rich but income-poor households might not be able to afford a large annual charge. This could be deferred until the house is sold, but that could discourage house sales and downsizing, in particular.’
Bet On It, Head of Lifestyle Economics Chris Snowdon, TalkTV
Head of Media Reem Ibrahim appeared on BBC 5Live with Stephen Nolan
British ¡Afuera! #1 - NHS and National Pay Scales
British ¡Afuera! is a new series of pieces applying the principles of the IEA’s ‘Sharper Axes, Lower Taxes’ and Argentinian ¡Afuera! to Britain today.
INVITATION: After the Budget - Where Will the Growth Come From?
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