By Douglas Kruger
OK, Jersey. Let’s check in on those crazy Argentinians. The ones who are doing the opposite to us, removing red tape, reducing the size of government, aggressively scrapping rules and regulations to free up enterprise.
Purest insanity, right? A recipe for nothing but anarchy.
Well, let’s take a run through the numbers…
Before Javier Milei took office in December 2023, the country spent decades in or near recession. They had chronic fiscal deficits, juggled multiple debt crises and often experienced negative economic growth. Inflation was 25% per month.
But it turns out that economic decline is not inevitable. If anything, it appears that you have to “choose it”, via your policies. Argentina changed its policies and everything began to transform surprisingly rapidly.
In May this year, inflation was down to 1.5% and Argentina’s economy is growing at 7.7%. That places it among the fastest-growing economies in the world. Foreign investment is returning, the agricultural sector is growing and they’ve posted trade surpluses for the first time in decades.
Now, let’s be clear, there is nothing new in Argentina. They didn’t strike oil, or discover gold. They have not suddenly invented a globally popular new technology. It’s the same place it was two years ago, with the same people. There is no miraculous new input into the system.
They literally just got government out of the way. Enterprise has become freer, the nightmare of permits and applications and fines and permissions and endless hurdles has been reduced, so that you don’t have silly little men with clipboards telling you what you may and may not do, like an episode of Clarkson’s Farm. Government now owns less, manages less and does less. That’s it. That’s what has changed.
Global Finance Magazine recently ran the headline: “Milei ends Argentina’s deficit after 123 years.” Bloomberg added: “Foreign investors flock to Argentina amid stabilising markets.” Voice of America said: “Argentina’s export sector sets new records, boosting economy,” and Al Jazeera reported, “The rebound in tourism and exports signals a hopeful future for Argentina’s economy, after years of economic turmoil.”
As per the National Review, Argentina is achieving all of this by “rolling back the overextended public sector, slashing the government budget, controlling the money supply and removing price controls”. Did you catch that last one? We’ll come back to that.
Milei eliminated fully half of the country’s cabinet departments and continues to find restrictive regulations to discard, month on month.
Oh, and taxes. Slashed, reduced reformed. Less for government, more back in the pockets of people and businesses.
OK, but how does that help us? Our biggest problem is expensive rental property. And what’s our knee-jerk reaction to that? “Government must introduce rent controls to keep prices down.” Milei did the opposite. He eliminated rent controls in Buenos Aires, and, immediately, the apartment market was “flooded with new properties and the average real price went down”.
Isn’t that strange?
It’s almost as though government interference into a market does not help. Could it even be that removing government interference into a market actually makes everything cheaper? If only we had (yet another) example of that being true, in addition to proven cases from New York, Berlin and Canada (see the works of economist Dr Thomas Sowell).
By contrast, our public sector continues to grow ever more bloated. And ever more petty towards business. “You want to keep your store open longer? Beg for our permission! Tables outside on the pavement? Ooh, that’s very costly and we may have to fine you! You want to sell a different item next week? Nope, can’t be done. The entire Island would break in half and sink into the sea in the face of such commercial exuberance.”
I will never tire of telling the true story about the entrepreneur who had to beg for permission to stay open a couple of hours later, and win her case before it was permitted, and then received repeated visits from Planning officers, who wanted to check which side of her counter she intended to display pies. How is that even a real job? Imagine if the tax money funding that nonsense went to something useful?
People have this strange idea that without planning permission, everything would be anarchy. I disagree. I think everything would work faster, cheaper and better, because free enterprise would see to it. The real anarchy is created by the slowing or forbidding of every useful entrepreneurial behaviour.
And we have been experiencing a slowdown in productivity-growth. That’s been the case, measurably, since around 2007. It’s not exclusively the Planning Department’s people, of course, but they’re a big part of the spirit of the problem, which is an entire gestalt of “the answer is always no”. If the spirit was “we find ways to say yes”, this would be a different island. Way more prosperous.
I make this bold claim, because in a country that was dying on its feet, the removal of government interference created an overnight economic miracle, with no new inputs. You can watch it happening in real time.
Jersey’s economy fell by over a quarter in real terms between 2007 and 2020.
We are also a mature market facing stagnation. Liberalisation would work here too.
And speaking of gestalt, you can see the spirit of “no” filtering down everywhere. Step outside of the economy with me, for just one second.
Last week, the JEP highlighted the problem of low physical fitness among urban kids. Now compare that to the signs you see in any public space: “No ball games, no running, no jumping, no skipping, no laughing, no bicycles, no fun. No outdoor cooking. Oh, and absolutely no dogs. Have a nice day.” Our building has a grassy area downstairs, and the second the building’s children attempt to play there, Cruella de Vil leans over her balcony and starts screaming at them. It’s a culture of no – and it has to change.
There is absolutely no reason the Island has to be run by the council from Clarkson’s Farm. We are a place that actively celebrates the idea of liberation. Let’s start practising the spirit of freedom.
Our first steps? For heaven’s sake, stop copying the UK. They’re going backwards too. Instead, look at bright spots around the world, and emulate what actually works. Liberalise markets, cut taxes, reduce government spending. More freedom for more prosperity.
Thereafter? Well, as a bonus, let’s start tinkering with the culture. Publish hero-stories about landlords who put up signs: “Children are welcome to play here.” If you’re feeling feisty, maybe even a wall of shame for those companies and departments that forbid it.
Douglas Kruger is a business author and speaker. He lives in St Helier, but speaks all over the world. Meet him at douglaskruger.com.
