Today, Niall Ferguson surveys the accomplishments of Argentina’s president Javier Milei as well as the challenges he faces in cementing the success of his economic reforms; Steven J. Davis discusses the American-led post–World War II international economic system with fellow economist Maury Obstfeld; and H.R. McMaster explains the history of the US-Japan relationship and why it is essential to countering China in the Indo Pacific.
Answering Challenges to Advanced Economies
In a column for The Free Press, Senior Fellow Niall Ferguson reviews the record of Argentina’s eccentric libertarian president, Javier Milei. “After less than 20 months,” Ferguson writes, “Milei has eliminated the fiscal deficit, cutting it from 5 percent of GDP to zero. He has reduced the number of government ministries from 18 to 8.” Milei has also “deregulated key markets, including property rentals, commercial airlines, and road freight transport,” and “brought monthly inflation down from 13 percent to 2 percent.” Suggesting that the next three months could determine the long-term success of Milei’s reforms, given domestic and international challenges, Ferguson says his “supporters can only hope [Argentina’s] voters do not succumb to the old Peronist temptations when they go to the polls in September and October.” As he concludes, “It’s not only Latin America that could use a libertarian success story. The whole world needs one.” Read more here. [Subscription required]
Since the end of World War II, the United States has played the leading role in designing, supporting, and governing the international economic system. How did the system operate, and what were its underlying principles, goals, and challenges? For the latest episode of Economics, Applied, Senior Fellow and Director of Research Steven J. Davis speaks to leading international economist Maury Obstfeld about the international economic system that emerged after World War II, the central role of the United States, and how the positive-sum nature of the system fostered prosperity. They consider how the system functioned in the Bretton Woods era, the Nixon Shock of 1971, high inflation in the 1970s, the transition to sound monetary policy in the 1980s, and how the US dollar became even more central to the system in the 1990s. A second part of this conversation will be released on July 30, 2025. Watch or listen here.
Writing for the Financial Times, Distinguished Visiting Fellow Michael D. Bordo and coauthor Pierre L. Siklos argue that the “threat by Donald Trump to dismiss Federal Reserve Governor Jerome Powell has a parallel” in Canadian history. The second Governor of the Bank of Canada, James Coyne, responded to a US and Canadian surge of inflation in the post-WWII period with a particularly tight monetary policy, “leading to a much worse recession than in the US.” This placed Coyne at odds with Conservative government leader John Diefenbaker, who feared recession would harm his reelection prospects. “Tensions between the government and the Bank spilled over into the public sphere,” Bordo and Siklos write, and the legislature moved to vacate Coyne’s role. But the attempt failed in Canada’s Senate and eventually led to reforms placing the government squarely in charge of monetary policy in the event of a policy conflict with the central bank—which counterintuitively has bolstered the Bank’s independence. Read more here.
California Politics and Policy
At California on Your Mind, Distinguished Policy Fellow Bill Whalen examines California Governor Gavin Newsom’s recent trip to South Carolina ahead of a widely anticipated 2028 presidential bid. Whalen, a veteran observer of Golden State politics, details one of “Newsom’s biggest challenges should he take the presidential plunge: Can he sell California as a piece of the American Dream as opposed to the stuff of woke, progressive nightmares?” Whalen argues that Newsom’s recent penchant for trading barbs online with Republican officials often leads him to speak in ways unbecoming of the office he currently holds—let alone the presidency. Whalen also outlines the challenges that would accompany a Newsom bid to redraw California’s congressional districts in response to the GOP-controlled Texas legislature doing the same. Looking to California’s history, Whalen shows that gubernatorial priorities often fail to win over the state’s voters in special elections—opening the door to a “humiliating way to kick off an eighth and final year in office.” Read more here.
US Foreign Policy
At his Substack History We Don’t Know, Senior Fellow H.R. McMaster argues that the recent electoral defeat of Japan’s Liberal Democratic Party (LDP) “combined with ongoing tariff talks with the United States will strain the Japan-US relationship.” “The LDP,” McMaster notes, “which has ruled Japan for most of its post–World War II history, has been the party most supportive of the alliance with the United States and, under the leadership of Prime Minister Shinzo Abe and his successors, has advocated for a stronger and more active defense of Japanese and US interests in the Indo-Pacific region.” McMaster shares an excerpt from his book Battlegrounds explaining the “history and importance of the Japan-US relationship,” before concluding by offering several reasons Washington should nurture the bilateral relationship with Tokyo. The number one reason, per McMaster, is deterring “the People’s Republic of China from further military aggression” and countering its influence in the Indo Pacific region. Read more here.
Related Commentary