The Pie is Not a Given: Prosperity Through Freedom
I remember sitting in class as a third grader, tasked with charting my classmates' favorite school subjects. I meticulously colored each section as Physical Education dominated, claiming the lion's share. No surprise — neither recess nor lunch were choices. Those simple, neatly divided wedges represent how many still understand economics —a static pie to be sliced and distributed. In this simplistic view, a gain for one group means a loss for another, a zero-sum game. Surprisingly, this view influences policy today. But in reality, the economy is far more intricate and dynamic.
Pies, Perspectives, and Policy
Picture an ever-changing pie, expanding and contracting — its fillings endlessly changing due to innovation, regulation, and shifts in consumer demand. Its recipe is unfathomably complex, and no single individual can grasp its preparation. Even the world's most advanced computers can't model the process. Evenly redistributing this pie has an undeniable moral appeal; however, this charge raises key questions about human motivation and the drivers of prosperity. Will people create and take risks without the promise of reward? What fuels progress — self-interest or altruism?
The idea that we can recut the pie, altering its portions without affecting its overall size or quality, has become a central contention in the debate of individual freedom versus collectivism. But does the metaphor oversimplify? Is the economy like a pie, limited and finite, where making one slice larger inevitably makes another smaller? Or is it more complex, where the actions of individuals, companies, and governments not only influence how the pie is divided but also its overall size?
While partisan theatrics consume America's spotlight, I've been more captivated by a different arena of political and economic intrigue — Argentina — a place that may hold the key to how we view economics in the future. As policies play out, consequences speak louder than the political drama preceding them. Argentina’s experiments put philosophies to the test, determining whether theories stand or melt in economic reality’s pizza oven.
Argentina — A Beacon of Freedom?
Imagine Buenos Aires in the early 20th century: a vibrant city hailed as the 'Paris of South America.' Its grand boulevards and elegant architecture symbolized Argentina's golden age, a time when it stood among the world's ten wealthiest nations.
That prosperity proved fleeting as initially welcomed populist policies gradually led Argentina toward protectionism and fiscal imbalance. By the mid-20th century, cracks in Argentina's economic foundation grew. The nation that once rivaled the wealthiest in the world began a decline marked by political upheaval, economic mismanagement, and social unrest.
The 1980s in Argentina were defined by rampant inflation due to excessive money printing and fiscal mismanagement. During this turbulent period, soaring prices eroded public trust and destabilized the nation's financial system. The 1991 Convertibility Plan was introduced to counter this chaos, pegging the Argentine peso to the U.S. dollar. Initially, this measure brought a semblance of stability to the economy. However, over time, it led to an inflexibility that limited Argentina's ability to respond to economic fluctuations.
In the post-2001 period, Argentina experienced intermittent phases of recovery, fueled mainly by a surge in commodity exports during a global boom. However, this was undercut by persistent inflation, fiscal deficits, and a problematic dependence on external borrowing.
Argentina's economic history, swinging between prosperity and crisis, provides unique insights into economic ideologies and sets the stage for the recent emergence of President Javier Milei. Amid the snow-dappled peaks of Davos, Switzerland, Milei addressed the political and commercial powerful at The World Economic Forum. In this hall of influence, with a poised and assured demeanor, President Milei confronted his audience: "Those who promote social justice start with the idea that the whole economy is a pie that can be shared differently. But that pie is not a given."
Milei's remarks, unconventional in both substance and style, struck like a shot across the bow of a ship brimming with elites unaccustomed to such direct criticism. His speech starkly contrasted the prevailing narratives at the forum, echoing views that might have found a more receptive audience seventy years prior. Today, a different philosophy is gaining traction, which could cynically be described as 'poverty for thee, but not for me.' Milei chose this moment to revisit the economic pie metaphor.
"If the state punishes capitalists when they're successful and gets in the way of the discovery process, they will destroy their incentives, and the consequence is that they will produce less.
The pie will be smaller, and this will harm society as a whole. Collectivism, by inhibiting these discovery processes and hindering the appropriation of discoveries, ends up binding the hands of entrepreneurs and prevents them from offering better goods and services at a better price."
President Milei's address was not just rhetorical boldness but a pivotal display of economic principles at a time when the global economy is at a crossroads. As nations grapple with challenges ranging from pandemic recovery to technological disruptions, Milei's advocacy for economic freedom is a vital voice in the discourse shaping the future.
Milei's emphasis on freedom is particularly significant amid a shift toward collectivism. Recently, a growing number of nations have intensified state involvement in their economies, advocating even allocation as their primary objective. However, Milei contests this approach, arguing that such policies, while well-intentioned, have counterproductive outcomes, like reduced innovation, shrinking entrepreneurship, and, ultimately, more poverty.
Global Lessons in Economic Ideologies
To fully grasp the implications of these economic ideologies, it's vital to examine real-world examples of economic freedom leading to increased prosperity.
In the aftermath of the Korean War, South Korea lay in ruins. Its economy was in tatters, its GDP per capita comparable to that of many impoverished African nations. Fast forward just a few decades and the picture changes drastically. Once scarred by war, Seoul transformed into a bustling metropolis pulsing with energy. By reducing state control, embracing market-driven policies, and fostering a competitive private sector, South Korea rapidly became one of the world's leading economies, a phenomenon nicknamed the 'Miracle on the Han River.'
In the late 1970s, China stood at a crossroads. The economic reforms initiated by Deng Xiaoping marked a departure from the rigid, centrally planned economy to one increasingly influenced by market principles. These reforms included opening up to foreign trade and investment, decentralizing decision-making, and encouraging private enterprise. This pivot would ignite one of history's most significant economic transformations, lifting hundreds of millions out of poverty and catapulting China into the world's second-largest economy.
Long Live Freedom, Damn It
In Davos, the Argentine president's critique went beyond economic theory. He emphasizes the fundamental link between economic freedom and individual liberty. A society that restricts economic freedom to promote equality risks eroding personal freedoms and stifling the creativity that drives progress.
The economy is not a finite resource to be divvied up — its existence is not a given at all. It is an ongoing cycle of creation and exchange that requires freedom to flourish. Argentina saw this firsthand as its golden era gave way to instability under collectivist constraints. True prosperity stems not from slicing but from liberating every individual's economic and creative potential.
The choices we make between individual liberty and centralized control impact more than short-term returns — they shape the opportunities future generations inherit. Will our legacy offer scarcity or boundless possibility?
Our focus should extend beyond the present moment and fixate on the horizon — a future where open economies empower generations to come. Through freedom, we can bake expansive economic pies that will nourish not only our children but also our grandchildren's children. Our responsibility is not just significant; it is monumental — after all, today's children will soon need to feed themselves and their own families.
As President Javier Milei passionately proclaimed in Davos, 'Long live freedom, damn it!'
