Argentina needs to default, not dollarise

Milton friedman looms large in the personal and political life of Argentina’s probable next president. Javier Milei’s ideas, which carried him to an unexpected victory in the country’s primaries in August, take cues from the 20th century’s most prominent free-market economist. Friedman influenced both Mr Milei’s opinions on the ideal size of the state (tiny) and its role in the economy (non-existent). So deep is Mr Milei’s admiration that he has christened one of his four pet mastiffs in Friedman’s honour. The former economics lecturer told in a recent interview that Milton and his other dogs, all of which are named for economists, make “the best strategic committee in the world”.The most far-reaching of Mr Milei’s Friedman-influenced proposals is to dollarise the economy. This would involve replacing the peso with the greenback, and mean getting rid of Argentina’s central bank, which Mr Milei calls “the worst thing in the universe”. He exaggerates, but only a little. Argentina’s economy is in tatters. Annual inflation is at 113%. The central bank has exhausted its dollars. The peso’s value against the American currency has halved since the beginning of the year. In short, the time for radical thinking has arrived. Unfortunately, dollarisation is more likely to be a curse than a solution to Argentina’s problems.