Speech at CPAC (VIDEO + ENGLISH TRANSCRIPT)
February 24, 2024The powerful speech delivered by H.E President Javier Milei of Argentina
View: https://m.youtube.com/watch?v=QmN7e-wtYIo&pp=ygUYSmF2aWVyIE1pbGVpIHNwZWVjaCBDUEFT
TRANSCRIPT
"Long live freedom! [Applause] It seems that what was initially perceived as a neighborhood phenomenon has significantly expanded. First and foremost, I am deeply grateful for this invitation. Regarding today's conference and its impact, I previously spoke at Davos where I emphasized the danger the West faces due to the rise of socialist, statist ideas. Today, I will focus on the technical foundations that underpinned the political perspectives I shared at that conference. I will discuss how neoclassical economics and its view on market failures facilitate the progression of socialism, ultimately hindering economic growth and the fight against poverty.
The crux of this issue lies in a methodological conflict between theoretical models and real-world scenarios.
Generally, when a model fails to align with reality, we adjust or discard the model. However, in the neoclassical framework, when there's a discrepancy, they tend to blame 'reality' for causing 'market failures.'
This originates from studying the normative aspects of competitive equilibrium – existence, uniqueness, and stability.
The problem arises with normative analysis through Pareto analysis. Pareto optimality suggests that improving someone's situation without worsening another's is a Pareto improvement.
When these opportunities are exhausted, we reach a Pareto optimum, leading to the definition of 'market failures' – non-convexities, externalities, public goods, asymmetric information, and the Prisoners' Dilemma. All these definitions enable state intervention and the advancement of statist and socialist agendas.
To illustrate this, consider the transition from candles to light bulbs. If interventionists had their way, we'd still be using candles instead of enjoying modern lighting.
This is how socialism can negatively impact our lives. We need to move beyond the Pareto optimum and embrace progress.
The market is a process of social cooperation where property rights are exchanged voluntarily. Since exchanges are voluntary, the concept of 'market failures' becomes irrelevant.
The foundations of the market include private property and minimal state intervention. The price system, emerging from these exchanges, acts as an information transmitter and coordination mechanism.
Private property and free markets facilitate economic calculation, debunking the feasibility of socialism. Socialism lacks private property and market mechanisms, leading to inefficiency and distortion.
Competition, not in the neoclassical sense of perfect competition, but as free entry and exit, is crucial.
Adam Smith's concept of the division of labor and social cooperation underlines the inefficiency of socialist ideas. Smith showed how specialized labor significantly boosts productivity.
However, without demand, the division of labor can't be fully realized. Despite any personal differences, market participants must cooperate, promoting peace and undermining socialism.
Successful businessmen in a capitalist system benefit society by providing quality goods at better prices, creating jobs, and fostering progress. Entrepreneurs are the bedrock of prosperity.
Now, let's address the neoclassical dilemma within economic growth theory. Historical data shows that from the Christian era to 1800, GDP per capita was relatively constant.
However, from 1800 onwards, it increased over 15 times, and the global population grew from 800 million to 10 billion. This period also saw a dramatic decrease in extreme poverty, from 99% to 5%.
Neoclassical theory criticizes monopolies, yet this period of monopolistic structures brought immense well-being and poverty reduction.
The neoclassical analysis is flawed because it oversimplifies and fails to consider future impacts and the entire economy.
Monopolies, according to neoclassical theory, produce less and charge more.
However, monopolistic profits can spur consumption, production, and employment in other sectors. Saving these profits leads to investment and growth.
Even if a monopolist hoards wealth, it reduces the money supply, lowering prices and benefiting the population.
Interventions in the name of social justice, unlimited democracy, and populism often harm the economy.
Countries like Argentina, once among the world's richest, have fallen drastically due to excessive regulations and state interference.
Capitalism, contrary to accusations of hyper-individualism, is not only more productive but also fair. The market, as a discovery process, creates wealth during production. Those who discover or create new value rightfully own it