From.

The New York Times, I'm Sabrina Tavernize and this is The Daily.

Argentina, a poster child for economic dysfunction, is again in the midst of an acute crisis. Last month, fed up with liberal fixes, Argentines voted for the candidate promising to blow it all up. Today, my colleague, Jack Nicas, on Javier Millet, the right-wing populist now taking office in Argentina, and his radical plan to re-make the country's economy.

It's.

Monday, December 11th. Jack, it's nice to see you again.

Thanks for having me.

So we are talking today about Argentina and its new president, Javier Millay. He was inaugurated yesterday, and he's a pretty flamboyant and colorful populist, styled in the vein of Donald Trump. So tell me about this new president.

Well, this was really one of the most surprising elections in Argentina's history. And from the start, the national conversation was dominated by Javier Millay.

He spent.

Years working as an economist and teaching economics, then was elected as a freshman congressman who really didn't show up to Congress much, but really became known to Argentines for many years of TV punditry.

.

He used to be brought onto these cable news talk shows to be the token conservative voice in a country that has in recent years been pretty left leaning. And he really stood out for a combative style and opinions that are really outside of the mainstream.

El Papa es el representante del maligno de la tierra.

So, for example, he called the Pope a communist and the embodiment of evil.

El Papa impulsa el communism.

Bear in mind the Pope is Argentine and a huge figure in the country. So this was really controversial.

And.

He's also suggested that the left has too much of a problem. It has also exaggerated the number of disappearances or murders that occurred during the bloody military dictatorship in the 1970s and 1980s. And that struck a lot of people as a troubling sympathy for the country's authoritarian past. He's argued that the right is esthetically and intellectually superior than the left. He has said climate change is a socialist plot. And in the lead up to his elections, he was pedaling baseless claims of voter fraud. But despite these unusual and to many worries in politics, the thing that you need to understand about Argentina is that politics is really about economics. And Millay is the candidate promising a sharp break economically.

Specifically, he's pitching voters on a libertarian overhaul of government.

In libertarian meaning.

Meaning that he wants to essentially get the state to get out of the way.

He's trying to argue that the state is a predatory against the average citizen in its policies and taxes, etc. In these libertarian views would really be a radical departure from what the government and what Argentina has had for decades, essentially.

And.

So, Malay's election victory showed how desperate voters are for change.

So.

Tell me about that desperation. What was it that caused Argentines to elect this political newcomer with these extreme views?

Well, I think anyone who has been vaguely paying attention to Argentina over the past several decades knows that they've been dealing with an economic crisis after economic crisis for a long time, and they are currently in one of their worst. That's saying something for Argentina. Right now, annual inflation stands at above 140%. Wow. The Argentine pesoso has completely disintegrated in value, and just more and more Argentines are falling into poverty.

What does 140 % inflation look like? Give us a sense of that.

Well, it's a situation where the value of the Argentine currency is constantly falling and prices are constantly going up. It's a bit confusing to live in Argentina sometimes. I'll give you one example. When I was in Buenos Aires recently, I met this owner of a hardware store called Oscar Beníez. His store is this really lovely little, almost tiny walking closet in a way, but covered in products: screws and hinges and locks. But he doesn't know the price really of any of them. Because of the fact that the Peru's value is falling so quickly and prices are rising so quickly. And when someone wants to buy something, he has to go to his computer to look at a list that the supplier provides him, which is constantly updating with new prices.

So how often does he have to do this?

How often do you have to change the prices?

Because even in the past two weeks.

He said that those prices were changing sometimes several times a week. And how is he doing personally? His financial?

He.

Was depressed and had a lot of gallows humor about the situation.

He's not the one to say that the pesos is the same as the same thing.

I mean, he at one point called the Argentine Pedro, used toilet paper. And as a result, he has tried to find ways to cope. What does he do when he gets money?

He.

Buys for it. He doesn't want to.

Hold on to it. No, because the pesos doesn't have any value.

When he gets pesos, he tries to get rid of them as quickly as possible so they don't lose any more value. So he either goes and buys more products and supplies. He has way more than he really needs, but he feels they hold value better than the Paso, or he buys US dollars.

He's basically trying to preserve the value of the money that he has by going out and buying dollars.

Exactly. Argentines, for many years now, have flocked to dollar bills to hold their value to save their money. As a result, more than 200 billion in hard US currency is now in Argentina. And that means that on a per capita basis, Argentines hold more bank notes, US bank notes, than Americans. In fact, anybody who has bought a house in Argentina will tell you that they almost certainly bought it in hundred dollar bills.

Okay, so Argentines have a lot of American dollars, which is, of course, a bad sign for their economy. Reminds me a lot of Russia in the 1990s, when also the rubble was just going wild and losing value, people used dollars to buy big, important things. At that time, it was a communist economy going into the global one. What is it here? What caused this in Argentina?

Well, it's a long story, but the short story is that it's really just decades of deep economic mismanagement. A series of left leaning governments has expanded the social safety net with things like free health care for universities, a dramatic expansion of social programs, deep subsidies for energy and public transportation, big pensions, and all of that without much economic revenue to pay for it. But to make up for that shortfall, they have drained economic reserves, they have taken out massive international debt and also just printed more money. And that has left the Paso much less valuable and prices skyrocketing.

Which brings us to Mr. Malay. What are the specifics of what he's proposing, Jack? What's his economic plan exactly?

Well, he wants to take Argentina in a completely different direction. Specifically, he wants to drastically shrink the size of government. He wants to eliminate 10 of the government's 18 ministries. He has proposed privatizing the state airline, the railroad company, the state oil company, and really trying to re-make the Argentine government and Argentina itself in his libertarian view of the world. That also means some much more radical ideas.

We'll be right back.

Okay.

So Malay is elected. He has this hail, merry plan to rescue the country's economy, including slashing all these government ministries and really taking a chainsaw as he has on spending. But there's something you said that's even more radical at the heart of his plan. What is it?

Actually, the central part of his campaign pitch has been what we would call dollarization. He essentially wants to use the US dollar as Argentina's national currency.

Use the US dollar as Argentina's national currency? How would that work?

Basically, his argument is that the Argentine government has shown to be so irresponsible in its management of the currency, and the Argentine pesos has become so worthless, you might as well just kill it and use a more stable currency. I mean, specifically like the dollar. He chose the dollar because Argentina is already dollarized. I mean, we spoke about how people buy houses with US dollars. They stash US dollars under their floorboards and their mattresses. This is a country that is already deeply comfortable with the US dollar and is already using a lot of US dollars. And so he basically wants to formalize that.

And is this a thing? I mean, have countries done this before?

It is. There are more than 30 countries that have actually adopted another nation's currency as their own legal tender. And in Latin America, specifically, there have been a few cases of dollarization: Panama is dollarized, Ecuador. And so this is not a completely novel idea, but Argentina is a larger and more sophisticated economy than those other nations.

Okay, so dollarization has been done, though in smaller Latin American countries. But what are the mechanics of it? How does it work?

How to do it is relatively simple in theory. First, the country must agree upon an exchange rate for its currency to the dollar. And then the country, on a specified date, essentially flips the switch and all of its obligations, things like contracts and deposits and loans and wages are all converted to dollars on paper at that agreed upon rate. And then there is another part which is potentially more tricky, particularly for Argentina, and that is converting all of Argentine's pesos, the physical bank notes, to physical US dollars. And for that, you need dollars. So mainstream economists believe that the government may need up to 30 to 40 billions to dollarize, and that could be a big problem for Millay and his plans. If you consider their debts, they basically have zero.

So Argentines, like Oscar, the hardware store owner, they might have a lot of dollars. But what you're saying is that the government itself does not.

Exactly. And one risk is that if the government doesn't have enough dollars, it may not give Argentines much confidence in a dollarization scheme. So for instance, if you're an Argentine and you see in your bank account that the government has now suddenly converted your paces to dollars, but you're skeptical that the government actually has enough dollars for everyone, maybe you're going to go to the bank and take that money out before your neighbor does. And if the next person does that and then the next person does that, now we have a run on the banks.

Wow. So a lot of hurdles here. They need dollars to dollarize. They don't have them. And then there's a chance that when people see what's happening, they panic, they race to the banks, and they take their money out, causing a real crisis in the financial system.

Exactly. So there are some real hurdles and some real risks. But there is also a competing view that there could be real benefits. We have seen dollarization really almost eliminate inflation in the past. And on top of that, in a place like Argentina, where there is $200 billion dollars in US currency stuffed under mattresses and in safe deposit boxes, the dollarization could bring those dollars from under mattresses and into banks officially, and that could be a real benefit for the economy.

There's a real question about whether his signature policy, this dollarization, would actually work even if he could pull it off. But I guess the question in my mind, since he's now, of course, in office as of today, is can he pull it off? Like, he has these ideas that were electric for people in Argentina, for voters, but can he implement them?

Well, I think that's another major hurdle to his plan for dollarization. Because remember, Millay is a total political outsider. He's coming in with no governing experience. And his nascent political party, just two years old, has just 15 % of the seats in the House. And something like dollarization would need congressional approval. So what we've seen since the election is actually a bit of deal making. He has actually started to make deals with a center-right coalition, which would give him potential control of Congress. But as a result, he has brought in more moderate members into his cabinet. And his focus in recent weeks has really shifted from things like dollarization to more about his plans to shrink the size of government and budget cuts. And I think what we're seeing is, Millay is confronting the political and economic reality as President of Argentina, and dollarization may be something he does down the road.

So this is a case where Millay campaigns as an outsider with these radical plans, but the political realities force him to moderate those plans once he's in office.

Well, I think we should remember that what Millay is proposing for right now for Argentina is actually rather radical, particularly when considering Argentina's history. These would be very, very deep government budget cuts. And this is a country where many people have come to rely upon government services and subsidies. And so these policies could be really difficult. And remember, this is a country that is already struggling with a deep economic crisis. So poverty is already up, hunger is already up. And that could get worse. And Mille is actually warned the next year is going to be very tough. But on the other side, this is actually what some economists think Argentina should have been doing a long time ago. They actually need some of this hard medicine, but we don't know how it's going to play out in reality.

So in other words, the hail Mary that Argentines went for in this election, it may, in fact, be the medicine that the ailing economy needs, but the application of that medicine, it's going to be very difficult to swallow. Have Argentines considered that the cure could feel as bad as the disease?

I think that's a major risk. Millay is a radically libertarian president who has an avowed hatred for the government, who is now in charge of what has for many years been a very big government. He's made clear that starting this week, his plans to shrink that government will be really painful for the country. That means that a populace that's already suffering so much economically is now being told that they're going to have to suffer a lot more before it gets any better. The question is, will Argentines put up with that? Whether or not they do may decide, after so many years of struggle, whether Argentina can finally ride its course.

Jack, thank you.

Thank.

You..

On.

Sunday, after being sworn into office, President Malay addressed thousands of his supporters in the Argentine capital of Buenos Aires.

In.

The speech, Mille laid the responsibility for the country's economic problems at the feet of the outgoing administration and promised to take the, quote, necessary decisions to solve them..

Soon after, in his first official decree, the new president cut the number of government ministries from 18 to 9. We'll be right back. Here's what else to know today. Over the weekend, prominent Democrats moved to denounce anti-Semitism in the wake of a growing scandal that saw the President of the University of Pennsylvania resign after giving testimony to Congress last week.

We.

Shouldn't have to.

Gather on a rainy day in Pennsylvania to talk about anti-Semitism, but we must.

Appearing at a synagogue in Philadelphia, Senator Bob Casey of Pennsylvania and the state's governor, Josh Shapiro, made the show of solidarity just one day after the resignation of the university President, Elizabeth McGill. Mcgill's departure followed days of pressure from donors, political leaders, and alumni who had criticized remarks she made to Congress that appeared to evade the question of whether students who called for the genocide of Jews should be punished. The presidents of Harvard and MIT made similar remarks to Congress last week and are now also under pressure to resign. European Union policymakers agreed late last week to a sweeping new law to regulate artificial intelligence, one of the world's first comprehensive attempts to limit the use of a rapidly evolving technology. The law, called the AI Act, sets a benchmark for countries seeking to harness the potential benefits of the technology while trying to protect against the possible risks like automating jobs, spreading misinformation online, and endangering national security.

Today's episode was produced by Carlos Priado, Rochelle Bonja, and Stella Tan. It was edited by MJ Davis-Lin and Mark George, fact-checked by Susan Lee, contains original music by Marion Lasano and Dan Powell, and was engineered by Chris Wood. Our theme music is by Jim Runberg and Ben Landsford of Wonderly. That's it for The Daily. I'm Sabrinna Tavernissi. See you tomorrow.