'Time to rethink GDP': As Argentina recovers, Zoho CEO questions economic experts with fancy credentials

As Argentina's economy emerges from recession, Zoho CEO Sridhar Vembu on Tuesday praised President Javier Milei's efforts to slash wasteful government expenditure. Vembu emphasised the need to "completely revise our notion of GDP," which he argued is often inflated by excessive government spending.

In a tweet, Vembu pointed out that when President Milei began cutting down on wasteful expenditure, traditional Keynesian economists predicted economic collapse. "Reported GDP fell at first, but now GDP is growing again, and he has also converted a massive budget deficit to a small surplus for the first time in a century," he said.

"We have to completely revise our notion of 'GDP' (easily inflated by massive government spending because the spending directly adds to reported GDP) and 'Jobs' (token distribution jobs aka bullshit jobs). Just as companies can show revenue while piling up debt, politicians can show 'GDP growth' while pushing government finances towards insolvency," Vembu remarked.

The Zoho chief criticised Keynesian economics for legitimising government profligacy, adding that it is time to challenge such thinking. "We must not grant automatic respect to economic 'experts' with fancy academic credentials," he stated, calling Argentina a "very useful case study in the modern era" and noting, "I follow it closely."

When questioned about the feasibility of similar measures in other countries, considering variations in population size and economic conditions, Vembu explained that while symptoms differ, the root cause remains the same: government profligacy. "In the US, the military-industrial complex (among many other constituencies) is severely addicted to extreme government spending and wars. In India, state governments are competing with each other to create dependency across our population," he said.

Vembu compared excessive government spending to addiction, warning of painful "withdrawal symptoms" when over-spending ends. "The longer we postpone it, the worse the withdrawal symptoms will be. Argentina's economy had nearly collapsed due to decades of over-spending, inflation, and mismanagement, so Argentinians took a chance with President Milei."

Looking ahead, Vembu questioned whether countries could recover without reaching a crisis point. "Can President Trump, along with Elon Musk and Vivek Ramaswamy, really slash wasteful government expenditure in the US? I hope they can do this. Along with Argentina, a reinvigorated America can become a positive role model for the world. We badly need fresh economic thinking around the world."

The Financial Times on Tuesday reported that Argentina’s GDP expanded by 3.9% in the third quarter of 2024 (seasonally adjusted) compared to the previous quarter, marking the country's first growth since entering a recession in late 2023. However, year-on-year GDP contracted by 2.1% during the same period.

Milei’s economic strategy — marked by drastic spending cuts and deregulation — has helped curb Argentina’s triple-digit annual inflation. The libertarian leader’s policies have earned praise from global figures, including US President-elect Donald Trump and billionaire entrepreneur Elon Musk.