Nothing guarantees that a country will remain prosperous forever. President Reagan stated that “we are never more than one generation away” from doing lasting damage to the primary institutions of the free society. In the case of Argentina, once one of the most prosperous and promising countries in the world, several generations have contributed to such damage. At the beginning of the 20th century, Argentina ranked seventh in the world in income per capita. It attracted immigrants from around the globe, mostly Europeans of Spanish and Italian descent.
Despite its name, derived from Argentum (silver), Argentina did not get rich owing to its mineral wealth. The country has little or no silver. Argentina began its road to prosperity only after General Justo José de Urquiza (1801–1870) defeated Juan Manuel de Rosas (1793–1877), the powerful governor of Buenos Aires, then and now the wealthiest province in the country, with the aid of Brazil and Uruguay. Urquiza became president in 1854 and adopted the Constitution inspired by the work of Juan Bautista Alberdi (1810–1884), a legal scholar and political theorist well-versed in economics. The 1853 Constitution created the legal framework that propelled Argentina’s economy.
Argentina endured ups and downs, but from the mid-19th century until the 1930s and ’40s, it experienced high economic growth. In fact, it overcame the Great Depression of 1930 faster than most other countries. However, the financial crisis of the 1930s created incentives for some of the world’s leading intellectual centers to explore new economic policies. Economists at the leading universities around the globe started devising various interventionist and statist schemes. The economic policies of the New Deal, Keynesianism, and fascist corporatism had a worldwide impact. Unfortunately, Argentina copied many of them. Its labor law was a copy of Mussolini’s Carta di Lavoro, for example. Although there have been periods of liberal economic policies during the past eight decades, the trend has continued toward increased interventionism, and the result has been dire poverty. Today, estimates from the Argentine Catholic University Center report that almost 45% of the population lives in poverty.
The recent electoral victory of Javier Milei, however, an economist who understands the political and economic ideas and conditions that lead to prosperity, gives new hope to many in this impoverished country. Will he be able to lead a turnaround?
President Javier Milei wants to change course and change history. I’ve never met him, but I’ve worked with several people he credits for his views and others he has nominated for relevant positions in government. He was born in 1970, studied and taught economics, and worked as an economic consultant. Many who introduce Milei to a broad audience, like Tucker Carlson, never fail to mention his youth as a soccer goalkeeper for the junior division of a professional team. That was not, however, his primary vocation. He has always had a passion for economics and loves to teach. During a recent interview, he said, “I am an economics professor who now has to serve as President.”
Milei was trained in mainstream economics and was fond of equations and typical macroeconomic analysis. But thanks to Alberto Benegas Lynch Jr., the leading figure promoting Austrian economics in Argentina, Milei began to change his approach. Benegas Lynch gave him a book he wrote in the mid-1970s describing the fundamentals of economics. He then recommended that Milei read Man, Economy, and State by Murray N. Rothbard. Acquaintances describe Milei as a sponge, absorbing what he reads quickly. Milei also learned his economics from the brilliant professor Jesús Huerta de Soto, a Spaniard who, like Murray Rothbard, defines himself as an anarcho-capitalist. Milei quoted both Benegas Lynch and Huerta de Soto during his recent inauguration speech. Given Huerta de Soto’s outstanding career, economists worldwide contributed chapters to a scholarly book honoring him. Milei was one of them.
That Benegas Lynch quote could be read as a description of Milei’s guiding philosophy: “Liberalism is the unrestricted respect for the life project of others based on the principle of non-aggression, in defense of the right to life, liberty and property, whose fundamental institutions are private property, markets free from state intervention, free competition, the division of labor and social cooperation.” Milei appointed Benegas Lynch’s son “Bertie” as a top candidate for Congress. (I happened to be on a balcony in the Congress, in front of now Congressman Benegas Lynch, and could see the emotion in his eyes and the many tears of joy among the libertarian bench.)
Now, however, is the time to pass from ideas to action: How likely is it that President Milei will succeed in turning Argentina’s economy around? His plan to reduce state spending, achieve fiscal balance, and stop printing money to subsidize government expenditures has elements that will please most of his voters but will impact many powerful interests.
I have seen three groups emerge trying to influence his presidency. One wants to neutralize him. Another wants to create a Milei in their own image. And a third wants him to succeed according to his own plan.
Groups inside and outside Argentina fit into each of these categories. Let’s start with the those that want him to fail. One of the goals Milei has said is nonnegotiable is the closing of the Central Bank. If successful, and Argentina were to move to less discretionary monetary policies, such as adopting the U.S. dollar, a slew of well-connected professionals living off the privileged information they receive from the Central Bank bureaucrats would lose their ability to package and sell that information.
Former Central Bank presidents and directors were among the 170 economists and “experts” who signed a documentstating that Milei’s plan would create havoc. I doubt if there was a single economist on that list who did not profit at one time or another from their connections to the “caste,” the name that Milei uses to stigmatize those who do business in alliance with entrenched bureaucracies and the bureaucracies themselves, a concept similar to that of “the Deep State.”
Ecuador dollarized in 2000; El Salvador adopted the dollar in 2001. Panama started using the dollar as equivalent to their Balboa as early as 1904. If Argentina also dollarizes, with an economy 17 times larger than El Salvador’s and five times larger than Ecuador’s, it might encourage other countries to follow suit. And more than just the consultant class would be adversely affected. The expansion of the dollar area is a geopolitical threat to those who want to weaken global reliance on the United States and who, like China, would like to see their currencies used in more transactions. As an example of just how shattering such a change would be to the status quo, just before the Argentine presidential elections, more than 100 foreign economists, including Thomas Piketty, published an open letter claiming that, as described in The Guardian: “the election of the radical rightwing economist … would probably inflict further economic ‘devastation’ and social chaos.” They warned that Milei’s policies “would be deeply damaging for Argentina and very unfortunate for the entire continent.”
Other areas where Milei’s views go directly against the mainstream include climate change, the life of the unborn, social “justice,” and forced gender policies. He will push for reforms, but the state will nonetheless continue to provide taxpayer-funded health and education.
After Milei’s victory, many pro–free market observers in the United States tried to build a Milei to their liking, in a familiar image. “The Argentine Trump,” said some. “Milei is a libertarian, far from Trump,” said others. On the socialist side, the labels used to describe Milei are “ultra-right” or “anarcho-capitalist.” Yet, as we know, each individual is unique and unrepeatable. Granted, like Trump, Milei saw his popularity explode with his TV appearances. His theatrical performances gave him another boost. Like Brazil’s Jair Bolsonaro, Milei conducted his campaign primarily on social media, with almost no money. But Milei’s task is much more difficult than was Trump’s or Bolsonaro’s. He inherits a country with 45% of the people living in poverty, 140% inflation, and artificial prices for many products. In addition, Milei had almost no party structure to rely on. It should be noted that he acted differently before the October 22 presidential election than when campaigning for the second-round “ballotage” on November 19, which he won by a wide margin. He will again be a different person now that he has won the presidency.
How do you build a governing team when you run as an outsider? With insufficient support in Congress, Milei chose an economic team that fit his own definition of a “caste” But Milei, in addition to being president, is the actual minister of economics, a ministry that did not exist during Argentina’s glory days. Milei has now appointed technocrats to bring integrity to prices and fiscal and monetary policies, as he knew that the immense number of subsidies and privileges, a bloated public sector, and artificial prices were poisoning Argentina. The job of Milei’s team now is like lifting the lid off a pressure cooker full of explosive material. Most of the first economic decisions, such as bringing the foreign exchange rate closer to the market price, point in the right direction but fall short of complete liberalization. Other measures, like expanding export taxes or reinstating income taxes, point to that “new” Milei mentioned above. One of the first analyses of the reform economic measures describe them as an “anti-Milei plan devised by Milei.” I agree.
In other government areas, Milei has appointed individuals with outstanding knowledge of economics. These include the foreign minister, Diana Mondino, who, like Milei, was a university professor, and Eleonora Urrutia, who is helping to choose the secretaries for the human capital ministry. In addition, the administration now has four ministries that have already lost senior personnel, been “downsized,” under the new reforms: Health, Education, Labor, and Social Development.
The role of Patricia Bullrich, a former contender during the presidential contest, is also of immense importance. Her immediate offer of support to Milei’s government will reason enough to earn her a celebrated place in Argentina’s history. She came from the hard left, and during her evolution as minister of labor, she was the person who, with great courage and high principles, confronted the worst of the Argentine labor unions. She then did an outstanding job in homeland security. Bullrich, who will be minister of national security, is not very well versed in economics, however, and her views on culture differ from those of Milei and, especially, the more conservative vice president, Victoria Villaruel. But her commitment and support among different sectors of the police and security forces will be essential if, as many expect, Milei’s government comes under attack by internal and external criminal forces.
My last words will be on Milei as a person. Some people who were against him reacted positively once he changed his behavior, mainly some of the foul language he employed during his rise to fame. Those around him also say he is unable to tell a lie. Telling the truth is very rare in politics, needless to say. During a private reception before the inauguration, former President Mauricio Macri, who like Bullrich also was fast to endorse Milei for the second round of elections, finished his presentation by stating, “We have a president prepared to give his life for freedom, and who tells the truth. That is not a small thing.”
As honest as Milei may be, keeping campaign promises takes more than goodwill. He has promised to close the Central Bank. We will see. I doubt he can fulfill his promise that “the caste” will pay for all the costs of the free-market reforms. (How that would work is unclear.) Most of the burden in all policy reforms, especially fiscal policy, falls on the most relevant and numerous group cohorts. Unfortunately, this has meant that the burden has traditionally fallen on Argentina’s continuously weaker middle class. We have yet to see if Milei’s understanding, his excellent team of capable people, and, more significantly, what he calls that “Strength [That] Cometh from Heaven” (Las Fuerzas del Cielo), 1 Maccabees, 3:19, will align adequately to put Argentina on a sure road to freedom.