Javier Milei is on tour. After trips to Spain, Israel and Davos, the Argentine president recently traveled to Silicon Valley, where he spoke with technology giants including Apple’s Tim Cook; Mark Zuckerberg, from Meta; and Sundar Pichai, from Google. These days, it’s rare to see a right-wing politician taking photos with so many distinguished figures in the notoriously progressive San Francisco Bay Area. For Milei, this means that “the world is waking up to [a liberdade econômica]” as a means of creating broad opportunities and lifting the poor out of poverty in a sustainable way.
While in California, Milei gave a highly technical talk about her new book, ‘Capitalism, Socialism, and the Neoclassical Trap: From Economic Theory to Political Action’, at Stanford. He covered the history of economic thought, criticizing John Maynard Keynes while praising the likes of Adam Smith, Friedrich Hayek, Milton Friedman, Ronald Coase, and Murray Rothbard—and even some lesser-known economists like Frank Ramsey, Knut Wicksell, and Angus Maddison. The self-declared libertarian leader broadly criticized economic models, which can stray far from reality, and academic economists for using market failures to justify excessive government intervention.
Back in Argentina, Milei still has a significant battle ahead. He will be judged on his ability to reverse decades of Peronist policies and improve economic performance in the country historically plagued by inflation.
He has already accumulated several victories in economic policies. Argentina’s year-on-year inflation rate fell to single digits in May 2024, thanks to Milei’s “shock therapy” policies of currency devaluations and cuts to energy and transport. Since Milei’s election, the country’s stock markets have risen significantly, and its dollar-denominated international bonds have reached new heights in response to planned austerity measures.
Argentina has made such significant fiscal progress that the IMF has unlocked additional financing as part of its conditional loan agreement with the country. Last week, Milei’s most significant package of legislative reforms to date, including substantial deregulation and fiscal consolidation provisions, won general approval in the Argentine Senate, but several pieces face uncertainty in the lower house.
Argentina was once one of the richest countries in the world, but Juan Perón’s statist policies changed the country’s trajectory starting in the 1940s. Intense regulation, industrial takeovers, and destructive export controls—especially those on beef—ruined the country’s fortunes. After decades of economic turmoil, Argentina’s GDP per capita is now about $13,650 [equivalente a aproximadamente R$ 74 mil. O PIB per capita brasileiro é de R$ 48 mil, segundo o Banco Mundial].
It remains to be seen whether Milei and the legislature will be able to reverse the regulatory policies that have suffocated entire areas of the Argentine economy. Milei has also yet to fulfill his campaign promise to adopt the US dollar as the country’s official currency, a measure made less necessary by the downward trend in inflation.
Milei also faces a political opposition determined to thwart her agenda. He must ask himself: what is the right speed to carry out economic reforms? His predecessor from 2015 to 2019, Mauricio Macri, failed in part because he was too slow and incrementalist to deliver meaningful change.
Milei took a different approach — quick shock therapy well before another election. Reducing government spending and deregulating much of the statist economy will undoubtedly have a high political cost in the short term. Unions in Argentina are already on strike against Milei’s economic policies, with the effect of disrupting some public transport services. Some students are protesting cuts to education. But the political cost is something Milei can bear for now.
Milei has made significant progress toward his goal of liberalizing the Argentine economy to enable human prosperity and alleviate poverty. Time will tell whether its success will continue — and lead other countries to adopt its bold and innovative platform.
Jon Hartley is a senior fellow at the Macdonald-Laurier Institute, a fellow at the Foundation for Equal Opportunity Research, and a doctoral candidate at Stanford University.
©2024 City Journal. Published with permission. Original in English: Milei’s Big Swing
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