Javier Milei in a meeting. Photographer: Erica Canepa/Bloomberg
Argentina was once a nation among the world’s most decadent, resembling Europe in its economic power and cosmopolitanism. However, the prosperity present a century ago is a far cry from where the country finds itself today.
The current state of the Argentine economy is one of disrepair, experiencing a rate of inflation at 124% that could climb to 200% by the end of the year. It isn’t the first time that the country has been plagued by rapid inflation, either. This is a game Argentinians are all too familiar with, having dealt with an episode of hyper-inflation in the late 1980s and a series of other issues arising from economic mismanagement.
Argentina’s poverty rate has hit a high of 40%, transforming the central square of its capital into a soup kitchen. Citizens are becoming increasingly upset with the government’s and central bank’s poor administration. However, there is hope for change as the October 22nd general election approaches. Yet, this one is quite different from most.
Enter Javier Milei, the highest-polling presidential candidate in Argentina and a former economist. Milei entered the Argentine Congress in 2021, establishing his political career after working as an economist for most of his life. He is seen as a rather eccentric politician, given his unkempt hair, and is said to have hired a medium to consult one of his dead dogs. Besides, his policies and vision for Argentina are radically different than the prevailing Peronism: a nationalist labor movement that has stuck to Argentinian politics for decades.
Milei’s Capitalist Vision
Javier Milei is a self-proclaimed anarcho-capitalist, meaning he believes that the government has no place meddling in the economy. The state, to Javier, is a criminal organization that robs the people through taxes. He has complete faith in the invisible hand of markets and capitalism as a force for economic growth.
Rather than list his personal economic views, the extreme reforms he has in store for Argentina do a better job of demonstrating his fiscal liberalism: Milei wants to halve the number of government ministries, demolish the central bank of Argentina, privatize all government companies, and dollarize the Argentine economy—meaning the current currency of the Argentine Peso would be replaced with U.S. dollars as the medium of exchange.
All of these reforms say a lot about Milei’s libertarian vision for the future of Argentina. His goal, clearly, is to significantly reduce government spending and its involvement in the economy. His plan to dollarize, possibly the most ambitious one of all, would completely strip the central bank and government of their role in monetary regulation.
The American economist Milton Friedman, who advocated for free markets and government non-interventionism, is an inspiration to Javier Milei.
In an interview with The Economist, Milei discusses his plan to replace the government-funded Argentine education system with one where students are given vouchers to use at a private institution of their choice: “if you think of the State as an insurance and people want to have education, you have to look for mechanisms that assimilate the competitive model. When you are going to allocate those resources, instead of putting it on the supply side, you put it on the demand side. And you generate competition.” This idea was popularized by Friedman in his magnum opus work Capitalism and Freedom, a book praising the freedoms and benefits of narrowly regulated capitalism. Throughout the interview, Milei repeatedly references Friedman when talking. Not to mention, he named one of his dogs after the economist.
Not So Fast, Javier
Just like any populist candidate though, Milei has received a ton of criticism regarding his policies and behavior. His takes on social issues are not so popular, as he is against the legalization of abortion and has praised Donald Trump, the former President of the United States, and Jair Bolsonaro, the populist, the conservative former President of Brazil whose supporters stormed the Brazilian Congress after the election earlier this year. Milei has also been accused of misogyny on numerous occasions, and is commonly seen as an inflammatory character who says what he wants with no regard for others. Such sentiments could jeopardize his election or make it difficult to work with him even if he were elected.
Arguments against Milei extend to his economic rationale as well. Some believe that he has misdiagnosed the inflationary crisis in Argentina, falsely attributing it to an over-circulation of the Peso rather than the enormous amount of money the government has borrowed from the U.S.
The World Bank, an international financial institution that aids developing economies, has denounced Milei’s dollarization plan as replacing one problem with another. Instead, they suggest that “Having fiscal discipline and low rates of monetary growth—i.e., moderating the amount of money in circulation—is absolutely key to handling inflation.”
Some critics believe that dollarization would not even be able to get off the ground. To do so would require a float of dollars to begin the process—something that Argentina’s bleak economic situation cannot afford. In addition, such a plan would not address the improvident fiscal spending that the Argentine government has made a habit of. In 2021, Argentina had the highest government expenditure in all of Latin America at nearly 38% of GDP.
A Breath of Fresh Air
2022 culminated in a second “pink tide” for Latin America, as three leftist governments were elected in the region. Socialist rhetoric has become commonplace in Latin America over the last couple of decades, as leftist states such as Bolivia and Mexico have made their mark—not to mention the long-communist autocracies of Cuba and Venezuela.
Javier Milei, one of the only true capitalists on the scene, could bring a welcome change of pace to the Latin American leftist establishment. Market liberalization could possibly jumpstart growth if Milei were able to implement his plans and would become a model for the rest of Latin America.
A movement away from the interventionist policies of the Peronist era might be just what Argentina needs. It is clear by now, after several cycles of hyperinflation, that a change in administration and direction is desperately needed. And, after a decade of stagnant growth, liberalization could be a model for delivering Latin America to prosperity.
Argentina is a nation bursting with potential. It has vast amounts of fertile land, large gas reserves, and abundant natural resources—particularly lithium: a commodity rising in importance given its use in renewable energy. If Milei’s market-friendly policies could take advantage of Argentina’s natural endowments, coupled with intelligent industrial policy, the nation would have a chance at returning to its former prosperous self.
This article was edited by Sarah Shanahan and Natasha Tretter.