Why Argentina’s Javier Milei matters
In the days leading up to the November 2023 presidential election in Argentina, a hundred “leading” economists from around the world, including progressive favorite Thomas Piketty, published an open letter warning that “radical right-wing economist” Javier Milei would inflict “devastation” and social chaos on his country.
They said it like it was a bad thing.
By the time Milei unexpectedly won the presidency, Argentina, once one of the wealthiest nations in the world, had a poverty rate of over 40% and the third-highest inflation rate in the world.
After decades of Peronism – a toxic melding of fascism, socialism and unionism – the nation bankrupted its central bank, and the peso was depreciating at warp speed.
Do you think your mortgage rate is bad? Interest rates hit 118% in Argentina weeks before the election.
The country was on its way to becoming another Venezuela. Yes, Milei wanted to blow it up.
After Milei’s unlikely victory, political scientist Ian Bremmer warned, “Economic collapse (is) coming imminently.”
Felix Salmon, the chief financial correspondent at Axios, argued that Milei’s policies would plunge Argentina into “a deep recession.”
Seven months later, Argentina was out of the recession that had set in before Milei’s victory.
The chainsaw-wielding economist, “el Loco” to friends, followed through on his promise of “shock therapy,” prioritizing taming inflation by cutting spending and deregulating the economy.
Governments in the modern West are always bragging about spending their way out of economic tribulations (problems they usually instigate).
If a person suggests that free-market economic policy would have been more beneficial in the long term, they are forced to rely on a counter-history.
This is why lots of elites are rooting against Milei: He would prove them wrong.
As we all know, most panic-inducing cases of “austerity” are just minuscule reductions in the trajectory of spending growth.
Not Milei’s plan, which entailed shutting down 13 government agencies and firing over 30,000 public workers – around 10% of the federal workforce.
That is an unrivaled political revolution. Argentina’s federal budget was reduced by 30%.
Even if the Department of Government Efficiency accomplished everything Elon Musk and Vivek Ramaswamy are talking about doing, they wouldn’t come close to 3%, much less 30%, in spending cuts. There has likely been no comparable austerity program in any Western economy.
By May 2024, Argentina recorded its first quarterly budget surplus since 2008.
Inflation, still high, dropped from a debilitating 25% at the end of 2023 to 2.4% by the end of 2024. Per capita salary, having plunged, is now also recovering.
Milei is often branded a “right-wing populist,” “far-right outsider” and “far-right libertarian.” The fascist Peronists, socialists and unionists who spent decades gutting and plundering one of the wealthiest nations in the world are never assigned such ideological designations.
Sure, Milei is a populist of sorts. But this is another reason why he is a genuine and welcome threat to the world order.
The difference between Milei and many other nationalists on the world stage is that he’s not using his position to transfer state power from left to right.
Rather, he’s diminishing the power of the state and cutting off the source of its control over citizens.
How many world leaders have ever done that? Not many, if any.
However, a man who believes that the “state was invented by the devil, God’s system is the free market” is probably imbued with a kind of moral certitude that makes it possible.
Of course, one year can’t undo 80 years of economic destruction. Owing to cuts in spending by Argentina’s government, which created busywork propped up by the weak peso, the economy shrank by 3.5% in 2024.
JP Morgan and the World Bank have both predicted its GDP will grow around 5% next year.
Milei is more than just an economist president.
The West “is in danger,” Milei told the world’s elites in Davos, because not only are modern environmentalism, radical feminism and social justice corroding the moral foundations of the West but they are also leading us to socialism “and, therefore, poverty.”
At the General Assembly, Milei derided the United Nations and promised that Argentina would drop its longtime neutrality on international matters, backing nations in the same fight. Argentina instantly became one of Israel’s greatest supporters in that corrupt institution.
And Milei still has an approval rating of over 50%, which is around the same number he had when he won the election.
Considering the dependency and state-entrenched special interests operating in Argentina, it’s a miracle that he ever got elected at all.
His success, on the other hand, is no miracle. Free markets work.