Harry Geels: Argentina is an interesting libertarian project

December 3, 2024

^{This column was originally written in Dutch. This is an English translation.}

By Harry Geels, written in a personal capacity

Javier Milei has been president of Argentina for a year now and is implementing an unprecedented libertarian-economic project. Not everyone has yet realised the consequences for the world if his policies succeed.

Argentina is one of the few countries in the world that has fallen sharply in the ranking of rich countries. At the beginning of the 20th century, the country was still regularly in the top of the world's richest countries on a per capita GDP basis, before slipping to the middle of the league. In recent decades, the country struggled with high inflation, pinching bureaucracy, high government deficits, and the IMF intervened regularly, most recently in 2022, when a $44 billion credit facility was secured for 30 months.

But then, on 19 November 2023, libertarian Javier Milei was elected president. He is known for his bold statements opposing socialists, who in his view have been Argentina's big problem in recent decades, with Néstor Kirchner (2003-2007), Cristina Fernández de Kirchner (2007-2015) and Alberto Fernández (2019-2023) as examples. In between was Mauricio Macri (2015-2019) who, while adopting more right-wing policies, struggled to break through the bureaucracy. Milei is determined to force such a breakthrough though.

Anti-socialist statements

Milei is eminently anti-socialist. For instance, he has compared socialism to the caste system, where every need must be accompanied by a right. But the problem is that needs are infinite, rights must eventually be paid for by someone, and resources are by definition finite. According to Milei, the conflict between infinite needs and finite resources is resolved by private property and a free price mechanism. Milei: ‘Politicians do not like the “invisible hand”, they prefer the “claw of the state”.

Milei also regularly repeats ideas of well-known libertarian economists such as Milton Friedman and Friedrich Hayek, including this one: ‘If you don't stop socialists, they will invade the state and impose an all-destructive agenda.’ On the most recent and first major privatisation, in which hydroelectricity company Industria Metalurgicas Pescarmona, or IMPSA, was allowed to spearhead it, Milei had the following statement noted: ‘Every day that such a company remains unprivatised, it costs the taxpayer money and the citizen becomes poorer.’

From ‘danger to democracy’ to ‘lessons for the world’

The Economist has seized upon Milei's 1-year presidency for a themed issue on his policies. Remarkably, the British business magazine has changed its tone from ‘a danger to democracy’ to ‘lessons from a surprising experiment’. Among the first major steps Milei has taken is sacking 50,000 civil servants and closing several ministries, including the Ministry of Women, Gender and Diversity. He calls the woke movement ‘cultural Marxism’ and the climate transition a ‘socialist agenda’.

Source: X

The question is whether Milei policy succeeds is still hard to answer. He has only been in office for one year. He seems to be keeping his word in terms of his promise to clean up the civil service. The new government in the Netherlands, which has also written down that it will lay off civil servants, is much less energetic in this regard. Looking at economic variables, the first signs of Argentina's recovery seem ‘positive’. The budget deficit and inflation are falling. And the (still large) ‘debt spread’, or the interest rate differential paid by the Argentine government versus the US, is narrowing.

Source: The Economist

Big implications for the world

Milei's policies are of greater importance to the world than most media realise. If he succeeds, it will be interpreted as a success of libertarianism. The right wing of the Republican party is therefore watching Argentina with suspicion. Trump seems to have slightly different emphases. But deregulation and government reorganisations are also central to his policies. As noted in another column, the current era resembles the early 1980s, when Ronald Reagan for the US and Margaret Thatcher for the UK adopted similar policies.

This article contains a personal opinion by Harry Geels

More columns by Harry Geels