On November 19, Argentine voters elected Javier Milei President of the Argentine Republic. Milei, an outsider with little political experience, is known for his “liberal” (in the Milton Friedman sense of the word) economic stances and his passionate televised appearances. His zealous repudiation of Argentina’s history of government intervention in the economy and redistribution of wealth has captured worldwide attention.
The Milei Phenomenon
Javier Milei is an economist and ardent defender of liberal economic theory. He is an accomplished economist and has taught and lectured on monetary and financial theory, economic growth, and mathematics applied to economics at universities in Argentina and abroad. He has authored numerous academic articles and editorial pieces, as well as books titled “Economic Policy against the Clock,” “Readings of Economics in the Time of Kirchnerism,” and “The Return to the Path of Argentine Decline.”
His small-government, “anarcho-capitalist” message resonated among those tired of decades of policies favoring government spending, subsidy, and welfare funded by heavy taxes and unrestricted currency printing. In addition to the various adverse consequences on private sector growth, these policies have led over the last two years to extreme consumer price inflation, ultimately leading the electorate to vote overwhelmingly for a change.
Impact on the Economy
Milei’s election promises a dramatic shift in Argentina’s economic policies. His electoral platform proposes changes to employment laws, elimination of the fiscal deficit, the removal of capital controls and other policies of financial suppression, privatization of government-owned companies, and the execution of public works through the private sector. His first order of business, however, is to control inflation.
The international community is watching closely, given Argentina’s role as one of the world’s major producers of food and energy and a heavyweight in Latin American politics.
Challenges
Milei faces significant challenges due to his lack of a political structure. Alliances with parties or politicians may provide a governance structure but may not completely stifle the resistance expected from sectors vested in the status quo. “Shock” policies aimed at undoing the government’s statist role have failed before in Argentina’s modern history, but this may be the first presidential election in which the winning candidate achieved a majority across all social classes. This difference affords Milei a mandate to make drastic moves. This broad-spectrum support may also provide the social cohesion and buy-in that is critical to the desired economic outcome.
Divergent Perspectives
Despite his victory, Milei must overcome Argentina’s long-standing lack of consensus. While some celebrate the change, others express concern for the impact on the most vulnerable sectors of the population and skepticism toward any leader’s ability to reverse decades of large government.
Conclusion
Javier Milei’s election potentially marks a turn away from a model that has prevailed for three out of the four decades since the country has returned to democratic rule. Whether this change proves sustainable depends largely on his efficacy during the first few months of his presidency.
If Argentina manages to stabilize its economy without the poorest concluding they are suffering the brunt of change and the incoming president is able to communicate clearly a better future across the class spectrum, he will have a chance to implement the free-market principles needed to prompt real economic growth that has so long eluded one of the world’s most resource-rich countries.
