Argentina’s President, Javier Milei, has been in office for over 100 days. He has moved quickly, attempting to carry out his proposed reforms. He has overseen a reduction in the public service and in public spending.
Public enemy number one is inflation. The country has been grappling with inflation for a long time. Different people advocate different solutions. Milei has no doubts about his policy prescriptions and is trying to move forward with his agenda.
Retail spending has reduced in recent months.
Congress has knocked back Milei’s proposals twice. Milei has no love for the established political class. He sees many politicians as having fallen under the sway of failed socialist policies of the past. Milei has been critical of Christina Fernández de Kirchner, President of Argentina 2007-2015, for what he sees as her misguided policies.
Is Milei a leader with dictatorial ambitions or a political outsider with rhetorical flair standing up for the underdogs against a political class that is either misguided or is simply a benefactor of the status quo? Some of his critics assert the former, while many of his supporters subscribe to the later.
He has promised to get rid of the country’s Central Bank.
Argentina is undoubtedly in a period of austerity. For Milei, this period is part of the plan. He believes that there is no alternative to this difficult time in order to transition to a new and better model for the country. He is counting on short-term pain for long-term gain.
While some disagree with his views, there can be no doubt that he has studied economics and is aware of the different models available to him. Theoretically, this should be a advantage to him in dealing with the economic issues of the nation.
Milei’s government has overseen a 50% devaluation of the national currency and has ended some transport subsidies. Critics point to a recent rise in the poverty rate while supporters point to the first budget surplus in more than ten years. Milei has ended price controls. There has been public protests and a rise in the number of people visiting soup kitchens.
The President’s party holds a minority in Congress and so while Milei scored a victory in the election, he and his party will need to work with the Congress to secure the passage of his agenda. Will it lead to a watering down of his plans? Perhaps, out of necessity, this will be the case. Milei will argue that he secured a mandate at the election for his reforms. The politicians in Congress will be watching public sentiment very closely and will be emboldened to oppose Milei’s policies if they see austerity biting and public anger mounting. In this sense, time is not on the President’s side.
Milei is variously described as an ‘anarcho-capitalist’ or a libertarian.
Milei ‘crashed the party’ at the World Economic Forum in Davos, Switzerland with his address in which he attacked socialism. He argued that capitalism was “morally desirable”. Milei refers to himself as a libertarian and quotes the Argentine Professor Alberto Benegas Lynch Jr who defines libertarianism as “the unrestricted respect for the life project of others based on the principle of non-aggression, in defense of the right to life, liberty and prosperity”.
While rightly pointing out the failures of socialism, Milei’s speech perhaps went too far in its focus on economic growth. More controversial still were his assertions that “it’s impossible for there to be market failures” and that “regulating monopolies…automatically destroys economic growth”. While awake to the excesses of socialism, Milei may have a blind spot to the excesses that can occur in capitalism. In particular, he says nothing about the negative aspects of monopolies.
Time is of the essence. If people start to see the economy turning around, they will be more inclined to stick with the President. On the other hand, if austerity goes on for too long, they will start looking for alternatives.
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