Milei is still very much in charge

For over a year now, Javier Milei has dominated Argentina’s political stage. He was initially allowed to so because other politicians feared that it would be suicide for them to assume responsibility for what was happening in a country that seemed to be careening towards an overwhelming disaster. By the time they realised that, thanks largely to Milei, the sky was not about to come crashing down, most understood it would be premature for them to try and stage a comeback.

Unlike Mauricio Macri, who assumed that, without the backing of a parliamentary majority, he would have to do things very gradually and spend much time negotiating with individuals who wanted his administration to fail, from day one Milei has applied a ruthless austerity programme that even the allegedly hard-hearted IMF technocrats thought was a bit much. To the astonishment of many, this paid off. If the opinion polls are right, half the population remains happy with Milei’s no-holds-barred, take-no-prisoners approach to the country’s many problems and wants him to continue on the course he has set.

Some approve of what he is up to because they like seeing the president behave in a monarchical fashion, others because they assume that, being an economist, he knows exactly what must be done to repair the damage that was caused by many generations of “fiscally degenerate” politicians and will not be tempted to repeat their mistakes. As for all that stuff about the “forces of heaven” and the philosophising dogs that Milei says are on his side, few take it that seriously. Most appear to be more than willing to let him play the role of a nutty professor because he clearly enjoys it and, in any case, it gives them something to talk about.

Milei’s core beliefs are straightforward. Like the late Milton Friedman, he takes it for granted that churning out too much money leads to inflation. He is determined to clamp a tight lid on public spending. He is also well aware that, over the years, politicians, their friends in the Judiciary and their many cronies, have put together a multitude of schemes that are designed to let them enrich themselves at the expense of the rest of the country.

Many such schemes are still perfectly legal, but will not be for much longer if Federico Sturzenegger has his way. The Deregulation & State Transformation minister is busily seeking to dismantle them all and, while about it, to get rid of a huge amount of red tape that allows bureaucrats to make life difficult for those unfortunate enough to come into contact with them. In Milei’s team, Sturzenegger, not Economy Minister Luis Caputo, is the man who really wields the chainsaw which is hacking away at the deadwood piled up by a long series of short-sighted governments of one kind or another.

Milei wants Argentina to become a sort of free-enterprise zone in which taxes are light (he says he wants to do away with “90 percent” of federal ones), people can buy and sell things using any currency they please, from cowrie shells to gold sovereigns, and tariff barriers are in large measure a thing of the past. Could the scheme he has in mind work? Only if businesses large, small and miniscule, manage to become as competitive as are their counterparts in the rest of the world. While some, especially those that are already doing well, can be expected to succeed, there are a great many that look more than likely to go under if hit by a big influx of inexpensive but high-quality products from abroad.

If the overall result is positive, opening up the Argentine market will turn out to be a wise decision, but should large numbers of outfits get clobbered and unemployment shoot through the roof, faith in Milei’s plans for the future would quickly fade away. In the medium term, this is the principal danger facing the government. Though free trade has always proved beneficial in the long run, in order to reach the promised land Milei says he is heading for, Argentina’s rickety economy will have to traverse a desert in which many dangers lurk. This is something other democratic countries such as South Korea and Israel have succeeded in doing, but even though Argentina has many big advantages that were denied to them, there is no guarantee that she will be able to do the same.

In what is merely the preliminary stage of Milei’s revolution, the government is trying to make the most of these advantages: an internationally competitive farm sector, enormous deposits of oil, much of it encased in shale, and natural gas, lithium and much else that is waiting to be mined. Up to now, having such a considerable degree of geological luck has had a negative effect on economic and social policy by persuading politicians and much of the population that there is no need to undertake the hard work that allowed resource-poor countries to become wealthy. Such an attitude may be painfully outdated, what with tech firms such as Apple, Alphabet (Google) and so on that depend on brainpower becoming far richer than the big manufacturing corporations or oil companies that for decades topped all the business league tables, but it still has a soporific effect on a large number of people.

Unlike politicians who are always on the lookout for excuses to buy popularity for themselves with money provided by others, serious economists know the numbers have to add up. This is the big difference between Milei, an economist by trade, and members of the political class (otherwise known as “the caste”) he regards as enemies of all upstanding people. After many decades in which chronically profligate politicians and military men (who shared their vices but not their virtues) have managed the country, running it into the dirt, it made sense for the electorate to choose to put an economist in charge.

Despite Milei’s wild appearance, his many eccentricities and his often loutish way of expressing himself, there can be little doubt that, after so much feckless lunacy in high places, he has applied a much-needed corrective that is already having promising results. Can he continue up the steep path he has chosen? The success or failure of the far-reaching programme Milei devised will depend on whether or not most members of the political fraternity have learned enough from their many errors to understand that, without financial stability, their compatriots’ wellbeing – though not necessarily their own – cannot be assured. Milei’s field of interest may be as narrow as many of his critics say, but he certainly has much to teach those who earn their keep by engaging in political activities.

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