In an article published in the Financial Times, President Javier Milei laid out his vision as to how Argentina will become a paradise for the development of Artificial Intelligence in the near future. He draws a parallel between the flourishing of the Dutch Empire in the 17th century on the back of a legal innovation – the limited liability company that allowed risk-takers to put a cap on their exposure – that, together with the industrial revolution, turbo-charged capitalism. Milei suggested that Artificial Intelligence will free humanity from the bounds of the inherently limited human brain, much like machines did with our bodies. Milei’s intention, together with his co-writer Deregulation & State Transformation Minister Federico Sturzenegger, is to set the conditions for AI to flourish in the country, following in the footsteps of Ireland, which created a regulatory framework to attract investment and companies to its shores.
To do that, the Argentines propose keeping AI unregulated, the creation of non-human corporations run by AI agents or robots and a series of fiscal benefits including lower taxes and the capacity to pick legal jurisdictions. This “open invitation,” as the President put it, to create an AI and tech billionaire haven goes hand-in-hand with other statements made by Milei, Sturzenegger and the now low-profile presidential advisor Demian Reidel. And with legislation that the administration has passed or has the intention to push through Congress. It’s also aligned with the President’s vision, in the line of Ayn Rand and his beloved Austrian School of Economics vision that wealth creation will trickle down if the entrepreneurial animal spirits are freed from the chains of the oppressive state.
While it is imperative to attract foreign direct investment to the country if a so-called “economic miracle” is to occur, there are several risks to the AI utopia Milei is trying to sell, which incorrectly managed could lead to bad outcomes. Today, there’s a global debate about the perils of building data centres, the growing wealth inequality probably exacerbated by the AI boom, and the risks of giving robots tools to build autonomous or biological weapons.
An educated rebuttal of Milei’s arguments in the FT article comes from Maximiliano Firtman, a specialist in technology who is a programmer and important communicator. He notes that non-human corporations already exist in the form of legal entities and that these types of companies aren’t necessary for AI to flourish as they are not inherently made for the technology itself, but for whatever purpose their creators envision. Firtman also indicates that Milei and Sturzenegger appear to show limited knowledge about the technology and actual workings of AI agents, and decentralised autonomous organisations (DAOs), in that they have no free will, meaning in the end they will only help to mask human action. He adds that language regarding the disclosure of final beneficiaries isn’t clear in the proposed bill, while lower taxes aren’t present at all.
Yet, outside of the specific counterarguments, the spirit of Milei, Sturzenegger and Reidel in seeking to build AI Disneyland in Argentina is understandable but also a tad bit naïve. The world’s most important technology companies are essentially all from the United States, which together with China control the AI race on every front: human capital, technological expertise, development and infrastructure, as well as the geopolitical capacity to pursue needed natural resources. Argentina wants its cut, and one way to do so is to lure the billionaires behind the Silicon Valley giants to the country. Milei courted Elon Musk in the early days of his Presidency, blessed a supposed deal worth US$25 billion with Sam Altman’s OpenAI to build a super data centre in Patagonia and recently had meetings with Peter Thiel, who has moved his family to Argentina and bought a mansion in Buenos Aires. The country is extremely attractive to the new wave of tech oligarchs looking to hedge themselves against geopolitical turmoil, whether it be in the form of domestic US politics and global wars. Real estate is cheap. Buenos Aires is safe. The beef and wine is fantastic. And Patagonia offers a perfect refuge from a hypothetical nuclear war.
The Milei administration has pursued a series of bills, laws and projects to make the country even more attractive for the tech and AI elite, asymmetrically to a certain extent. The “Super RIGI” is a bumped-up special regulatory framework to incentivise investments worth north of US$1-billion, guaranteeing favourable tax and other conditions for 30 years. While most of the projects that secured “Original RIGI” status were aimed at energy, particularly oil and gas and mining, the new version seems particularly well suited for technology investments including AI data centres, electric automakers and nuclear energy, to name a few. It goes in hand with the vision Reidel mapped out during his time in charge of Argentina’s state-owned nuclear energy company Nucleoelectrica SA, from which he was forced to resign under corruption accusations. Reidel indicated that Argentina’s peaceful nuclear energy programme, together with the development of smaller reactors, could be used to help leverage the favourable climatic conditions of Patagonia, making the region perfect for building data centres for AI or blockchain projects. A major problem here is that all of these ideas seem to be aimed at foreigners, while leaving Argentines out of the beneficial frameworks.
There’s also a push to loosen regulations regarding the private ownership of land by foreigners. Milei’s government is seeking to lower the 15-percent cap on foreign ownership of productive land through the private property law, while there’s an idea to ease limits on the acquisition of strategic land that includes aquifers, rare earths, and lithium, particularly in areas close to the Andes mountains. The recent Glacier Law reform contributed to some of these changes.
These ideas are all aligned with a pseudo-paper published by Milei and Reidel earlier this year where they defended monopolies’ role in innovation. The main argument – with which the President believed he was set to win the Nobel Prize in Economics – was that regulating monopolies stifles innovation and so should be avoided. While Milei probably drinks his own Kool Aid, his ideas aren’t so novel, as Thiel had already mused on the issue in his 2014 book Zero to One. The idea is closely tied to Austrian economist Joseph Schumpeter’s concept of “creative destruction,” coined in 1942, by which economic innovation destroys outdated technologies and businesses, setting the stage for new ones to appear. It goes totally in line with the philosophical and economic framework that Milei envisions and is trying to implement to make Argentina attractive for these kinds of major tech firms, entrepreneurs, and investors. Yet the nation has suffered the yoke of monopolies for way too long – as the President himself has pointed out on several occasions. Products in Argentina are multiple times more expensive than abroad given an excessively closed economy, protection of domestic industries, import taxes and a history of inflation and devaluation. Many of Argentina’s domestic monopolies and oligopolies grew by the hand of the state, in many cases through vicious cycles of corruption.
Back to billionaire amusement parks: the government already put in place the “Golden Visa” or citizenship through investment. While government agencies must determine whether an investment is substantial and qualifies, a minimum threshold of US$500,000 puts the bar extremely low for these kinds of people, most of whom are multi-millionaires and billionaires. The application also doesn’t take into account how long a person was a resident previously.
Taken together, these ideas and the frameworks put in place to make them a reality are interesting and promise to have mixed results. Yet for Milei and Sturzenegger the potential risks are unfathomable. There’s a major debate in the United States and across the world as to the desirability of hosting data centres on one’s territory. According to a report put out by the United Nations University, they could consume as much water as 1.3 billion people and as much electricity as 650 million by 2030. They also occupy large spaces and have a major carbon footprint. These technologies also demand a growing share of precious natural resources such as rare earths and lithium.
It’s not just about the data centres, but loosening restrictions on land ownership by foreigners risks handing over massive troves of valuable land at fire-sale prices. Whether they were environmentally protected or too expensive for acquisition or production by Argentine capital, foreign mega-billionaires easily have the economic capacity to purchase large portions of the country, much of which is sparsely populated. Argentina is a country with major habitat issues and over-concentration in large urban centres that needs to be tackled. Furthermore, the potential to develop those precious natural resources should have built in guarantees so that their employment benefits the country and its population.
Seeking to become a billionaire’s playground is attractive if it brings with it productive foreign investment that feeds economic development. It has the risk of deepening inequality, particularly by creating a set of favourable rules for a few, while keeping in place more stringent conditions for the rest. This was one of the major criticisms by the industrial sector of the original RIGI scheme.
In the United States, Mile’s ally Donald Trump recently signed an executive order asking major AI firms to submit their newest models for cybersecurity testing. At the same time, the normally antagonistic CEOs of OpenAI and Anthropic, Sam Altman and Dario Amodei respectively, recently signed a letter together with their colleagues from Google and Microsoft seeking to limit models’ capacities to be used in the development of biological weapons. Amodei had also raised the issue of mass surveillance and autonomous weapons, clashing with the Pentagon about the use of Anthorpic’s models for those types of objectives. While many of these things appear inevitable, Argentina should make sure it avoids becoming a testing ground for a new age of mass surveillance and autonomous weapons.
Ultimately, Milei’s self-proclaimed anarcho-capitalist libertarianism seems totally aligned with the idea of generating a robot oasis and a billionaire’s playground in Argentina. Looking to make the country an attractive destination for global investment and the elite sounds enticing, but safeguards should be put in place to avoid easily sliding into some sort of dystopian nightmare. While the Dutch Empire may have unleashed the forces of capitalism, it also resulted in colonialism that relied on extreme exploitation and slavery. Let’s hope we can keep the robots in check.
Comments