A Libertarian President!!!

On November 20, the day after the general election in Argentina (and my birthday), I had to pinch myself to ensure I wasn’t dreaming. Javier Milei, the radical, Rothbardian, anarchocapitalist, academic libertarian economist had been elected President of Argentina — the second largest country in South America (and eighth in the world), third largest in population in South America (33rd globally), and a member of the G20 Group; in other words, a global contender. He won by a substantial 56% against his opponent, Sergio Massa, who received only 44%, and carried 21 of 24 provinces. Massa immediately conceded, signaling that the transition should be smooth and without a contesting recount.

It is still hard to believe.

Nacho, my friend from Mendoza, Argentina, immediately contacted me: “Yes, our crazy peacock Milei won! Here, we are overjoyed at having annihilated the thieving populists that for years have driven Argentina into decrepitude. Difficult times will come but they will be tempered with hope.”

“Today we embrace the ideas of libertarianism,” he told the exuberant crowds, who shouted and clapped unrestrainedly.

That was not the reaction of everyone. Initial US media reports after the election referred to Milei as a “far right populist,” a “shock jock” and “Trump admiring” demagogue. Bloomberg News characterized him “as an anarchist willing to blow things up.” So much for detail and context. The mood of the crowds who turned out in the capital on Sunday night to hear Milei’s victory speech was one of jubilation as supporters arrived in their thousands, waving Argentine flags, launching fireworks, honking horns, and singing to popular Latin American rock music. Milei’s smile and endearing transparency of unconstrained happiness revealed much about the man. Even his arm and hand gestures signaled that he is genuine and not a career politician. “Today we embrace the ideas of libertarianism,” he told the exuberant crowds, who shouted and clapped unrestrainedly, adding, “There is no room for gradualism, there is no room for lukewarmness or half-measures. There is no way back.”

Referring to the biased government news media, he added, “We consider that Public TV has become a propaganda mechanism. I do not adhere to those practices of having a propaganda ministry. Public TV has to be privatized.” Ditto for the highly subsidized Argentine film industry, the INCAA, which has remained a target. Milei insisted that he will close INCAA and stop all support for film, a plan for which he — surprisingly — gleaned social media praise.

Although Milei’s Freedom Advances Party will have only seven seats out of 72 in the Senate and 38 out of 257 in the lower Chamber of Deputies, his new alliance with Juntos por el Cambio, the parties of ex-President Macri and defeated center-right candidate Bullrich, ensures that the defeated Peronists will remain only a minority — albeit the largest bloc — in both chambers. So, contrary to pundits pooh-poohing Milei’s ability to get anything done (while denouncing him for trying), parliamentary majorities are within his reach.

In contrast, Milei holds a chainsaw high in the air, with a look bordering on the berserk. He means business.

Even before he officially took office on December 10, according to Moneywise, “his win sparked a major rally in the U.S.-listed shares of Argentine companies and an exchange-traded fund (ETF) focused on the country’s economy.” The Argentine peso, on the other hand, plunged. On Monday, the day after the election, it fell 7% and then another 10% by Tuesday afternoon. On the same day, Milei picked Horacio Marín, a can-do oil exploration executive, to head YPF, the Argentine oil company, once nationalized by the Kirchners — the husband-and-wife team who separately ruled (and ruined) Argentina as president or vice-president from 2003 to 2015, and 2019 to 2023 — from Repsol, the Spanish oil giant. The Argentine government holds 51% of YPF shares. YPF shares traded in New York shot up nearly 40% by Monday, November 20, while the company’s shares listed in Buenos Aires gained nearly 55% the next day. And they weren’t the only ones. By Friday the local S&P index had risen 23%, its best ever on record.

Milei’s primary concern is inflation, which is running at about 155% annually. I’m reminded of Gerald Ford’s “whip inflation now” campaign, with lapel buttons for followers and a bat for the president so he could “go to bat against inflation.” He swung the thing as if it were a golf club. Even Joe Biden ridiculed that campaign. In contrast, Milei holds a chainsaw high in the air, with a look bordering on the berserk. He means business. His plan to ditch the peso in favor of the US dollar has met with much skepticism by many economists — and The Economist — citing the immediate inflationary consequences that might trigger social unrest, the danger of national bankruptcy, and the difficulties of the dollarization mechanics.

But the Cato Institute’s policy brief cites the fact that “Argentines held over $246 billion dollars in foreign bank accounts, safe deposit boxes, and mostly undeclared cash, according to Argentina’s National Institute of Statistics and Census. This amounts to over 50 percent of Argentina’s GDP in 2021 dollars ($487 billion).” The Federal Reserve of Chicago puts that figure at 60%: the “Argentine economy is already partly dollarized [with] private non-financial sector deposits [being held in] dollars.” Because of the wide use and circulation of dollars, the Fed assumes that the change “would not dramatically” alter the “habits and practices” of the public. “Hence, the dollar scarcity pertains only to the Argentine state,” it stated (a fact Milei is well aware of), adding that dollarization would take 12–24 months.

Further dampening the naysayer’s predictions and giving Argentine stocks another fillip, Reuters reported on November 27 that Kristalina Georgieva, chief of the International Monetary Fund, said that the Fund is “very keen” to support Argentina and that the country could be a candidate to receive financing through its Resilience and Sustainability Trust.

An admirer of Margaret Thatcher, who reconquered the Falklands from Argentina, Milei nonetheless restates Argentina’s claim to the islands, stating that it is “nonnegotiable,” but rejects the use of force.

It didn’t take long for Argentina’s central bank to retaliate. Reuters reported that “Argentina on Thursday (November 30) raised taxes on U.S. dollar purchases destined for savings or made with bank cards to protect the central bank’s limited reserves, weeks [sic] before President-elect Javier Milei assumes office on Dec. 10. The measure was announced in Argentina’s Official Gazette and stated that the advance payment of income tax increased to 100% from 45%.”

Furthermore, Argentina’s central bank is expected to adjust its benchmark interest rate — currently at 133% — to protect local currency deposits. “Analysts said that a potential rate hike aimed to stem recent signs of outflows of peso deposits from local banks into dollars as savers looked for a safe haven against potential reforms Milei makes once in office,” Reuters said.

In the foreign policy arena, Milei visited the US and Israel before his inauguration on December 10. Congratulations poured in from ex-President Trump (President Biden has yet to react and declined to meet with Milei during Milei’s two-day trip to the US), British Prime Minister Sunak, Russia’s Putin and Ukraine’s Zelenskyy, and EU chief Charles Michel. Greetings also came from India and China, the latter warning Milei that severing ties with the PRC would not be a good idea (Milei had called the Chinese regime murderers). The left-wing presidents of Colombia and Brazil damned him with faint praise.

As to Argentina’s claim over the Falklands-Malvinas Islands, Milei walks a thin but statesmanlike line. An admirer of Margaret Thatcher, who reconquered the British possession from Argentina, he nonetheless restates Argentina’s claim to the islands, stating that it is “nonnegotiable,” but rejects the use of force. He squares the circle by adding that resolution to the dispute must be pursued through diplomacy, and that the islanders’ wishes must be respected. A 2013 referendum on the Falklands resulted in 99.8% of islanders voting to remain British. Shedding some context on his seemingly contradictory remarks, he philosophizes that the islanders might only come around to becoming Argentines if Argentina finally becomes a “normal” country.

Argentina was among the six countries invited to become new members of BRICS at the summit held in South Africa in August of this year. It is an intergovernmental organization of five states: Brazil, Russia, India, China, and South Africa. Countries invited to join on January 1, 2024, include Argentina, Egypt, Iran, the UAE, Saudi Arabia, and Ethiopia, potentially increasing the membership to eleven. But, according to the Minister of Foreign Affairs of Argentina, Diana Mondino: “We will not enter BRICS.”

At his inauguration Milei peremptorily, albeit legally, halved his cabinet from 18 to 9, thereby reducing the number of ministries, according to the Kenya Times. However, the move must be confirmed by Congress. Still, on December 26, the AP reported that Milei laid off 5,000 government workers that had been hired in 2023 — probably as pork barrel favoritism.

Effective radical change requires a degree of gradualism. It is a sign of Milei’s determination and statesmanship, not a sign of backtracking, that he realizes this.

Two days later, Luis Caputo, the new economy minister, unveiled a series of radical economic reforms including the devaluation of the peso by 50%, a slashing of electricity and transport subsidies, and a temporary increase in import and export tariffs to reduce fiscal deficits. These last measures may seem counterintuitive to a libertarian, but on December 26 Argentina’s government lifted import restrictions, advancing Milei’s free trade agenda. According to Bloomberg, “The tax authority replaced a red-tape import system Tuesday that forced many companies to seek manual approval for every shipment with a more data-based version.” These necessary measures are not popular with the portion of the population that doesn’t understand them and is most affected. Demonstrations broke out on December 20.

In response, the AP reports that, “Milei’s security minister, Patricia Bullrich, presented a new ‘protocol’ to maintain public order that allows federal forces to clear people blocking streets without a judicial order and authorizes the police to identify — through video or digital means — people protesting and obstructing public thoroughfares. It can bill them for the cost of mobilizing security forces.” But that’s not all. The government then announced that people who block streets could be removed from the public assistance benefit lists if they are on one.

Draconian? Yes, on the face of it. Yet, she continued, “Protesting is a right, but so is the right of people to move freely through Argentine territory to go to their workplace.” Additionally, the measures are a way of countering a system whereby many receive government social support indirectly through social organizations — such as labor unions — with direct links to federal offices. “Milei’s administration says that many of these groups use this as a way to force people to go out to protest in exchange for support,” concludes the AP.

At Christmas, the protests were still going on. Meanwhile, some of the media seemed to have tempered their unfavorable reporting and adopted a wait-and-see attitude toward Milei’s reforms and his public support. In contrast to the media’s repeated use of the term “radical” to describe his positions, they have recently resorted to reporting that he has tempered his statements and policy proposals. Effective radical change requires a degree of gradualism. It is a sign of Milei’s determination and statesmanship, not a sign of backtracking, that he realizes this. Best of all, libertarian ideas are getting a wide, international airing, with greater acceptance pending on their success in Argentina, now the laboratory for libertarian idealism.

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Editor’s note: Robert H. Miller’s series, “Danubia,” about his bicycle ride down the entire Danube River from the Black Forest to the Black Sea, has been completed by his publication of his excellent book Mae West Was Right: Mountain Biking the Hidden Contours of the World, where the Hungary, Croatia, Serbia, and Romania installments of Danubia can be found. The book is available through Amazon or from Miller himself — autographed!, while supplies last — at roberthowardmiller@gmail.com.