Argentina: Endless Talent in Search for Institutions

Javier Milei & how libertarians are providing real answers for Argentina’s problems

“For libertarians, Milei’s presidential victory in Argentina can only be compared in prominence to the fall of the Berlin Wall.”
~ Jesús Huerta de Soto

“[F]ear and tremble, that Freedom Moves Forward,” said Argentine Austrian Economist Javier Milei some time ago. He has also said that ending the Argentine central bank is first and foremost a moral issue. “ The decision to end the central bank is a decision of moral nature. Having a central bank is wrong.”

Today, Javier Milei is the first Anarcho-Capitalist president in history.

This monumental event came to be because a libertarian decided to do politics by politics’ rules.

The Strategy: Right-wing Rhetoric For Libertarian Goals

Milei decided—explicitly or implicitly is not known yet—to use right-wing rhetoric, position and gain tons of right-wing votes, and then promote libertarian solutions to Argentine problems.

Milei, who has a very eccentric personality (he was a soccer goalie, a rock singer, a TV personality, and other endless wild stuff), discovered how to play by the unstated rules of the political system he faced. Agustin Etchebarne, general director of the think tank “Libertad y Progreso,” described the political genius of Milei. Some years ago, libertarians were invited to TV talk shows to debate. For about 3 hours, speakers would loudly give their opinions, and libertarians were provided about 10 minutes throughout those 3 hours.

Milei saw this, so once he was invited to the TV talk shows he decided to yell out more, hence, he became known for being loud and strident. Once he yelled out loud on TV he started to be more well-known and—fantastically so—his personality created such a great impact on TV audiences that the ratings of those shows tripled. So, Milei had to be invited back again and again; despite all kinds of complaints from Peronists (anti-libertarians in Argentina).

Milei strategically used right-wing rhetoric for libertarian purposes. For instance, he was openly pro-life, and he shamelessly attacked his left-wing opponents. Using profanity and a bombastic style very popular on social media, Milei attacked the very existence of the state, being explicit on how he rejects left-wing and statist ideas. So, right-wingers tended to support his campaign.

Furthermore, Milei would vocally criticize the Chinese Communist Party. He would say things like “I will never sign treaties with communists.” This gained him even more sympathizers from right-wing movements despite not providing details at that moment. But, when further questions came along about his views, he would be more explicit and detailed about what he meant. He would not sign a trade treaty with the Chinese Communist Party, but his administration would not intervene when Argentines traded (or not) with Chinese people. In effect, he leveraged rhetorical flair similar to Donald Trump, but with the libertarian goal of free trade instead of protectionism.

By appealing to populist, anti-elite sentiment, he created a platform to promote libertarian policies such as privatization of state services and the end of their Central Bank (i.e., ending the coercive monopoly control of the Argentine state over money and banking). Much like Ron Paul, he didn’t mince words about economic policy but struck at the heart of it; to quote Milei: “The decision to end the central bank is a decision of moral nature. Having a central bank is wrong.”

Things like “owning the libs” in public is the right-wing priority, not their ideological nor technical content. Milei saw that, so he attacked lefties, gained right-wing votes, and now he can implement libertarian policies. The practical lesson here is:

Provide the ideological and technical content in a popular rhetorical way, and let libertarianism win.

Austrian Economics in Argentina: From Böhm-Bawerk to Milei

Do not let Milei’s outlandish behavior, flamboyant antics, and strambotic optics make you think he is an intellectual clown. His intellect is sharp and he is a very strong economist. For example, in a very casual interaction, libertarian economist Dr. Phil Magness expressed his fascination for Milei’s knowledge of history of the economic thought: “Fascinating to see that a newly elected head of state is both versed in the errors of the labor theory of value, and knows that Marx essentially copied it from Rodbertus.” Yes, Milei is so well-read in economics that he can easily, in one tweet, teach the errors of the Labor Theory of Value while he provides the correct historical context for that failed theory. To this, Dr. Lawrence White adds “I suspect he has read Bohm-Bawerk, who criticizes Rodbertus” and Magness closed with “[e]xactly my thinking as well. This is clearly someone who knows Böhm-Bawerk.”

This small casual interaction among academic economists shows Milie’s intellectual capacity. For further evidence of Milei’s academic firepower, see his chapter “Capitalism, Socialism, and the Neoclassical Trap,” pages 209-221, in “The Emergence of a Tradition: Essays in Honor of Jesús Huerta de Soto, Volume II.”

Agustin Etchebarne describe Milei’s academic credentials and work ethic as “a brilliant economist. He loves economics, he was a professor for over 20 years in monetary theory, credit, and banking. A fan of both the Chicago School and the Austrian School of economics. Also, a workaholic with great courage, fearless, and intrepid.”

No immediate libertarian puppies and rainbows: What libertarian institutions can and cannot be quickly achieved

The first priority of the Milei administration is to reduce the size of the bureaucratic-state. Things are so bad in Argentina with their bureaucratic-state, that even lowering taxes cannot (yes, cannot) be the immediate goal. The first cut is to reduce the amount of federal government departments from 20 to 8. That in itself will be a push down on inflation. Current bureaucratic-state workers will have to produce in the market what is on demand, and in doing so decrease the rate of price inflation. Observers suspect this will likely be ironed out in the first 6 to 12 months of the new administration.

Milei–as of now–cannot even reduce taxes yet, which in the US would usually be a top priority for libertarians. But he first has to reduce the size of the bureaucracy, later he might be able to reduce taxes. Renowned Spanish economist Juan Ramon Rallo described one of Milei’s reforms as a “fiscal reform to simplify the tax system. Javier Milei has committed his administration to ensure that in Argentina there will be no more than 10 taxes, as these 10 taxes already account for practically the entirety of the Argentine government’s budget.” The rest, 160 more taxes, are mostly just tortuous bureaucratic practices against Argentine entrepreneurship.

If you ever thought the US federal government was a bureaucratic mess, some more quick examples out of millions will make you see the gigantic problems Argentines are tortured with, daily, by the state-apparatus. First, as discussed above, there are tons of useless departments at the federal level. Second, also noted above, there are 170 different taxes in Argentina that a small business has to pay. No, it is not an exaggeration. The new administration’s goal is to bring down the total quantity of taxes to 10. Even if the total dollar amount of taxes ends up being the same, the efficiency (and peace of mind) gains is already a productivity boost for society; and less tortuous for the mind.

Third and last for now, just picture what it would be like to have 27 different exchange rates between the currency you earn and the currency you want to use for savings and for large transactions. Imagine 27 different exchange rates to change dollars for Bitcoin, all controlled by the US government. In Argentina, citizens like to exchange Argentine pesos for US dollars. Remember, all these exchange rates are controlled directly by the national government.

Now imagine the amount of bureaucracy needed just for this nationwide program.

Now multiply that by 30 or more.

Imagine California’s bureaucratic-state multiplied many times over. Welcome to Argentina.

What can be anticipated as the worldwide powers’ reaction?

For sure, the US government will have to provide some subtle support. For starters, Milei supports Ukraine and Israel on foreign policy issues. Second, and more pointedly, he will also be supported by the US because Argentines are already using the US Dollar as de facto money, underground as of now. The Milei Administration will just make official what regular people are already doing, accepting the US dollar as a payment and savings asset, AKA, money. This is a win-win situation for the US government and the Argentine people.

The US dollar, by the sovereign and spontaneous decision of the Argentine people, is the Argentine money; while the Peronist currency labeled as “Argentine Peso” has no voluntary demand.

Conclusion

There are many more things we can say about Milei, Argentina, and libertarianism. Every day there is something new and very interesting for those who like the topics of money, banking, politics, and freedom. I hope you find this short introduction to the libertarian challenges in Argentina that are faced by the first Anarcho-Capitalist president in history, as a useful reference. Milei achieved the largest electoral victory by a libertarian in history.

To sum up, Milei used right-wing rhetoric to achieve libertarian goals. He is a fantastic Austrian economist. There are numerous challenges ahead for Milei to achieve as much privatization as possible. He seems to have a local challenge to liberalize the monetary system, but the fact that Argentines already use the US dollar as underground money is a big plus for his presidency. The US dollar is the “agorist” money in Argentina. Milei has become the president of a living paradox that became a country of 46 million people.