Argentine President Javier Milei, a year after his election, arouses less contempt than twelve months ago, and more consideration, as evidenced by the recent coverage of The Economist where he is featured. Even in the French press, he is no longer systematically treated as a neoliberal fascist. That’s a good thing because he’s not.
In the long and fascinating interview he has just given to the American podcaster Lex Fridman, this economics professor details his intellectual itinerary, largely based on the economists of the “Austrian school”, including authors almost unknown in France like Carl Menger, Ludwig von Mises or Murray Rothbard. We may, like the author of these lines, have moved away from this school of thought after having excessively reverenced it, but it would be a major error to draw a line under it because of its radicality, especially in the Argentine context. , a magnificent country ruined by state interventionism.
Strong medication
Until World War I, Argentina was one of the most prosperous countries in the world. The standard of living there was higher than that of France and close to that of England. Its agriculture, particularly its livestock, was so flourishing that immigrants from all over the world tried to reach the country to make their fortune. It was this blessed era which saw the birth of the bourgeois city of Buenos Aires, today a vestige of past grandeur. Everything changed in 1946 when, after a series of military coups, Peron came to power. His mixture of dirigisme, corporatism and protectionism led to a decline that his too many populist successors have perpetuated. After the soft center of Mauricio Macri, it is not illogical that a majority of Argentines, tired of inflation and decay, turned to the strong medication – and outrageous style – of Professor Milei.
His policy is based on two simple, radical and fair ideas. The first is that inflation is a scourge which destroys not only the economy but also, as Stefan Zweig showed in his Memoirsthe relationships of trust between members of the same society. However, as Austrian economists have established, it is the printing of money used to finance budget deficits which gives rise to inflation. Restoring order to society therefore requires reducing these deficits, which implies, if we cannot hit the country fiscally, reducing public spending. Milei’s second idea: economic freedom is the best tool for creating prosperity. The Argentine president therefore wants to simplify laws, eliminate monopolies and deregulate to the point where Argentina will be as economically free as Singapore or Switzerland. The goal and the path are clear.
Fewer civil servants, but the best
For what results? In one year, public spending has fallen by 15%, the Argentine state is in budget surplus and inflation seems to have been crushed. Javier Milei remains popular because Argentines are grateful to him for fighting this inflationary evil. In fact, such shock therapy is not without side effects. Growth has collapsed, the unemployment rate has increased from 6.1% in 2023 to 8.2% in 2024 and above all, the poverty rate has reached 50% – the share of people who live on less than 50% of the income. median income – jumped from 42% a year ago to 53% by mid-2024. This is hardly surprising. Combating inflation can hardly be done without sacrificing a few months of activity. Javier Milei’s credible bet is that the sanitation thus achieved will put Argentina back on the rails of prosperity.
The most complicated thing for him will be to reduce the size of the State, not to weaken it but to make it more efficient and put it at the service of the general interest. Fewer civil servants, but the best. Clearly, this policy and its fruits should be followed closely. Because the moment Argentina is experiencing, after decades of populism, is fascinating. Perhaps also because France, without having gone through such inflationary horrors, will perhaps also experience its “Milei moment” in a few years.
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