Argentina Is Responding to Shock Therapy
He comes across like a madman, but Javier Milei is fast becoming the man of the moment.
Sometimes, a man meets the moment.
It may not be the man you want; it may not be the moment you’d hoped for. The man might be a bit of a lunatic, and the moment may be an out-and-out shit-show. Still, sometimes, man and moment come together, and then history happens.
When Javier Milei was sworn-in as Argentinian president a year ago, the smart money was on a spectacular train wreck. Impulsive, thin-skinned, hyper-ideological and irresistibly drawn to every culture war controversy, no matter how dumb, Milei doesn’t immediately strike you as the kind of leader that gets results. Taking over one of the world’s most notorious economic basketcases at a time of absolute fiscal disarray, Milei’s coming doom seemed all too predictable.
A year on, the naysayers have been, if not quite silenced, then given ample time to reconsider. Argentina’s economy hasn’t imploded—that was the job of the previous administration. It did go through the deep recession the president himself had almost cherished forecasting, but it’s coming out the other side with much lower inflation, and much improved prospects for growth. Yes, poverty spiked during the adjustment, as everyone knew it would. What’s remarkable is that, even so, Milei retains popularity ratings above 50%—an amazing feat in a region where incumbency and single-digit approval ratings increasingly go hand-in-hand.
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To understand how Milei has done it, it helps to grasp something about the dumpster fire the Argentinian economy had become by 2023. The budget deficit was huge, but in Argentina that goes almost without saying. The problem wasn’t so much the deficit as the enormously self-harming way the government went about dealing with it: pressing the Central Bank to issue more and more pesos to cover the shortfall, then trying to deal with the fallout through an ever more elaborate maze of rules and regulations and permits and licenses that turned running a business into an exercise in never-ending form-filling.
If ever a country had been ripe for a bit of libertarian disruption, Argentina in 2023 was that country.
Now, it seems to me few Americans are really doctrinaire libertarians, but virtually all Americans have some level of libertarian instinct, some sense that bureaucracies can and often do go too far, become too prescriptive, meddle too much. This anti-statist instinct is not really part of Latin America’s political culture, and hadn’t really been much in evidence in Argentina at all, until this past year. Probably due to that lacuna, rules and regulations sometimes proliferate unchecked—when a bureaucrat proposed a new procedure, one more rule, just one more form to fill, there was seldom an instinct to push back.
Now there is.
Alongside a tax and cost-cutting spree, Javier Milei has gone on a kind of crusade against the thicket of regulatory nonsense that had colonized every bit of the Argentinian state. His economy minister launched a new mechanism to invite Argentinians to suggest useless rules to be done away with: in the first eight hours it was in operation, it received over 1,300 suggestions. The government deregulated everything from imports to labeling to apartment rentals. Its Deregulation Minister thundered at the mass of absurd regulations that meant importing, say, $30,000 dollars worth of toys required you to spend $10,000 on paperwork.
Argentinians may not have all turned into doctrinaire libertarians overnight, but they seem to have been catching on to the utility of the libertarian instinct. Faced with the mad mass of overbearing state interference in economic life, they seem to have accepted that you need a bit of a lunatic to cut through it: someone with the bombast and the pugnaciousness to fight the beast. In normal times, you’d surely prefer your president not to run around waving a chainsaw in the air like a madman, but Argentina left normal times so long ago the objection barely seems to even register.
Not, of course, that you can ever rest quite easy with a crazy person in charge of the government. Though he’s shown some signs of moderation in, for instance, restraining himself from calling Xi Jinping a murderous thug to his face, the way he used to, Javier Milei remains the edgelord he’s been all along: inveterately vituperative, revelling in insult, permanently itching for a fight. Treating bilateral relations with Spain the way a 14-year-old treats his first online fight, he called Prime Minister Pedro Sánchez “the torture poor Spaniards have to put up with.” His frustration-control, never strong, remains as flimsy as ever. As long as he stays in power, Argentina will always be one tweet-thread away from the next crisis.
But for the moment, Milei has had more successes than failures. He’s stabilized the currency, ended the deficit, tamed inflation, and made more progress in terms of structural reform than would’ve seemed imaginable a year ago. He’s managed to get enough support from a congress he doesn’t control to pass some important reforms, though he’s had to push much of his agenda through executive action. He’s pushing for a major new nuclear power plant building program to prepare Argentina for the AI future. Milei is a man with big plans, and it’s no longer obvious they will fail.
Whether Milei’s libertarian shock therapy will translate into real long-term economic growth and prosperity remains to be seen. Stabilizing a chronically unstable economy isn’t easy, but turning it into an engine of prosperity over the long run is much harder still. Whether Javier Milei will succeed at the harder task is very far from certain.
And yet Milei’s critics are surely on the back foot right now. More importantly, Argentinians have seen the worst of him and are still willing to give him a chance. The country seems to be grasping that, for all his many flaws, Javier Milei is meeting the moment, and this is how history happens.
Quico Toro is a contributing editor at Persuasion and writes the Substack One Percent Brighter.
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"This anti-statist instinct is not really part of Latin America’s political culture, and hadn’t really been much in evidence in Argentina at all, until this past year."
Big government is like an addictive drug: people think it will alleviate their misery, even though it actually exacerbates it. In a vicious circle, they go from more misery to opting for ever more expansive government. Marx had it wrong: it is government, not religion, that is the opiate of the masses.
Eventually, some countries hit a crisis point (typically hyperinflation or mass starvation) where they realize the terrible vicious cycle they're in and how govt. is the actual source of their problems. Countries that have undergone this tend to be some of the most free-market societies around, e.g., Eastern European countries, Argentina, Vietnam, and Chile...
Here is the sad truth about leaders that take these needed bold moves to fix structural problems. Often they never get the thanks for it until they are long gone. And sometimes they are long gone with a shortened life because of their needed actions.
Change required to fix decades of continually layered problems HAS to be first destructive, until it can rebuild. Unraveling what is can seem more painful than what it. But the lack of sustainability for what is promises more pain in the future... the kicking of a can down the road so future generations have an even more difficult task to repair what is broken.
Trump has this challenge in the US like Milei has had in Argentina. I is good to remember that Argentina had the 8th largest economy before socialist Juan Peron took over. Many decades later, the pain from that mistake is still being felt by Argentinians. US citizens better wake up as a similar trajectory toward socialist hell is underway.