If your economy is broken, you can try to fix it, or you can just throw it in the trash and try to build something new from scratch. The latter is the plan the new Argentine president Javier Milei. He is a self-proclaimed anarcho-capitalist and came into office like a wrecking ball. He slashed the official value of the currency in half, introduced a decree scrapping 366 separate rules and laid off 5,000 government employees.
This shock therapy has risks, and the inflation has actually increased to around 200% and a plunge in household income is expected as well as a 2024 recession. Milei’s opposition have already announced strikes and will battle him in court and elsewhere. The economy in Argentina is clearly in such bad shape that things need to be shaken up. Even the IMF agrees on that and at this point, Milei is getting support and goodwill from the international community. The IMF has restarted its program in Argentina, which means $4.7 billion in international funds have been unlocked and default is not imminent.
Javier Milei recently attended the World Economic Forum in Davos, Switzerland, and his remarks have gotten much attention. Milei’s brand of politics has been described as far-right libertarianism, but his speech in Davos showed that he is just an old-fashioned free-market capitalist. Somehow, Milei speech was something like a call-back to the organization’s supposed roots with free and open markets. Milei warned that the western world is in danger, and he declared that the west is in danger because those who are supposed to have to defend the values of the west are co-opted by a vision of the world that inexorably leads to socialism, and thereby to poverty.
The world should instead embrace free-enterprise capitalism to bring an end to world poverty. Western leaders did indeed formerly believe in free-market capitalism. That system has lifted more people out of poverty than any other system in history.
Milei mentioned that the history of economic growth flatlined for most of human history until the 19th century. From that moment that free-market economics took off, human progress took off alongside it. Global per-capita GDP kept doubling at a faster and faster rate until this century, when global per-capital GDP doubled in just 23 years. Today though, world leaders increasingly talk of the free market as a problem and collectivism as a solution. Milei comes from a country that used collectivism in a big way and it led to economic and social ruin.
What Milei offered in Davos was a positive way out of current trends. Where the Davos crowd now seems to see human beings as a problem, Milei recognized that there is a solution. He argued that there is no reason to see population growth as a negative. Or to think that the world’s resources as some kind of zero-sum game. Instead of seeing free markets as a challenge, Milei reminded Davos that there are opportunities and put his finger on the point when he added that the prevailing religion of social justice is mere cover for the old type of socialism.
This is a mindset that is anti-growth as well as anti-excellence, leading to a flattening of society. In the name of making everyone equal, what it does is pull everyone down.
Milei’s ideas are clear and relatable. At the same time, it is difficult to see how Argentina’s economy can be turned around quickly and how poverty can be reversed in a country with endless economic headaches. The opposition will do everything they can to stop Milei and his radical reforms. In democracies, it is often difficult to change societies, but Milei is giving Argentina a chance and he certainly gave the global elite in Davis something to think about.