Milei Promises Argentina Can Be Saved With Libertarian Economics

(Bloomberg) -- Self-described libertarians seem to pop up in political circles in every corner of the globe. But few mean it quite like Argentina’s Javier Milei.

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On Wednesday, he flashed his zeal for unleashing the powers of free markets on the ailing country during a two-hour interview in Buenos Aires. He vowed to slash government spending, shutter the central bank, replace the beleaguered peso with the US dollar and restore credibility to the famously unstable economy.

And with Milei now in a good position to pull off a stunning victory in October’s presidential election, libertarian economics might be about to get its most high-profile real-world test yet.

The country has been in economic turmoil for so long — headed to its sixth recession in a decade amid triple-digit inflation and an ever-weakening currency — that it’s easy to see how proposals that might be seen as radical in other contexts come off as eminently reasonable here.

“One of the biggest thieves in the history of humankind is the central bank,” he said. “We should try to get out of the blinders that the statist indoctrination imposed on us.”

Milei, 52, sees these goals not just as smart economics, but a moral imperative. Everything is made better with competition, he believes, so it’s worth seeing what happens when Argentines can choose the currency to use.

Based on that, the free market will pick the dollar, which is “not even a good currency” in his view, because it’s at least more stable than the peso. Years of money printing and policy mismanagement wiped out 99% of the peso’s value over the past two decades, helping push the inflation rate up to 113% at the latest reading.

Milei wants to run almost everything in Argentina through his libertarian framework, and cited the economists Friedrich Hayek, Murray Rothbard and Gary Becker to explain his vision. He dismisses concerns over the high percentage of citizens who work in the informal economy — “people should decide if they enter to the market or not.” He has no patience for subsidies to industry — “don’t pick the winners.”

The intellectual logic behind his ideas, which he’s keen to passionately debate, sets him apart from fellow populists like Donald Trump and Jair Bolsonaro. He appears eager to show himself to be serious, engaged and ready to lead the country. In times of economic hardship, his message resonates with voters who don’t have much time for theoretical discussions.

Of course, he also wants to win the election, and so seems to be willing to compromise on his vision for a libertarian paradise in South America. He says he won’t end the popular social programs that support millions of people in a country where almost 40% of the population is impoverished, despite the staggering cost.

“Those who receive social programs, are victims, not the victimizer,” he said, adding that ending that type of welfare will take as long as 15 years. “We will redesign them and take out the intermediaries.”

He even toned down some of his most controversial proposals, such as blowing up the central bank. “That was metaphorical,” he said.

The one-term congressman took almost a third of the vote in Sunday’s primary election. The mainstream center-right coalition got 28% of ballots, compared with the ruling party’s 27% support, leaving Milei the clear front-runner ahead of the presidential vote. His direct competitors in the Oct. 22 election will be Economy Minister Sergio Massa and Patricia Bullrich, a hard-line former security minister from the market-friendly opposition coalition.

Given the three-way race, it’s likely the presidential vote will go to a runoff in November, which happens if the top candidate doesn’t receive 45% of valid votes in the first round, or fails to clinch 40% while holding onto a 10 percentage-point lead over the runner-up.

A victory for Milei, an economist trained at Belgrano University in Buenos Aires, would be a more dramatic version of the pro-business government of former President Mauricio Macri. He tried to introduce market reforms after taking office in 2015 only to face political opposition and run headfirst into a financial crisis that ended with the country calling back the International Monetary Fund for yet another rescue package.

Macri’s successor, the Peronist Alberto Fernandez, struggled to fix the economy amid the Covid-19 pandemic and a severe shortage of hard currency that’s now left the country vulnerable to another debt default. He’s so unpopular that he chose not to run for reelection this year.

Milei said he’d make every effort to avoid a default on overseas bonds, but investors are skeptical, in part because of fears his policy proposals could be blocked by Congress and trigger social unrest. Argentina’s assets slumped this week.

There is still a long way to go until the election, and Argentina’s politics are as volatile as its economy. In fresh claims that echo those of Trump and Bolsonaro, Milei says he should have gotten five percentage points more in the primary election if it wasn’t for dirty tricks by his rivals that day that skewed the results.

There’s also a risk that as Argentines get to know Milei better, they’ll be less enthused about voting for an outsider who promises major change. But for now, he’s on a mission to use his newfound celebrity to preach the gospel of free-market economics.

Right after the primary win, Milei wasted no time in redoubling the strategy that worked so well for him until now, giving extensive interviews in several radio and TV shows that go viral on social media. He receives so many requests that he turned his phone off during the hours he spent at the Bloomberg bureau.

“It’s ringing all the time,” he said. “It’s very irritating.”

--With assistance from Manuela Tobias, Scott Squires, Patrick Gillespie, Walter Brandimarte, Jonathan Gilbert and Julia Leite.

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