In Argentine politics, the script is grimly predictable. A populist leader sweeps into power, inflation bites at real wages, and living standards plummet, non-stop drama interrupted by the odd season of technocracy when the IMF comes knocking. For a while, it looked like President Javier Milei might represent something different. The leather-jacketed libertarian certainly comes across like the author of his own story, promising to replace the primacy of Peronism - the leftist populism that has dominated the country for decades - with his own anarcho-capitalist take on governance.
Milei is a big fan of the American political soap, The West Wing. Such a big fan, in fact, that last month he appeared to steal sections of his speech to the UN from the show's President Bartlet, a twist no one saw coming. Alas, Milei has once again fallen back on the tired trope of political instability and false promises. His ideology may be different, but the outcome is more of the same. Over half the country now languishes in poverty, and inflation, having cooled substantially during Milei’s early months in office, remains stubbornly high.
Argentina has spent much of its post-war history in economic crisis; between 1944 and 2023, the country's inflation rate has averaged an eye-watering 190%. In the last ten years, living standards have fallen by a tenth. Unsustainable government spending, reckless borrowing, and sovereign debt difficulties have been the cycle underlying this economic despair. The central bank has been all too prone to print money to get the government off the hook. Lenders are wary of a country that has defaulted on its debts 3 times since the turn of the century.
All of which is to say that things were hardly rosy before Milei rose to power last year. The Argentine Peso had become worthless as a store of long-term value; shops and businesses take to social media to issue day-to-day price updates, such is the volatility of the currency. In 2023 Milei's leftist predecessor, Alberto Fernández, oversaw the introduction of currency controls, artificially fixing the value of the Peso and strictly limiting foreign exchanges. This has done little to solve the problem of inflation; a powerful black market has emerged where the Peso trades at a much lower rate against the dollar. Nearly 10% of all dollars in circulation are now estimated to reside in Argentina.
It's not hard to see why the prospect of Milei's libertarian revolution was attractive to an exhausted electorate. The former TV personality appeared on the campaign trail brandishing a chainsaw as he vowed to slash government spending, privatise state assets, and unleash market forces. He pairs his libertarian beliefs with a national conservative take on culture worthy of Trump and Bolsonaro. Feminism is to be dismissed, environmentalism dubbed a “socialist lie”, social justice deemed a distraction. Many pro-market types in the West were prepared to look beyond Milei's brash manner and questionable social attitudes, hoping there was method in his madness. So far, we have seen mostly madness and little sign of method.
In office, Milei has halved the number of government departments, followed through on pledges to cut subsidies, and taken his chainsaw to pensions and welfare spending. His fiscal shock therapy has not, however, been matched by his monetary policy. His decision to devalue the Peso by 50% initially made exports more competitive, but continued currency controls have failed to keep the exchange rate in line with inflation.
Despite promising to abolish currency controls altogether, he now refuses to allow further liberalisation and lambasts his critics as “intellectually dishonest”. Plans to dolarise the economy are yet to be implemented. Argentina has neither a state willing to support the vulnerable nor a government willing to allow the hand of the market to dictate economic outcomes. It has the worst of all worlds: a president whose leadership skills can’t keep up with his radicalism.
The tragedy is that Argentina's problems are not intractable. The country has vast natural resources, a comparatively high standard of education, and a history of scientific achievement. Since the 1960s, it has lacked a political class capable of translating these strengths into a liberal democratic first-world nation. Milei's failure is not the failure of libertarianism but a failure of dogmatism in all its guises and a valuable lesson that the loudest voices are rarely the most coherent.
Argentina needs a government committed to the hard, unglamorous work of building better institutions and cultivating a stable investment environment. That is the true policy revolution that could await the country under the right leadership. This is not an endorsement of the kind of grim technocracy that often befalls a country in crisis. Argentina's political reinvention can and should be carried out by the hopeful and the ambitious; it cannot, however, be carried out by a madman. Liberal democracy is only as effective as its people; to succeed, Argentina must turn its back on false prophets and demand better. If it does not, then the writers on this particular show will continue to self-plagiarise.
Image: Flickr/Vox España
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