Liberal economists heard by the People’s Gazette celebrated Javier Milei’s victory for the presidency of Argentina, highlighting the population’s success in supporting the liberalizing proposals of the victorious candidate, in opposition to those of Peronist Sergio Massa.
Adolfo Sachsida, former Secretary of Economic Policy and Minister of Mines and Energy in the Jair Bolsonaro government, highlights the change in Argentina’s economic policy orientation. “Milei’s main proposal, to abolish the Central Bank, draws attention to the implementation of an economic policy of less state intervention and more free trade”, he states.
In the economist’s opinion, during the election campaign Milei’s theoretical solidity became very clear, which comes from the thought of the Austrian school of economics, developed by Ludwig von Mises and Friedrich Hayek. “In my opinion, Hayek was the greatest economist of the 20th century. He is a fabulous reference”, says Sachsida.
Fernando Ulrich, from Liberta Investimentos and master in Economics from the Austrian School at Universidad Rey Juan Carlos, highlights that Milei is based on the “classics” and the facts that economic experience shows work.
“What really makes countries escape poverty and achieve wealth, what eliminates misery from societies are the ideas of reducing the State, economic freedom, entrepreneurship, less taxes, less regulations. It is not the conception of the entrepreneurial State, but of privatizations. Milei wants to follow the recipe used in rich countries over the last 100 years”, he states.
Ulrich, who is also an economics influencer with a channel with more than 600 thousand subscribers on YouTube, met Milei last year, at a seminar promoted by Fórum da Liberdade, in Porto Alegre.
“Despite his effusive, intense and combative, sometimes aggressive manner, he addressed the fundamental causes, the root of the problems, with solid arguments, without bravado or grimaces. Personally, he is as polite, cordial and accessible a person as any other, with a lot of intellectual baggage”, he described.
Ronald Otto, professor of economics and international relations at the Federal University of Rio Grande do Sul (UFRGS), also highlights Milei’s theoretical basis. “Unlike most politicians, he has read a lot in the liberal field, he has a good education, not only in economics, but in principles. The proposals show an integrated vision of society with the premise of freedom. The extravagant manner is part of the theater politician. what matters is what he thinks”, he believes.
In Otto’s assessment, it is not clear whether the Argentine understands or fully approves of Milei’s proposals. “What is certain is that the people were convinced, after 70 years of confirmed failure, that Peronism was no longer effective”, he summarizes.
Milei’s challenge will be to implement the proposals with a hostile Congress
In the assessment of economist Claudio Shikida, from the Millenium Institute, more important than the consistency of Milei’s ideas will be his ability to implement a liberal project in front of a hostile parliament. “The election represented hope for Argentines and the region, but he needs to have the ability and convince Congress to help him, without renouncing principles,” he says.
Fernando Ulrich believes that Milei’s program is fully viable in economic terms, but politically it will require enormous effort. “Putting proposals to reduce the size of the state will face a variety of difficulties, including resistance from privileged groups. The president-elect was the first willing to face this challenge.”
Shikida believes that if he takes a more balanced position, Milei can even convince Peronists and Kirchnerists to support him as a means of political survival. “Congress knows that it cannot continue doing more of the same things that led to Argentina’s current situation of misery,” he says.
Macroeconomic stability should be a priority for the new government
There is a consensus among economists that the first step should be macroeconomic stabilization, with an attack on inflation that reaches more than 142% per month. At this point, dollarization and the extinction or readjustment of the Central Bank come into play, which will require planning and competence in execution.
Regarding dollarization, Ulrich explains that the process depends on a diagnosis to be given by the Central Bank. “It is not known how many reserves in dollars the BC actually has. It is necessary to see if it is viable. The BC would have to rescue the monetary base and all of the country’s liabilities to convert into dollars, that is, use its assets to pay the liabilities and make the weight stop circulating. It’s not a simple task”.
Sachsida says it is not clear what type of dollarization will be done. “We don’t know how this will be operationalized. So far we’ve only had a debate of ideas. All of this should be materialized in a bill, in a regulation to bring the ideas to a concrete level.”
What is known is that it cannot be done as in the past, with a fixed exchange rate. “At first, the conversion of the peso made everyone rich. When the exchange rate was adjusted, the effect was reversed, recalls Sachsida. Milei’s dollarization will certainly be more sophisticated.”
The extinction of the Central Bank is viewed with skepticism by experts. “It is likely that he will adopt an independent BC system, as in Brazil, to shield the body from the political class”, believes Otto.
Liberals, libertarians and anarcho-capitalists
Milei defines himself as a “libertarian liberal”, which created strangeness between the groups. “He was the first person I saw to define himself like that, says Ulrich. I think it was a way of making it clearer that he is liberal in the classical and non-American sense of the term.” In the US, Democrats and Progressives are identified as liberals.
Sachsida explains that liberals and libertarians have a common base of values, including individual freedom, private property, free trade. “The classical liberal will pursue liberal agendas in a more gradual way. Control inflation through the Central Bank and the interest rate to prevent public deficit”, she explains.
For the libertarian, controlling the public deficit is important, but they want to do it by faster means. “For example, ending the government’s monopoly on issuing currency,” he explains. Anarcho-capitalists, on the other hand, consider the existence of the State to be amoral, in principle. Some currents are more pragmatic and defend the minimum state, called minarchists.
For opponents, however, Milei has other labels, including “ultra-rightist” “right-wing extremist” “right-wing ultraliberal” and “right-wing radical”. In the press, nicknames are also used. “The press has a habit of labeling people, especially when they cannot understand what they are talking about. I have never seen the press call a candidate ‘ultra-leftist’, even if he belongs to radical parties.”
For Ulrich, there is a simplification of concepts generally to “ridicule or classify someone as more radical. Generally, those who use the ultra radical nickname are those who do not understand the logical consequences of libertarian theory”, he highlights.
Shikida says that adjectives are a way of “stigmatizing opponents by a left that does not admit contradictory things.”
Otto also considers labels pejorative. “In my time, my far-right references were Nazism and fascism; a system where the government is strong, dominates the unions, tells businesspeople what to do, carries out industrial policy. Everything is contrary to what Milei preaches. In fact, whoever has Fascist origin is Peronism”, he summarizes.