The Argentine Miracle

Foreign Affairs

The Argentine Miracle

Javier Milei’s administration in Argentina provides a blueprint for politicians looking to uproot entrenched left-wing interests

(Tomas Cuesta/Getty Images)

“You’re my favorite president!” Donald Trump reportedly told Javier Milei. Milei was the first foreign leader to meet the president-elect in person after the election and is one of Trump’s most dedicated allies, despite the fact that in many ways their political philosophies are nearly as divergent as can be. The Argentine maverick, who shares with Trump a distinctive head of hair, has accumulated an international fanbase for his almost miraculous accomplishment of pulling Argentina back from the brink of hyperinflation and complete economic devastation.

Go back just a few years and few people would have ever expected Milei, the eccentric, chainsaw-wielding libertarian economist, to be a person of any political importance—let alone end up getting chummy with Trump and snapping photos with Elon Musk at Mar-a-Lago. Now, he’s not only the chief executive and head of state of his own country of Argentina, but a prophet and harbinger for libertarians, conservatives, populists, and enemies of the “zurdos de mierda” (literally “shit leftists”) everywhere.

Milei has proven himself an unusual occupant of the Argentine presidential chair—not only because of the fact that he is a self-proclaimed “philosophical anarchocapitalist” (a striking persuasion for a head of government), but also because he has proven spectacularly effective at both components of that funny trade that goes under the heading “politics”: delivering substantive goods to the electorate and consolidating power in the hands of his allies at the expense of his enemies. Even a cursory review of the historical record will reveal that Argentine politicians have proven themselves entirely incapable of the former, and libertarians (if such a thing is possible) even more helpless at the latter.

Yet despite being both an Argentine politician and a libertarian, Milei has managed to assemble, on a skeleton crew of institutional political supporters, an impressive governing record.

His most striking accomplishment is, without a doubt, his effective rescue of the Argentine economy from hyperinflation. High inflation has long been one of Argentina’s most durable problems, but toward the end of the presidency of Alberto Fernández it began to spiral out of control, skyrocketing from an already high rate of five percent per month in January 2023 to an astronomical 25.5 percent per month as Milei was sworn into office in December. The situation threatened to turn catastrophic: The rapidly eroding purchasing power of the Argentine peso encouraged rampant capital flight and threatened the integrity of the Argentine financial system while sinking the citizenry into potentially crippling poverty.

Milei campaigned on the promise of dollarizing the Argentine economy, but when he arrived at the Casa Rosada—the Argentine equivalent of the White House—he was confronted with the reality that the Argentine Central Bank’s dollar reserves were in the red, far below the levels necessary to implement currency substitution. If the country tried to switch to dollars before substantially increasing the amount of currency held by the central bank, there would literally not be enough cash to keep the country’s economy running.

The hardheaded libertarian did not flinch for a moment. Dollarizing Argentina was impossible, but there were plenty of other ways to confront inflation—they would just be painful. The president began the difficult process at the beginning of December by chopping the official exchange rate in half, devaluing the peso 50 percent against the dollar. The official exchange rate is only one of many ways Argentines acquire dollars—most currency conversion in Argentina occurs near the real exchange rate on the black market—but the move still hurt the purchasing power of Argentines already suffering economic distress. “For a few months, we’re going to be worse than before,” admitted Luis Caputo, the economy minister. But otherwise, he said, “we are inevitably heading toward hyperinflation.”

A week later, Milei launched his real offensive: the total restructuring of the Argentine state and economy on libertarian principles. This took the form of the so-called “megadecree,” an 83-page document with over 300 provisions slashing regulations, eliminating subsidies, opening up constricted markets and beginning the process of privatizing all of the country’s state enterprises. The disruption was enormous: overnight, tenancy protection laws, rent control provisions, employment rules and regulations, tariffs, export restrictions, and weighty subsidies and price controls for food, fuel, power, and other utilities and necessities disappeared.

The domestic consequences were harsh. Argentines found themselves faced not only with reduced purchasing power from currency devaluation and inflation, but also with sticker shock from now free-floating, unsubsidized prices for food, rent, power, and other necessities. The poverty rate climbed from 49.5 percent in December 2023 to over 57 percent in January 2024, and the country entered a recession, as GDP fell for the first two quarters of 2024.

Nevertheless, the shock therapy worked: Monthly inflation fell from the disastrous 25.5 percent in December 2023 to 20.6 percent in January 2024, then to 13.6 percent in February. The successful reversal of the inflationary trend kept him in the confidence of the Argentine populace: he has maintained his high popularity throughout his presidency, despite the sometimes severe costs that his methods have imposed. And that confidence has been well repaid. At the time of writing, monthly inflation has fallen to just 2.7 percent, below the average Argentine inflation rate since 2000, poverty has declined back to the December 2023 levels, and the economy is projected to grow an astronomical 8.5 percent next year.

Milei’s success in bringing down Argentine inflation and revitalizing the economy has won him many admirers outside of Argentina, though likely few converts to anarchocapitalism. It is difficult to disregard such results. But, interestingly, what has made him a world figure is not principally his economic accomplishments. Instead, it is his alignment with the growing axis of populist right-wing leaders across the Western world—particularly Trump, with whom he shares some remarkable traits as a political figure.

Milei was elected as a protest candidate against a government and a political class that the Argentine people felt was morally and intellectually bankrupt. “If I had to choose between the state and the mafia,” he said, “I would pick the mafia, because the mafia at least has a code. The mafia gets things done. The mafia doesn’t lie.” For young Argentines, especially, whose life experience has been nothing but the continual impoverishment and humiliation of the nation, the comparison hit home.

And there was plenty more where that came from. Milei railed against the Argentine political class (“la casta,” as he prefers to label them) in the harshest terms possible, often straying into the vulgar and obscene. “Filthy failed vermin”, “a slinking maggot”, “cockroaches”, “a bloodsucking parasite”, “a heap of manure”—these terms are just a few in the wide vocabulary he deployed to castigate Argentina’s leading lights. When the minister of health responsible for Argentina’s response to Covid-19 died, he eulogized him as “a son of a bitch who will be remembered as a son of a bitch.”

Like Trump, he and the media are on bad terms. His hatred of journalists is legendary: He considers the industry fundamentally corrupt, a way for la casta to slander outsiders under the cover of responsibility and open inquiry. His campaign worked hard to leverage social media and influencers, forces that he sees as confronting journalism on its own turf. “Thanks to social media, the privilege that la casta has had for such a long time and which they have used with such violence is over,” he declared in a post on X. “It’s time for all you [journalists] to accept that the world has changed for the better and that your monopoly on speech is over. Now you will have to do honest work!”

That approach won him the presidency on the back of a major youth movement: he won a massive 69 percent of the vote among 16–24-year-olds and 54 percent of the vote of 25–34-year-olds. It also won him the notice of right-wing figures outside of Argentina, figures for whom he would soon provide something of a model.

As a politician, much of Milei’s genius consists in a very strong understanding of political, economic, and social institutions. Despite the fact that—or perhaps because—he is an individualist and an anarchist, Milei thoroughly understands that the left is institutional; the peronists and the socialists that he despises for destroying the Argentine nation obtain and maintain their power institutionally: They fill the ranks of government ministries, regulatory bodies, non-profit organizations, unions, state enterprises, universities—in short, everywhere the harsh laws of supply and demand do not apply. The basis of his political theory (if not the practice) is relatively simple: eliminate the enemy by depriving them of their subsistence. 

Leftists, Milei insists, are parasites. They cannot exist without other people protecting them from the social and economic realities of their decisions. Cut down the bloated rolls of government workers; privatize the state industries; strictly control state contracting; end subsidies, handouts, and grants of all kinds; destroy the buildup of laws, rules and regulations that provide the rationale for the existence of the administrative state, and they will dissipate like fog in the morning sun.

In the hands of a less talented or perspicacious individual, this philosophy could well prove self-destructive. The political impulse for simplification and elimination often ends up sawing off the branch upon which the wielder thereof sits—alienating too many powerful interest groups, eliminating vital state functions, destroying one’s own institutional capacity, or simply foundering on the byzantine technicalities of government administration. But, unusually for a libertarian, Milei is supremely pragmatic, content to take his time and advance his objectives position by position as he gathers strength. An analysis of his dealings with two of the leading political parties of the country is illustrative.

Milei benefitted from two major alliances in the run-up to his presidency. His political coalition, La Libertad Avanza, was new, small, and weak, with little funding and almost no party apparatus. It had difficulty finding candidates to fill up its electoral lists for legislative elections, and was in severe need of political and technical advisors. Into this gap stepped an unlikely figure: Sergio Massa. Massa, serving as the economy minister under Alberto Fernández, was also one of the leading presidential candidates, a centrist Peronist who had at his disposal the powerful Peronist political machine. Massa supplied a number of advisors and assisted La Libertad Avanza with putting together its campaign for the 2023 election. Massa’s intention was to use Milei and the libertarians as a spoiler against the center-right Republican Proposal (PRO) party, which was favored to win the election—a decision that he would soon come to regret. Milei outperformed all expectations and, in the first round of the presidential election, won more votes than any other candidate. Patricia Bullrich, the candidate for PRO that Massa had planned to run against, was left entirely out of the race, and Massa ended up losing the presidential election to a campaign he himself helped assemble.

Nevertheless, there were still benefits for Massa and his allies. Because the Peronists had provided many of the technical advisors and assistants to Milei’s campaign, a number of them went into the government with the incoming administration, particularly the Federal Administration of Public Revenue (AFIP), the Argentine equivalent of the IRS that administered taxation, tariffs, and customs. With his fledgling political movement still severely understaffed, Milei needed the expertise, personnel, and connections that Massa’s allies brought to the table, and—for the time being—he was content to allow them to control a corner of the administration.

The other major alliance that Milei benefitted from was the assistance of PRO, which, once the election had been pared down to a contest between Milei and Massa, threw its support behind Milei in exchange for posts in the administration. Eighty percent of the supporters of Bullrich in the first round supported Milei in the second round, and as a result Bullrich was granted the important position of minister of security in the new cabinet. La Libertad Avanza also counted heavily upon the support of PRO in the legislature, as the president’s electoral coalition ended up with just 15 percent of the seats in the lower house and a smaller still in the Senate.

All told, this left Milei in a precarious position—much of his administration and political power rested, to some extent, on external support from those who would prefer either to coopt or destroy him.

He played his cards carefully.

The first thing Milei did upon entering office was to show his determination to fulfil his campaign promises: In one stroke, he eliminated nine of the 18 ministries in the Argentine executive branch, folding their competencies into other executive agencies or abolishing them entirely. The famous video of Milei tearing ministries off the whiteboard and shouting “afuera” was not intended for rhetorical effect; he had entered office to deliver a transformation of Argentine politics, and he proved it from his first day in office. This increased his popularity and gave him a credibility many reformers and political newcomers never have, the perception that they are capable of backing up both their threats and their promises. This perception was reinforced by the issue of the “megadecree.” Few things could have swayed the balance of power like the immediate drop in inflation that resulted from Milei’s prompt and extensive action on the matter. From that point on, the president held the trump card.

The first dependency he set to unraveling was the agreement with PRO, and his point of action was Bullrich herself, his former opponent in the presidential elections. Bullrich—like most Argentine politicians—had felt the scornful lash of Milei’s tongue during the election, but she became progressively more impressed by the president’s political program. Milei worked carefully to make her an important part of the administration while also winning her over as an ally. The effort bore fruit rapidly. After just a few months in Milei’s cabinet, Bullrich, who was then serving as the official leader of the PRO, began an attempt to merge the party into La Libertad Avanza under Milei’s leadership.

This development shocked many in the party, who hoped to maintain their political independence and contest the libertarian ascendancy in Argentina, but Bullrich did have support among party members. The situation quickly became an internal crisis. Mauricio Macri, the founder of PRO and the president of Argentina from 2015 to 2019, had to intervene personally to stave off its extinction. Macri and his supporters ejected Bullrich from the presidency, which Macri then assumed, allowing the party to continue its independent existence. Bullrich and her defeated supporters, on the other hand, became ever-more closely linked to Milei and La Libertad Avanza rather than to their own official party leadership. The end result was that Milei, who began in the dangerous position of sharing his cabinet with a former political opponent, nearly coopted the entire opposing party to his own movement, and successfully turned the representative of an opposing party in his cabinet into a political proxy of his inside the other party.

But the problems were not over for PRO, despite Macri’s reassumption of the party’s leadership. Milei’s popularity and success greatly diminished PRO’s appeal as its own political force, leaving it in danger of falling victim to La Libertad Avanza electorally. Yet the party could not assert its independence by opposing the president’s initiatives, even where it would be in its interests to do so—such a move would go directly against the desires of its electorate, which would then be incentivized to vote for La Libertad Avanza to secure a legislature that would back the president’s platform. Macri has attempted to secure PRO’s position with careful negotiation, but both sides are aware that he has laughably little leverage. 

As a result, although the party was not formally absorbed by Milei’s movement, it has been absorbed in practice. PRO has voted in line with LLA on every initiative and bill of any importance that has ever crossed the threshold of the halls of Congress, including bills that are objectively against its interests, like the attempt by the opposition to restrict the power of presidential decrees, and may find itself in danger of being reduced to electoral irrelevance despite all its attempts.

The reckoning for Massa came later and with even less warning. In October, Milei issued a startling decree: AFIP, the stronghold of Massa’s allies in the administration, would be completely dissolved and replaced by a new organization for the collection of taxes and management of customs. The old agency had become bloated, corrupt, and politicized, the president declared, and as a result, personnel would be purged: “This will eliminate 3,155 agents who entered AFIP in an irregular manner during the previous Kirchnerist government,” the decree read, a reduction of a full 15 percent of the organization’s staff. “This step is indispensable for dismantling the unnecessary bureaucracy which has obstructed the economic and commercial liberty of Argentinians.” The new agency would be placed under the direct control of one of Milei’s closest allies and advisors.

The patterns here are typical of Milei’s political strategy: proceed from a position of strength, coopt potential allies, avoid unnecessary distractions and taking on too many political fights at once, and then destroy the institutional power of the enemy in a single blow. 

The same schema was used to reform the intelligence services. In July, the Federal Intelligence Agency, established by the left-wing Peronist Cristina Kirchner in 2015, was dissolved and replaced with a new agency. Hundreds of agents with ties to Peronist and other left-wing political groups were unceremoniously fired; “the majority [of agents] will not be retained,” sources close to the government said.

Milei’s government has also successfully defunded universities, traditionally a hotbed of left-wing activism whose social status has often rendered them untouchable by right-wing governments. Its privatization of state enterprises has destroyed an entire class of sinecures for political hangers-on; the same follows for its institution of strict controls on government contracting. The drastic cutbacks on labor regulation have proven damaging to the unions, who form the principal backbone of the Peronist political coalition. At every point, Milei has systematically undercut the institutional power of his political opponents.

Milei’s libertarian populism is of a very different ideological bent than the right-wing populism sweeping Europe and the United States. But, if Milei continues to be successful at creating prosperity for Argentina while destroying the political power of left-wing institutions, the “Milei model” may well become an increasingly attractive option for frustrated populations in America and abroad.

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