Argentina has a new president; an eccentric, foul-mouthed politician with thick uncombed hair and sideburns named Javier Milei. The media have depicted him as a “far-right” candidate with crazy economic policies. The Economist, The Guardian, The Washington Post, The New York Times…etc. just to name a few of these left-wing news outlets; have labelled the Argentine president-elect as a radical far-right economist. But why? What makes him a “radical far-right?”
Javier Milei is an economist who advocates for the Austrian School of Economics, small-government, a libertarian, and a self-proclaimed anarcho-capitalist. Milei pledged to cut government spending, to balance the budget, to privatize state-owned enterprises, to deregulate the economy, and to abolish the Central Bank of Argentina. What’s so radical about that? What’s so radical about cutting government spending? What’s so radical about privatizing state-owned enterprises? What’s so radical about deregulating the economy? What’s so radical about abolishing the central bank? What’s so radical about reducing the role of government in people’s lives? Why are basic ideas promoting individual liberty suddenly radical and demonized?
As a matter of fact, the monetary policies of the Argentinian central bank are the root cause of Argentina’s economic woes. Indeed, the Argentinian economy has been in consistent decline for more than a decade due to bad monetary policy. The Argentinian central bank printed too much money, which dramatically depreciated the value of the peso, and exacerbated wealth inequality. The high level of inflation that is destroying the Argentinian economy is the result of government policies applying the Cantillon effect on different social classes.
Government spending has never solved economic problems, it only delayed or postponed them. John Maynard Keynes, the British economist who popularized the use of government spending to address economic conundrums, argued that government spending could be used as a stimulus to incentivize aggregate demand through consumer demand. This is faulty economic thinking because government spending attempts to redistribute wealth through debt-financing programs where it transfers wealth from future taxpayers to current beneficiaries. This then reduces the availability of future resources to create wealth, increases inflation since the money borrowed is injected into the economy, and also increases interest rates for private businesses because the government borrows at high-interest rates, and these high interest rates are also applied to business in the private sector. And the worst is that the future generations are the ones who have to pay for this.
Therefore, what is so wrong about Milei wanting to reduce government spending to avoid the government misallocating resources, and to abolish central banks to avoid central banks exacerbating wealth inequality and impoverishing the middle and working classes in Argentina?
The election of Milei sets an important precedent for libertarian politics in the developing world. African countries who wish to be lifted out of poverty should rely less on government and prioritize market mechanisms to bring innovation, increase productivity, and more importantly, to advance individual liberty. The poverty that the African continent is facing is caused by its own government through corruption and economic mismanagement. For example, Zimbabwe, which was once one of the richest countries in Africa, has become one of the poorest because of bad monetary policy, too much government spending, and mismanagement of public resources.
At the end of the day, the prosperity of a society is based on its people’s ability to pursue what they see fit through free enterprise. Too much government prevents people from improving society as a whole.
Milei is surely not perfect. He has his flaws. But the economic policies that he is advocating for are not radical at all. they are normal policies for any society that seeks freedom and prosperity.