A Libertarian Landslide in Argentina by Dan Mitchell

After a libertarian candidate took first place in Argentina’s presidential primary back in August, I wrote that the runoff would be the most important election of 2023 (even more important than the fortunately failed referendum to weaken TABOR in Colorado).

Amazingly, Argentinian voters opted for the libertarian by a strong 56-44 margin. To understand President-Elect Milei’s approach to the budget, here is a very encouraging video (with English subtitles).

A kindred spirit!

So why did Argentine voters opt for a radical libertarian after repeatedly voting for statists?

Did they finally realize that they ran out of other people’s money?

I assume part of the answer is that they realize their country is in economic decline. Here’s a chart I shared last week at a speech in Miami. It shows that Argentina was one of the world’s richest nations after WWII, but has suffered a dramatic drop because of bad policy.

The establishment media’s coverage of the election has been mostly fair, but there are some errors.

For instance, here’s some of what Samantha Schmidt and David Feliba wrote for the Washington Post.

A radical libertarian…rode a wave of voter rage to win Argentina’s presidency on Sunday, crushing the political establishment and bringing the sharpest turn to the right in four decades of democracy in the country. Javier Milei…claimed nearly 56 percent of the vote in a stunning upset over Sergio Massa, the center-left economy minister… With Milei, Argentina takes a leap into the unknown — with a leader promising to shatter the entire system. …Wielding chain saws on the campaign trail, the wild-haired Milei vowed to slash public spending in a country heavily dependent on government subsidies. He pledged to dollarize the economy, shut down the central bank and cut the number of government ministries from 18 to eight. …He has branded Pope Francis, an Argentine, an “evil” leftist. Climate change, he says, is a “socialist lie.” …Jonathan Aguero, a 32-year-old…father of two…has felt shortchanged by his country’s economic troubles for his entire life. …“We’ve already seen what Peronism has done. We need a change.

Almost everything in the article is accurate and balanced. But the big exception is the claim that Milei’s policies are “a leap into the unknown.”

That’s nonsense. Milei is simply proposing to go back to the limited-government policies that enabled Argentina to become rich before Peronism caused a dramatic slide.

Those are the same policies, by the way, that enabled the western world to become rich in the 1800s. And the policies that enabled mass prosperity after WWII in Asia’s tiger economies.

Next, here are excerpts from a report for the New York Times by Jack Nicas.

Mr. Milei, 53, an economist and former television personality with little political experience, burst onto the traditionally closed Argentine political scene with a brash style…and a series of extreme proposals that he says are needed to upend a broken economy and government. …He has also proposed…loosening regulations on guns and considering only countries that want to “fight against socialism” as Argentina’s allies… Mr. Milei’s election is a victory for the global far-right movement that gained strength with the election of Mr. Trump and similar politicians, among them Jair Bolsonaro of Brazil… He has clear differences with the two other politicians, including his strong adherence to a libertarian ideology… Mr. Milei will now confront a major challenge that virtually no other Argentine president has been able to solve for decades: the Argentine economy. Failed economic policies have long left Argentina with one of the world’s most perpetually unstable economies, yet even by its standards, the nation of 46 million is in one of its worst crises. …for many Argentines, Mr. Milei will be a welcome break from Peronism, the political movement that has held the presidency for 16 of the past 20 years, mostly installing leftist policies over that period that have jerked the country from boom to bust.

Once again, the story is mostly fair. I especially applaud the reporter for acknowledging that Milei’s libertarian agenda is not the same as Trump’s big-government approach.

But there is an error. The reporter says that Peronist policies have “jerked the country from boom to bust.”

But that merely implies volatility, with bad periods being offset by good periods. But you can see in the chart above that statism has produced long-run decline. At the very least, the sentence should have stated that excessive government has “jerked the country from weak boom to deep bust.”

Let’s conclude with the observation that Milei takes office next month and he will face a less-than-friendly legislature. So will he have the ability to dollarize and make other reforms? I don’t know the answer, but it’s very encouraging that at least Milei understands the recipe for growth and prosperity.