On November 19th, Argentine voters made the radical choice of electing Javier Milei to be their next president. Milei, a self described “anarcho-capitalist”, handedly defeated the centre-left Minister of Economy, Sergio Massa, marking a departure from the Peronist incumbent Alberto Fernandez.
Milei, a former professional football player and economics professor, rose to prominence in the 2010s as a guest and pundit on various Argentine political programs. There, his bombastic personality and willingness to call out the corruption of Argentina’s political elite quickly propelled him to popularity. His brashness and anti-establishment rhetoric is key to understanding why voters elected the radical right-wing populist.
Under now-former president Fernandez, Argentina’s economy has struggled. Inflation is currently at 143% and expected to rise to over 200% in the following months, a level not seen in the country since the early 1990s.
Milei has radical solutions to Argentina’s inflation issue: to cut the state, a lot. Milei’s use of a chainsaw as his campaign symbol represented his promise to slash the size of the state. Milei’s cuts would include the abolition of over a dozen ministries and significant reductions in welfare spending. While decreasing government spending could help reduce inflation, it would require decreasing Argentina’s spending on pension and utility subsidies. Cuts in these areas could significantly hurt the poor in the short term.
Second, he has plans to “dollarize” Argentina’s economy. Milei’s policy would get rid of the Argentinian peso, replacing the official currency with the U.S. dollar. The country’s central bank would essentially be abolished, leaving Washington to control Argentina’s monetary policy. This raises significant concerns when likely scenarios where the needs of Argentina’s economy and the U.S. differ. For example, while inflation has risen in the U.S. (going as high as 8% in 2022), it remains far, far lower than Argentina’s 143%. As one would expect, the interest rates Argentina’s central bank might adopt in response to high inflation would likely not correspond with the rates set by the U.S. Federal Reserve. Giving up their monetary sovereignty to a country with a wholly different economy will likely spell disaster.
Despite his dominant victory over Massa, Milei will likely not have the chance to implement his most radical policies. His coalition, “Liberty Advances” was formed only two years ago: it commands support from none of Argentina’s powerful governors and holds very few seats in either of Argentina’s chambers.
For Argentinians, Milei represents “something new”, marking a departure from the Peronist leaders that have historically dominated Argentine elections. While Argentina’s current inflation is wholly unsustainable, Milei’s brand of radical economic policy will likely contribute to further instability in Argentina’s near future.