Have Argentine voters truly voted to overturn their destructive economic past, and to rediscover liberty? As these four guest posts point out (including one from Milei's adviser Jesús Huerta de Soto), President-Elect Javier Milei has the credentials, and has offered as much liberty as (it seems) the Argentinian people are willing to accept. Will it be a revolution of liberty? History will only tell....

Have Argentine Voters FINALLY Chosen Liberty? Time Will Tell

Guest post by Octavio Bermudez

A historical event has taken place, not only for the libertarian movement but for the history of the world. The first libertarian president has been elected in none other country than Argentina.

The Argentinian people faced a dichotomy, either continue with the socialist road to serfdom embodied by the ruling Peronist regime or adopt a radical change towards liberty, the leader of said change being Javier Milei, self-proclaimed Rothbardian and anarcho-capitalist. Finally, with more than 55 percent of the votes, Argentinians elected Milei as their new president.

Argentina’s situation is critical and the people know it. 142,7 percent accumulated inflation this year, 40 percent of the population under poverty levels and at least 80 percent of public debt in terms of GDP, just to mention some of the main economic problems. Crime -which is rampant in many parts of the country- is the other main concern of the public that Milei has had to address in his campaign. He has done so mainly through his vice-president Victoria Villarruel, expert on defense and security matters.

Argentinians chose a free market path, a liberty road towards prosperity and justice.

Now, besides the celebration and enthusiasm that such an occasion merits, we libertarians (especially Argentinian libertarians) must draw upon the wisdom of the British economist Alfred Marshall who said that one must stay on our toes to keep our heart warm. Milei has introduced many libertarians’ ideas to Argentinian political discourse but not all of them have been received favorably by the general public or the media. Milei has had to engage in retreatism due to backlash regarding some free market-oriented ideas such as a voucher system for education, eliminating gun regulations, 100 percent bank reserves and privatising both education and the health system.

Milei has offered as much liberty as the Argentinian people are willing to accept. Socialist and collectivist ideals still prevail in major parts of the population, it would be an error to affirm that even half of the electors that choose Milei are full libertarians. Milei’s upcoming administration will be a test, if it succeeds in pushing for a libertarian program, then more people will rally behind the Gadsden flag and Argentina will serve as a beacon of freedom in Latin America.

Even more important is the cultural shift that has taken place due to Milei’s political activism. Books by the Austrian School of Economics and libertarians can be found in any bookstore (before Milei, those works were harder to access, almost clandestine) and liberty friendly universities and programs are now more frequented. Being a classical liberal or a libertarian is no longer a cultural crime in Argentina.

A libertarian hardcore has been formed and continues to grow, they are the vanguard of the movement, convincing lay people to support Milei’s reforms. True enough, many times they may not convince everyone to embrace libertarianism but at least they persuade them not to oppose it. That’s how the libertarian spirit in Argentina can grow.

Milei’s plan is a moderate one if seen through ideal lenses but as I have already pointed out, it is the most libertarian program that could be advanced upon without being ostracised by the public and mainstream media. Compromises were made after the general elections. The Libertarian-Republican alliance was formed to confront the Peronist regime in the ballot boxes, Milei allied himself with his former competitor Patricia Bullrich and former president Mauricio Macri to rally the necessary votes to win in the ballotage against the leftist Peronist candidate Sergio Massa. The alliance succeeded in calling for the votes necessary to win. It was an epic campaign, thousands attended Milei’s rallies crying out “Liberty!” In many parts of the country, shouts of joy and relief were heard when the Peronist candidate recognized his defeat on live TV. I of course joined the people in the cries for victory.

Bearing in mind the compromises made in the alliance to defeat Peronism, the most crucial libertarian proposals such as slashing public spending and taxes, deregulating the economy and labor market, free trade, privatization of public companies (like the oil company “YPF” and the state airline “Aerolineas Argentinas”) and abolition of the central bank are going to be implemented, at least on paper. Milei, although an anarcho-capitalist has had to moderate in order to gain office, once taking the reins of the state we shall see how much of the freedom program he proposes is implemented.

Will it be a revolution of liberty? History will only tell.

The Economics of Javier Milei

Guest post by David Howden

The election of Javier Milei brings the first libertarian/anarchocapitalist world leader in history. Although prolific in the Spanish-speaking world, English speakers know very little of the Argentine´s views. The fact that he heads the Libertarian Party of Argentina certainly hints at what direction his politics run.

Earlier this year, Philipp Bagus and I edited a two-volume book in honour of Jesús Huerta de Soto [see Bagus's and de Soto's post below.]. Milei wrote a chapter entitled “Capitalism, Socialism, and the Neoclassical Trap.” To my knowledge, it is Milei's only writing made directly in English for an English audience.

If anyone doubts Milei´s credentials, the chapter is a scathing critique of neoclassical growth theory. It also offers a full-blown Rothbardian alternative. Mises's work on interventionism and Hayek's knowledge problem form the basis of his analysis.

Milei identifies a crucial rationalistic error in neoclassical economic analysis:

Note that whenever situations arise that do not match the mathematical structure [modelled by the neoclassical analysis], they are considered “market failures,” and that is where the government appears to correct those failures. However, to successfully solve this problem, it is assumed that the government knows the utility function of all individuals (preferences) for the past, the present, the future, the time preference rate and knows the state of the current technology and all future enhancements, along with their respective amortization rates. In short, to solve the problem in question, the government should be able to master a significant amount of information that, by definition, individuals themselves ignore or are not able to handle, which exposes that the idea of the welfare state acting on the market to correct failures is a contradiction.

Furthermore, Milei concludes that:

when it is made clear that the correction of market failures by the government as proposed in the neoclassical paradigm is conceptually invalid, taking into consideration that the only ones who can internalize those effects are individuals, once the artificial separation of decision-making processes is eliminated, there will no longer be any reason for government intervention, which will not only stop the socialist advance but will also allow us to counterattack.

This is not your grandfather´s South American leader who politicises under the influence of neoclassical "Chicago Boy" economists. Milei is a full-blown libertarian. His Libertarian Party won yesterday´s run-off election by carrying nineteen of twenty-two Argentine states and 56% of the popular vote. After decades of socialism, a plurality of Argentine voters must surely be fed up with it.

A Statement on Javier Milei from Spanish Libertarians 

Guest post by Jesús Huerta de Soto and Philipp Bagus

Senior Mises Institute Fellow Jesús Huerta de Soto and Fellow Philipp Bagus write:

In our own name and in the name of the rest of the Spanish libertarians and anarcho-capitalists we want to send Javier Milei our most enthusiastic congratulations. Today is a historic day for liberty only comparable to the fall of the Berlin Wall and communism. For the first time in history an anarcho-capitalist has won the Presidency of a country as important as Argentina. This shows that in the end the ideas of liberty against statism, left or right, end up prevailing. Mises, Hayek, Rothbard and the great thinkers and theoreticians of liberty planted the ideas that Milei have had the enormous merit of making attractive to the broadest layers of the population and, especially, to the most vulnerable who are always the main victims of the manipulations of socialists and interventionists of all stripes. We are now advising him closely especially on the necessity to establish a 100 per cent reserve ratio on his dollarisation process to avoid any new "corralitos." Viva la libertad carajo.

Milei's Long-Term Victory Depends on Him Winning in the Battle of Ideas

Guest post by Ryan McMaken

Last Sunday, Javier Milei was elected president of Argentina by a comfortable margin, with 56 percent of the vote. He will be sworn in as president on December 10.

Over the past year, however, Milei has made a name for himself as an extremely vocal critic of socialism, central banks, and many types of government intervention in general. He has become memorable for fiery commentary condemning the Left's ideology and tactics while expressing an interest in immediate (i.e., not gradualist) change. He has said he seeks to abolish Argentina's central bank and introduce the US dollar as the country's dominant currency.

His fiscal policy is far more in the free-market direction than any other head of state in a country as large as Argentina (with 46 million residents). Milei has expressed admiration for the work of Murray Rothbard, F.A. Hayek, and a variety of economists who are more centrist than Rothbard and Hayek, but which we might reasonably describe as more-or-less free market. Moreover, Milei self-identifies as a supporter of the Austrian School of economics.

If Milei remains committed to reining in (or abolishing) the central bank, lowering taxes, and cutting government spending, Milei has the opportunity to push through real economic reforms that could provide relief to the beleaguered Argentine middle class. These people have suffered greatly under decades of easy-money-induced price inflation, and an ever-growing burden of taxation and regulation.

Many libertarian supporters of Milei (both inside and outside the country) have responded to Milei's candidacy with celebratory enthusiasm. Some have declared him the next Ron Paul, and many others seem to assume that his election will translate into actual implementation of his stated policies. That could happen, but unfortunately, the hard part has only begun.

It is entirely possible that Milei is sincere in his stated goals and in his apparent commitment to radical opposition against the disastrous status quo in Argentina. If so, that is excellent news. After Milei's election comes the real test, however. Assuming that Milei is sincere right now, that doesn't mean he won't later be unwilling to carry out such policies if they prove to be unpopular as his administration unfolds. Given his short history of serving in political office, we have little to suggest a likely outcome one way or another.

Another possibility is that we may find that he lacks the political skill necessary to harness and exploit what free-market sentiment in the country presently exists. He will have to do this to actually push through any of these reforms. What political skills are necessary? Milei must be able to convince a sizeable portion of the voting public that his policies will work or are working. This doesn't necessarily mean a majority have to be enthusiastically with him at all times. But he at least has to be able to use public opinion to pressure the legislature and powerful interest groups. Since Milei will not be a dictator as president, he will be forced to somehow squeeze concessions out of countless socialists and interventionists in government who quite literally hate him and his policies.

This is not just a problem in countries with democratic institutions. Not even dictators can simply enact radical policies at will. As absolutist monarchs and countless military dictators have found in their days, chief executives meet fierce opposition from entrenched interests within the state in all types of regimes—except, perhaps, in fully totalitarian ones. The sorts of reforms Milei wants will hurt many interest groups who have benefited from inflation and high government spending. The productive class may suffer greatly under these policies, but there are also millions of politically active voters who believe they benefit from Peronist-style economic policy. Those who think they stand to lose from reform will resist.

No Victory Is Possible without Progress in the Battle of Ideas

For the sake of argument, however, let's say that Milei is both sincere in his views and is also among the most skilled politician we've seen in decades. Let's say he is skilled at the tricks successful politicians employ to confound adversaries and build coalitions.

Ultimately, not even these skills can bring about the successful implementation of true radical free-market reforms if Milei and his supporters lose the battle of ideas in the meantime. Milei can only succeed if the public agrees that Milei's policies are "worth it." After all, as Milei tries to push through reforms such as tax cuts or limits on monetary inflation, his political opponents will flood the media with explanations of how Milei is hurting ordinary people, destroying the economy, or is somehow "a threat to democracy." Milei's intellectual opponents will trot out economists to explain how high taxes and inflation are actually good. The public will hear from various "experts" about how Milei is wrong, and that the usual socialists and interventionists have it right.

These tactics are especially dangerous in the short term because efforts by Milei to cut spending and rein in price inflation will be sure to cause plenty of short-term pain in the economy. Cuts in government spending and an end to easy monetary policy tend to pop financial bubbles and drive government-dependent industries into decline. Surging unemployment results in the short term as bankruptcies spike. That, of course, is bad news for any elected politician.

Unless the public can be convinced that this pain will lead to better days ahead, the public is likely to abandon Milei and his policies in short order. Then, four years form now, the Peronists will return to power and the status quo will proceed as if nothing ever happened.

The only antidote to this is to relentlessly fight the battle of ideas in academia, in the media, and with the public. Free-market intellectuals, activists, columnists, and speakers must never tire of endlessly recapitulating the truth about freedom, free markets, and peace. So long as a sizeable portion of the public thinks the Peronists "get it right," no free-market reformer can win.

After all, the only reason any people—including Milei—quote Austrian School economists or appreciate the wisdom of free-market classical liberals is because those people learned those ideas from some teacher, publication, or organisation. Without scholars like Rothbard, Hayek, and the others that Milei says he admires, there would be no Milei campaign as we know it. Without organizations like the Mises Institute, it is a safe bet we would not be hearing Milei call for the abolition of a central bank. Without hardcore classical liberals like Mises, Rothbard, Hayek, Molinari, and Bastiat, there would be virtually no one, anywhere, calling for radical cuts to taxes, spending, and state power overall.

Those who wage these battles of ideas provide the foundation for the political movements that build upon the ideas. Yet, these movements can only succeed if the public learns—to at least some extent—why fiat money is bad, why state power is a problem, and why high taxes are disastrous. The public doesn't need to know the technical details behind these arguments, of course, and is probably not interested. But the public must believe on some level that freedom and free markets are good things.

It remains to be seen if the voting public is willing to give Milei a chance to try beyond the very short term. Much of that will depend on whether or not Argentine libertarians have managed to sufficiently preserve or advance some lingering measure of pro-liberty sentiment. If they have not, Milei will fail politically, regardless of his political skills. If that happens, free-market activists and intellectuals will have to simply keep up the fight until the political situation again favours a viable free-market candidate.

The situation is no different for those of us in the rest of the world.

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CONTRIBUTORS:

Octavio Bermudez is an Argentinian student and Austro-libertarian interested in Austrian economics, political philosophy, and history.

David Howden is Chair of the Department of Business and Economics, and professor of economics, at Saint Louis University at its Madrid campus.

Jesús Huerta de Soto is a Spanish economist of the Austrian School. He is a professor in the Department of Applied Economics at King Juan Carlos University of Madrid, Spain and a Senior Fellow at the Mises Institute. His website is here.

Philipp Bagus is professor at Universidad Rey Juan Carlos. He is a Fellow of the Mises Institute, an IREF scholar, and the author of numerous books.

Ryan McMaken is an economist and writer living in Colorado where he has taught political science since 2004. He has degrees in economics and political science from the University of Colorado and is an Associated Scholar of the Ludwig von Mises Institute in Auburn, Alabama.

These posts first appeared at the Power & Market blog.