Milei’s administration in Argentina has gone through its first month. It could be argued that it is too early to make an assessment but so many events have taken place this first month that a prudent review is warranted.
The criteria for this assessment must not fall into two extremes: dogmatism and on the other hand optimism. A dogmatist (and even naïve view) would complain that Milei has not taken apart all the progressive structure of legislation, regulations and taxes already. The pragmatist counter argument is that Milei’s government has support to carry on some free-market reforms but not the minimal state dream nor further federal disintegration; this support is at many opportunities timid and does not rest in principle but on the benefit of the doubt; libertarians in Argentina are still few in number, they are the core of Milei’s support but do not represent the majority of his voters.
Optimists would say that Milei has achieved a lot, like reducing the number of federal ministries from 18 to 9. But this reduction is almost symbolic in terms of GDP and some Argentine Austrian economists have argued that most of the actual reduction in government deficit will come at the expense of the private sector. Tax hikes on exports and imports come as a surprise since Milei -a few years ago- said that he would rather cut his own arm than to raise taxes.
So, summing up, we cannot ask the impossible, but we cannot ignore the faults. The raises in taxation come in direct conflict with the notion of a “libertarian” administration but in other areas there has been some progress, like deregulating the economy with a massive decree that takes down or modifies 300 laws. Next, he sent to congress a package of laws called “Ley de Bases y Puntos de Partida para La Libertad de los Argentinos” (“Law of Bases and Starting Points for the Liberty of Argentines”) reminiscent of the book by the Argentine classical liberal Juan Bautista Alberdi, whose writings inspired the writers of our first constitution. This bill intends to make sweeping reforms in tributary, electoral and administrative matters that could not have been modified by decree, so they have to make it go through congress. This -if approved by congress- would mean a massive deregulation of the economy that would prove highly beneficial for the people.
Opposition has made itself present by street protesting and public appearances, talking about the “evils” of such deregulation. One of the architects of this massive deregulation plan, eminent economist Federico Sturzenegger has said that one of his associates told him that he “had never seen people protest when they are given more freedom.” For many that was the reaction to such opposition. How can people be so mad when they are being liberated from the shackles of the state? The answer is simply, Milei’s support is less fervent than his opposition. Most of Milei’s supporters are not libertarians but most of the opposition is indeed socialist. This is one the challenges of Milei’s government, he has little hardcore support but a huge diehard opposition.
What will come of the “Law of Bases and Starting Points for the Liberty of Argentines” when going through congress, we do not know yet. Certainly, legislators will “work” on it, so it may not come out as free market oriented as intended originally. The decree has to go through congress and the judicial branch as well, so it has a hard road ahead.
The reader can surely notice that such a review of Milei’s administration so far makes sense given the number of events that have taken place, and only some of them have been pointed out in this article. When making such an assessment one must be fair, point out both the negative and positive aspects of what has been done so far. Milei’s government faces huge challenges ahead and it must prove itself up to it. Unfortunate measures such as reducing the public deficit by increasing taxation will hinder economic activity and should not be even on the table as options to get out of this crisis; but massively deregulating the economy (eliminating rent and price controls for example) is of course welcomed.
Milei’s administration has not yet proven itself; its actions navigate through the political spectrum and have not gone straight to the free market (the tax boost proves it) as many expected. It has only been a month; one must be critical but prudent and take into account pragmatic affairs. So, we shall follow the next events closely, keeping our mind cold to discern right from wrong but our heart warm to avoid losing ourselves.
