Read part I here.
Milei and the Chances of Privatization
Though privatizations have not yet arrived, the state-owned airline is on the agenda. The company was renationalized in 2008, forcing taxpayers to prop up an airline that has been directly bailed out by the government since 2021. For true privatization, all regulation prohibiting competition and all taxation in the industry should be abolished—falling short of this, it should come with deregulation and less taxation. Milei has proposed to give the company’s shares to its employees and thereby transfer ownership to them. They would either bear responsibility for the company or sell their shares. While this may be the most expedient method toward privatization in a country where unions have so much influence and power to negotiate, it is not a just course of action.
Anatomy of the StateRothbard, MurrayBest Price: $13.62Buy New $17.28(as of 03:26 UTC - Details)
According to the homestead principle, assets belong to those who have worked on them, but the airline would not have been possible without the initial aggression against taxpayer property. The government legally owns the airline, but it does not justly own it. As for the workers, their only possible claim concerns their salaries, and even these, and all other costs involved in the operation of the airline, are primarily financed by taxpayers. As a matter of fact, to do what Milei proposes would constitute a moral outrage. Rothbard would state that the principle of privatization that should take priority wherever it applies would require the government “to return all stolen, confiscated property to its original owners, or to their heirs,” because property rights imply above all restoring stolen property to the original owners. Only those who have been aggressed into financing the airline have a justifiable claim to restitution.
If possible, legal ownership should always be restored to expropriated private owners or their heirs of socialized factors of production. But in this case, even though we know that the taxpayers are the rightful owners, legal ownership cannot work in the same way for tax-funded enterprises. The most just and sensible solution would seem to involve the distribution of shares among taxpayers in proportion to the taxes paid since 2008. However, an airline needs hierarchy and expert knowledge on its inner workings. For assets to be used, liquidated, or dismantled, some agreement among the owners about many complicated matters would still be required. Such a process would hinder any possible gains from this solution. If an entire bureau were created to go through tax documents and calculate a fair distribution of shares, this would impose an unjustifiable burden on taxpayers. The perpetrator of the injustice, in charging the victim a price for justice, would commit a further injustice. Moreover, the government, as usual, could err in its task by, for example, giving more or less than is due to the taxpayers, which could complicate the process of getting the company back in business or liquidated.
Benjamin Seevers proposes to combine the joint stock company and syndicalist approaches. Milei, he argues, should cease all government transfers to the airline and eliminate all government-granted privileges. The company should not be pardoned for its willing participation in taxation and expropriation, and taxpayers should be free to make claims against the now private airline. Milei could give the company to the bureaucrats who currently run it, but taxpayers should be able to bring claims against it in civil court for restitution in the form of payments, bonds, or shares. Seevers recognizes taxpayers’ legitimate claims to the company and wants to relegate its division to the “free market” rather than the government—mirroring the syndicalist solution first, turning it into a mixed system afterward. Following Seevers, the airline “should be cut off from the government altogether without caring how the former public employees organize the company,” and some legally binding order (perhaps an executive order) would state that the company’s expropriations of taxpayers are no longer legally protected, allowing them to extract rectification.
Assuming the cooperation of the airline employees and his political opponents, Milei’s plan would be quick, easy, and preferable to the status quo—but it would be unjust. Seevers’ proposal is more just, but it is neither faster nor easier than Milei’s. Besides, justice in Seevers’ plan would depend on the efforts made by the taxpayers, especially as funders of court expenses, while the workers have done nothing to be the first owners of the new company. Furthermore, each claim could only be awarded relative to the potential claims of the other taxpayers, which would require someone to perform the calculations—whether the company, the government, or the claimants. But there is also a more fundamental inconvenience that virtually rules out Seevers’ plan: the more taxpayers seek compensation, the fewer the benefits for the workers. The latter could foresee this problem and require conditions, thus changing the very essence of Seevers’ proposal.
Nonetheless, we can propose another plan, one faster and easier than Seevers’, significantly more just than Milei’s and not necessarily less just than Seevers’. It would be feasible, entail immediate economic benefits, and avoid judicial and bureaucratic efforts. Milei’s administration would sell the company on the market to the highest bidder, and bidding would start at the market price if possible. As a condition, the company could only be sold to taxpayers who have been paying taxes since at least 2008, and the sale would have to be in cash. Of course, the new owners would get total control of the company and have no particular legal obligation to the workers—they could keep them or let them go. One could expect these taxpayers to be happy with their acquisition, because they chose to buy it, and the government would no longer have to run the company and bear its costs. The workers, now free, could accept new contracts from the new owners or anybody else. With the money from the sale, the unemployed would continue to receive half their salaries for a period preestablished in the plan—say, six months—or until they find a new job. They are not victims, but income expectations and pressure from the union will be taken into consideration.
After the period given to the unemployed, the government would burn what cash remains in the most transparent way possible, thereby alleviating inflation and preventing the government from diverting resources to non-market wishes. This way, there would be no time-consuming and painstaking processes of distribution and reassignment, and workers could continue to work in the company or find new value-generating jobs. This plan can also be applied to other privatizations.
Argentina and Peso Hyperinflation
Let us explain the general situation Argentina was already in when Milei assumed the presidency. With the government constantly spending more than it collects, and printing money to finance the overspending, inflation beyond what is normal for the inflationist monetary system was to be expected. As Rothbard’s great teacher, Ludwig von Mises, wrote, “The inflation can continue only so long as the conviction persists that it will one day cease. Once people are persuaded that the inflation will not stop, they turn from the use of this money.” So there is an ultimate limit on inflation, though a wide one, that will conquer any inflation—the phenomenon of hyperinflation.
Inflation from the government and the banking system is usually aided unconsciously by the people, who generally believe that some moderate periodic rise in prices is normal. If prices could decrease due to economic growth (price deflation as an outcome of increased productivity), people would be able to keep more of their income in the form of cash balances for some future advantage not possible in the present—they could plan further ahead and save more money without having to worry about significant decreases in its value. And if the social demand for money increases, any increase in prices could be proportionally less than the increase in the quantity of money.
