Milei and Argentine Paradox

The Milei government has spent 100 days with relative success. It has failed to implement the most ambitious reforms, but it has made progress in reducing public spending and inflation, and it has relatively good marks from economic operators. But Argentina’s population is facing poverty that has returned to the levels of 20 years ago, and this defines a potentially explosive situation. Nevertheless, the consensus on Milei remains the same as it was when he took office.

How to explain this? The thing is that the Argentine crisis has become unbearable for the population but, paradoxically, has become a resource for Milei. What was unacceptable at other times becomes tolerable given the futility of previous economic policies.

Understanding Argentina’s economic history is not an easy task. Just under a century ago, the country had one of the largest GDPs, was the sixth largest economy in the world, a major exporter of agricultural products, and obviously conducted promising industrial activity. What happened to the state, which became one of the most indebted, with uncontrolled inflation and a series of economic and political crises?

Despite the risk inherent in simplification, it can be said that the country has not been able to make investments that would guarantee sustainable development. The government spent a lot and not always well, taking loans that were not used for investments sufficient to grow the country’s infrastructure and production capacity. Its development model, which was followed for most of the twentieth century, created customs barriers to imports of manufactured goods aimed at developing local industry. Despite success over a period of time, this system has led to the financing of inefficient and uncompetitive economic groups, making it increasingly difficult to integrate into the international economy. Meanwhile, governments have increasingly invested in the expanding role of the state and have allowed public deficits to grow.

It is noteworthy that throughout this period, thanks to the government’s economic successes and social investments, the Argentine population enjoyed a privileged socio-economic level among South American countries. This is one of the main problems with Latin American populism: it tries to guarantee people’s quality of life in order to maintain the electoral base of those who rule.

But populists have an unrealistic vision of economic sustainability and often steer productive investments toward ineffective political elites who have no interest in the country’s development. In a sense, the drama lies precisely in the ability to overcome crises without addressing their fundamental problems. Thus, the current critical level that challenges the government of Javier Milei has been reached.

In this context, a “neoliberal” shock with sharp cuts in government spending seems inevitable. At the same time, the economic crisis makes the population more vulnerable and defenseless, requiring even more public assistance. Balancing these two opposing tendencies is the first and biggest challenge for any political leader facing a situation like the one in Argentina.

But Milei’s plans go further than that. He proposes a radical reorientation of Argentina’s economic development model. In a sense, his proposal is to destroy whatever exists to create something new: sell off all state-owned companies (and Argentina has many), deregulate economic activity, open the country indiscriminately to foreign investment, abandon the idea of national development plans, and let the laws of the market determine who will prosper and who will not. It’s a risky path destined to exacerbate the crisis in the short term, with the hope of progress in the medium to long term… Milei’s strategy has been called the “chainsaw plan” in economics because of its enormous destructive impact on what exists today. Meanwhile, his proposals are struggling to reach the approval of the Argentine Congress. If they go further, the short-term projections will cause alarm for the survival of the population. Public forces that oppose him are organizing and preparing strikes and other measures to make it impossible to implement his proposals.

Milei has neither the parliamentary nor popular support to offer the population great sacrifices. His party has only 38 of the 257 seats in the House of Representatives. He was elected in the second round with 55.7% of the vote, but won only 22% in the first round. This percentage (22%) represents the part of the Argentine population that actually supported his proposals from the beginning. Not a lot for those who propose to change the way politics and governance of the structured state is conducted, even if it is in crisis.

Milei’s authoritarian temper tends to manifest itself in this situation. In his government plan presented to the Chamber of Deputies, the Law on the Foundations and Starting Points of Argentine Freedom, better known as the “omnibus bill” (because of the number and multiplicity of legislative subjects), Milei created obstacles to strikes and public demonstrations; he virtually banned opposition rallies against the government and imposed a state of emergency that allows him to make economic and administrative decisions without requiring parliamentary approval.

Although the “omnibus bill” was simplified and stripped of many controversial points, it failed to make progress, leading Milei to seek new legislative proposals and take measures to increase its popularity. To this end, resources were taken from state-run soup kitchens for the poor to organizations run by evangelical churches; a 30% increase in the minimum wage was approved (although the unions’ demand was 85%); he met with Pope Francis, whom he had previously called a “communist”; renewed Argentina’s claim to the Falklands (or Malvinas) archipelago owned by the British.

Among these measures, two stand out: rapprochement with evangelicals and renewed Argentine claims to the Falkland Islands. The allocation of resources to evangelical churches, accompanied by dialog with their leaders and Milei’s participation in their religious ceremonies, strengthens the international link between Christian conservatism and right-wing authoritarianism. The claim to own the Falkland Islands is a purely rhetorical exercise, but it echoes the strategy of the military dictatorship that plunged Argentina into military disaster in 1982, already in its final stages, in an attempt to seize the archipelago. Currently, according to the survey, 99.8% of the local population would prefer to remain under British control.

Argentina has even less economic and military power today than it did in 1982… Reviving the issue only serves to build consensus using strong Argentine nationalism. From a traditional democratic perspective, overcoming a crisis like Argentina’s requires consensus building and intensive political construction. But Javier Milei seems to insist on ideological extremism and anti-politics. He repeats, not in program but in practice, the steps of the populist leaders he claims to oppose. The future will tell if he can prevail, contrary to most predictions.

The approval that Milei continues to enjoy, despite the social crisis, from about 40% of the population is due to two factors. The first, already mentioned, is to discredit previous policies that forced people to make sacrifices now to achieve a better future. Second, it is political polarization itself. In very polarized societies, for example in contexts where party attachment is traditional and rooted in the past, political commitment is highly emotional and passionate. The militants would rather make sacrifices than recognize the rightness of their opponents. Populism is largely fueled by passionate support for its social bases. This is the political capital that can guarantee the survival of the Milei government, whether it succeeds or not.