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| Prices are still going up in Argentina, just more slowly |
As Argentina’s libertarian President Javier Milei marks one year in office, his efforts to revive the country’s economy remain a work in progress, but his policies are making waves in the United States.
Milei took power with a bold mission to reduce state spending in a country plagued by years of fiscal irresponsibility. Despite implementing austerity measures and seeing rising poverty rates, he still enjoys support from over half the population, according to a recent survey. This level of popularity mirrors that of Donald Trump, with both men sharing a mutual admiration. Trump has praised Milei, calling him a leader who can “make Argentina great again,” while tech billionaire Elon Musk has also lauded Milei's economic reforms, claiming Argentina is experiencing “giant improvement” under his leadership.
Milei’s most significant achievement so far has been cutting inflation, but his push for deregulation has attracted attention in the US, especially among small-government advocates. His initial reforms included slashing state subsidies for fuel and reducing the number of government ministries by half. He is also pursuing a privatization drive, aiming to sell off state-run companies like Aerolineas Argentinas, which was previously privatized and then renationalized in 2008.
Musk, who is focused on reducing government spending and regulations in the US, has expressed admiration for Milei’s bold cuts. Musk and fellow billionaire Vivek Ramaswamy are working on similar goals, aiming to slash federal regulations, lay off government employees, and even close down some agencies. Musk has suggested that Milei’s success in “deleting entire departments” is a model for the US.
However, some Latin America experts remain skeptical. Monica de Bolle, a senior fellow at the Peterson Institute for International Economics, argues that Milei’s approach is unique to Argentina’s situation, where years of mismanagement created a financial crisis. “What works in Argentina doesn’t apply to the US,” she says, noting that the US faces different challenges.
Marcelo J García, a director at Horizon Engage, notes that Milei’s dramatic “chainsaw” approach has captured the imagination of small-state activists globally, but questions whether it aligns with Trump’s broader agenda. Trump’s policies, such as border wall construction and mass deportations, require a large government, making the Milei model less compatible with Trump’s platform.
While Milei and Trump share common ground in opposing the "woke agenda," their economic ideas diverge. Milei is a strong proponent of free trade, while Trump has been critical of trade deals like the US-Mexico-Canada Agreement, seeking to renegotiate them to protect American jobs.
Milei’s polarizing leadership style has sparked strong opinions. García describes him as a “divisive leader” who has not attempted to appeal to his opponents, which could limit his long-term political success. “You don’t build a sustainable political project if you don’t try to reach those who didn’t vote for you,” he says.
Milei’s political future will face a crucial test in Argentina’s 2025 midterm elections, which could determine whether his small-government revolution endures or fizzles out, like previous reform attempts.
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