LYAL WHITE: The real Javier Milei

Javier Milei’s victory in Argentina’s presidential election has caused a public-comment storm, and for good reason. He is a firebrand with a colourful story, striking hairdo and radical economic policies.

Those who appreciate the history of the nation will also note that, at some level, this is more of the same for one of the most volatile, fascinating and troubled socioeconomic studies we know.

Let’s go back to 1945. The Workers’ Day march galvanised working class Argentinians and inaugurated the Peronism movement. Led by Juan Peron, who would win the 1946 election, this movement would go on to dominate politics for decades to come.

Difficult to define, Peronism is a movement, a culture and a doctrine where power and personality outweigh ideology. Its military origins brought the political and working classes together in response to failing institutions in a country desperate for a messianic leader.

2001 has also been recognised as pivotal for Argentina. Mass protests took the spiralling economy and volatile political set-up over the brink. This led to the largest debt default the world has yet seen and precipitated a dark two-week spell when no fewer than five presidents took office.

The more cynical commentators believe the Peronists have wilfully kept Argentina poor — holding the people down so they remain dependent on the state and the power of Peronism. The movement certainly retains substantial power.

Attempts to topple Peronism have failed dismally. Each time out-of-control debt and ballooning inflation have followed, rejuvenating the Peronists.

Enter Milei

Milei, Argentina’s president elect, who will take office on December 10 2023, is a shock to the system. His libertarian, “out with them all”, anti-socialist approach informs his extreme election promises. He has pledged to shut multiple government ministries, abolish the central bank, dollarise the economy, and take a wrecking ball to a plethora of other cultural, political and economic institutions in a clearing-out and cost-slashing exercise.

But as a look back at history shows, Argentina is no stranger to shocks to the system. The big question is whether Milei can implement any of his plans. He is an economist and highly skilled in front of a crowd or camera, but wet behind the ears as a politician.

He controls only about a quarter of the seats in each house of Congress. This will make passing legislation difficult. Congress is fragmented, with no bloc dominating. Getting things done will require coalition-building — but Milei has shown himself to be anything but a team player, readily vilifying anyone left of Margaret Thatcher.

That said, Milei does have momentum. His 11-percentage point margin of victory was substantial. So far, markets have responded favourably to his victory. And young people are among his strongest backers.

But as Milei mania gradually subsides from fever pitch, the question becomes: who is the real Javier Milei?

Much of what we’ve seen of late is actually “moderate” Milei — believe it or not. He has toned things down since the August primary elections, where Milei “The Madman” got less than 30% of the vote. It seems he realised that for most voters, his moderate form beats the more radical rhetoric.

Political realities will determine the Milei that emerges in the weeks to come. Many of those who voted for him were motivated by a fiery unwillingness to continue with the ongoing disaster. Nobody else offered them anything resembling a departure from the unbearable status quo. That doesn’t mean voters are all born-again radical libertarians.

The best-case scenario may be “Milei light”. He absolutely should slash substantial portions of the bloated and often corrupt government. He must deal with inflation. However, shutting the central bank would do more harm than good. He would be better off ensuring responsible monetary policy. While pegging the currency to the US dollar may provide a short respite in combating inflation, it has been tested (and has failed) in Argentina. It is probably unpalatable to voters and lawmakers.

Mostly, Milei’s rhetoric of “good Argentinians” vs “bad Argentinians” is divisive and unproductive. If he avoids this populist trap and focuses on defendable, politically realistic reforms, he may just break the cycle of debt, inflation and disaster that has come to characterise Argentina.

Given the current mood, the country’s history of brinkmanship and Milei’s cavalier style, we should find out soon exactly which Milei we are in for.

* Prof Lyal White is a faculty member at the Gordon Institute of Business Science and an associate researcher at the Brenthurst Foundation