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HomeNewsMilei’s task: Bringing Argentina's bureaucrats to heel

Milei’s task: Bringing Argentina’s bureaucrats to heel

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TEN days ago the flamboyant – outré, actually – Javier Milei won the presidential election in woeful, tragic Argentina. ‘Won’ does not really fully capture the result – he trounced his opponent, winning almost 56 per cent of the vote. 

Milei, 53, is repeatedly compared to Donald Trump, but there is really no comparison. He is unique among prominent world political figures. So unique that mainstream sources don’t know how to pigeonhole him, though they strive mightily to do so.

Since he is not a leftist, he is of course repeatedly called ‘far-right’. But any epithet that is used to describe both the open borders, anti-collectivist Milei and the nationalist, anti-immigration Alliance for Germany (AfD) is obviously meaningless – except as a signal from the left that someone is beyond the leftist pale. 

He is referred to as a populist, but that also widely misses the mark. Milei is a self-described anarcho-capitalist, whereas most populists now and historically (such as the Populist Party in the United States in the 1890s) are openly hostile to capitalism and markets: modern populists hurl the ‘neoliberal’ insult at those with pro-market views far milder than Milei’s. 

Even Milei’s dogs’ names advertise his beliefs and intellectual heroes. They are Murray (for Rothbard), Milton (for Friedman of course), and Robert and Lucas (a twofer for the late Robert Lucas – one of my professors at Chicago). What, no Friedrich? Milei should have cloned another one! (These pets are all clones.)

When I wrote Milei is not a leftist, let’s say that rather understates the matter. Milei loathes leftists and leftism, and repeatedly refers to them on television and in public appearances in scatalogical terms, calling them ‘leftards’. He despises collectivism, and asserts bluntly that leftists are out to destroy you. His mission is to destroy them first. 

As someone so vehemently hostile to the left and well outside conventional political categories, Milei’s victory has triggered a mass moral panic, especially in the media. The New York Times coverage was (unintentionally) hilarious: ‘Some voters were turned off by his past outbursts and extreme comments over years of work as a television pundit and personality.’ Well, obviously a lot more weren’t, but I guess one has to take solace where one can, eh, NYT?

Milei’s agenda is indeed a radical one, especially for a statist basket case like Argentina. To combat the country’s massive (140 per cent annualised) inflation, Milei says he will dollarise the economy and eliminate (‘burn down’) the central bank. He also wants to reduce radically the role of the state in Argentina’s economy. He says he wants to ‘chainsaw’ the government – and emphasises the point by campaigning with an actual chainsaw.

His election on this programme sparked a rally in Argentine financial markets, with government debt rising modestly and stock prices rallying smartly.

Will Milei be able to deliver? Some early commentary has doubted his ability to govern based on the fact that his party’s representation in the legislature is well below a majority. That may be an issue, but not the major obstacle to Milei’s ability to transform Argentina into what it was at the dawn of the 21st century: an advanced, rapidly growing economy and a relatively free society. 

The real obstacle is one that is faced by anti-statists everywhere – the bureaucracy. (I do not say ‘civil service’ because that phrase is at best aspirational and more realistically a patent falsehood. Akin to the Holy Roman Empire that was neither holy nor Roman, the ‘civil service’ is neither civil nor a service.) 

Argentina’s bloated state is its own clientele with its own interests, mainly self-preservation and an expansion of its powers. Moreover, it has created a whole host of patronage clients in business and labour. Milei’s agenda is anathema to this nexus of public and private interests. They will make war to the knife to subvert it.

Even a president with an electoral mandate faces formidable obstacles to implementing his agenda. The most important obstacle is what economists call an ‘agency problem’. The bureaucrats are agents of the chief executive, but it can be nigh unto impossible to get these agents to implement the executive’s directives if they don’t want to. Their incentives are not aligned with the executive, and are often antithetical. As a result, they resist and often act at cross purposes with the executive.

The modern chief executive’s power to force his bureaucratic agents to toe the line is severely circumscribed. At best, the executive can make appointments at the upper levels of the bureaucracy (such as the heads of ministries or departments), but the career bureaucrats who can make or break the executive’s policy are beyond his reach, and not subject to any punishment if they subvert the executive’s agenda. 

This problem is not unique to Argentina. Indeed, it is the main defect in the governance of virtually every country in the world. See Suella Braverman in the UK, who was recently defenestrated as Home Secretary for daring to offend the sensitivities of the British civil servants. (I again emphasise this phrase’s oxymoronic nature.) 

But the travails of the likes of Braverman (or Trump) are likely to pale in comparison to Milei’s in confronting the gargantuan Argentinian state and bureaucracy. Even if he avoids Trump’s fault of repeatedly appointing those hostile to his agenda to the positions in the bureaucracy he can hire and fire, Milei will still face the immense task of bringing those myriad bureaucrats outside his direct reach to heel. 

There are indications that Milei understands this problem, and has devised a solution. Rather than attempting to control particular bureaucracies, he states that he wants to eliminate government departments (like the Ministry of Education) altogether. This is likely the only way to succeed, but whether he can cut the bureaucratic Gordian Knot à la Alexander brings us back to the question of his doubtful legislative backing. 

Indeed, Milei needs to be more than a mere Alexander. He must be a Hercules to clean the Augean Stable of the Argentinian state. I don’t hold out much hope, but it is refreshing that someone has been elected to play Hercules, and one who is eager to take on this labour. Would that this starts a trend worldwide. 

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Craig Pirrong
Craig Pirrong
Craig Pirrong is Professor of Finance, and Energy Markets Director for the Global Energy Management Institute at the Bauer College of Business of the University of Houston.

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