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Editor's Pick

Argentina’s Javier Milei Is Slashing Big Government – We Can Do the Same in America

Michael Chapman

milei

Argentine president Javier Milei was sworn into office on December 10. In the last thirty days or so, the libertarian economist has consolidated eighteen government ministries into nine, fired 5,000 government workers, devalued the peso so it is closer to the market rate, and introduced a 350‐​page package of economic reforms that would make Milton Friedman and Friedrich Hayek smile. 

Milei’s vision, as he stated in his inauguration speech, acknowledges “the right to life, liberty, and property.” This echoes our Declaration of Independence, which says “all men” have certain rights, including “life, liberty and the pursuit of happiness.” In practice, Milei’s ideas reflect the limited government policies long advocated by the scholars at the Cato Institute. The circumstances are different, but the principles are the same.

Small government, individual liberty, economic and social freedom, and peace are the ingredients of a prosperous society. The Milei administration is trying to reach that goal by throwing off decades of socialist exploitation by the State. What’s happening is historic and US policymakers should pay attention. If pro‐​liberty change can occur in Argentina, it can happen in America too.

No doubt, some of Milei’s plans will be stalled by the courts or killed by the National Congress but some of them will succeed. Also, like anyone in a position of political power, Milei is likely to disappoint supporters of limited government and economic freedom sometimes. Nonetheless, there are reasons to be cautiously optimistic.

On his first day in office, President Milei signed a decree to reduce the number of federal ministries. Eighteen cabinet offices were absorbed into nine departments. For instance, the Ministries of Transportation and Public Works were transferred to the Ministry of Infrastructure; Tourism and Sports and the Ministry of Environment and Sustainable Development were transferred to the Ministry of the Interior; five other executive offices were placed under the Ministry of Human Capital.

Transferring or eliminating federal departments and agencies in the US is not as easy to accomplish as in Argentina, but it is a policy that Cato scholars support.

Capitol building with Senate

For instance, the Cato Handbook for Policymakers (9th Edition, 2022) explains why many federal agencies should be phased out or privatized. The US Agency for International Development (USAID) should be abolished and the US should withdraw from the World Bank, according to Cato’s Ian Vasquez, because the evidence shows there is “no correlation between aid and growth.” People need economic freedom, not subsidies. Currently, the US spends about $40 billion in overseas development aid.

Vasquez also says it is time to “privatize or abolish the Export‐​Import Bank, the Overseas Private Investment Corporation, the US Trade and Development Agency, and other sources of international corporate welfare.”

As for government spending, Cato’s Chris Edwards explains that all corporate welfare should end, including “subsidies for agriculture and energy businesses.” He also calls for ending “aid‐​to‐​state programs for education, housing, transportation” and “welfare,” and privatizing “postal services, passenger rail, electric utilities, air traffic control” and other activities that could operate in the private sector.

Medicaid could be converted to a block grant, says Edwards, and Social Security could be transitioned into a “system based on private accounts.”

The notoriously unreliable Amtrak, as an example of government waste, has never turned a profit and “consumed more than $50 billion in federal subsidies over five decades to 2020,” said Edwards. In 2021, Amtrak had a loss of $2.1 billion. It should be privatized.

government

As for the US Postal Service, privatize it as well, added Edwards. It employs about 640,000 people but has “lost more than $90 billion since 2007. Between 2001 and 2021 first‐​class mail volume dropped 51 percent, largely caused by the rise of email and the internet. “Afuera!” or Out! as Milei would say.

Other federal entities ripe for privatization, according to Edwards, include the Tennessee Valley Authority, Power Marketing Administrations, Army Corps of Engineers, and the Bureau of Reclamation. (Edwards documents the worldwide privatization revolution here, which both Argentina and America can learn from.)

In his reforms package Milei calls for a temporary suspension of public infrastructure projects, reduction in “energy and transport subsidies,” and an end to “export and import quotas and licenses,” reported Manhattan Institute fellow Daniel Di Martino. Milei also plans to privatize the national airline Aerolineas Argentinas.

As for US education, “the Constitution does not grant the federal government any authority to govern education, and for most of our history Washington stayed out of the schoolhouse,” wrote Cato’s Neal McCluskey in the Handbook. Today, we need to “eliminate federal involvement in K‑12 education except for supplying school choice in Washington, DC [and] funding education for students in military families and on Indian reservations,” he added.

In Argentina, Milei has long advocated school choice. As president, he transferred the Ministry of Education, which he had dubbed the “Ministry of Indoctrination.”

The US Congress should end the National Endowment for the Arts, the National Endowment for the Humanities, and the Corporation for Public Broadcasting, according to Cato’s David Boaz. “Taxpayer subsidy of the arts, scholarship, and broadcasting is inappropriate because it is outside the range of the proper functions of government,” he said. “Government funding of anything involves government control.”

Milei transferred the Ministry of Culture’s operations to the Ministry of Human Capital on his first day in office. It was not a complete elimination of the department but it was a move in the right direction.

declaration

Other changes he’s achieved, according to Ian Vasquez, include repealing a law that regulates the renting of real estate, repealing the “Buy Argentina” law, ending a regulation on how and what products can be stocked on store shelves, strengthening contract law, allowing transactions in dollars and other currencies, including bitcoin, and closing the Central Bank.

In his inauguration speech, Milei said, “Today we return to embrace the ideas of freedom, those ideas that are summarized in the definition of liberalism by our greatest hero of the ideas of freedom, Professor Alberto Benegas Lynch, Jr.”—a Cato adjunct scholar—“who says that, ‘Liberalism is the full respect for the life project of others, based on the principle of non‐​aggression, in defense of the right to life, liberty, and property, whose basic institutions are private property, markets free of government intervention, free competition, division of labor and social cooperation.’”

Those “ideas of freedom” are essentially identical to those named in the Declaration of Independence. Milei wants to “return to embrace” those principles, which incidentally have guided the Cato Institute since its founding: “the Declaration of Independence and the Constitution — on the bedrock American values of individual liberty, limited government, free markets, and peace.”

A once‐​unknown libertarian economist is slashing big government in Argentina armed with the same ideas that inspired Jefferson, Washington, and Adams. It is early on in the Milei administration but believers in limited government and economic freedom should keep their eyes on Argentina with interest and hope. “Long live freedom, damn it!”

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