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Within six months, Javier Milei went from being a local phenomenon to the cover of the Time magazine. He has pitched Argentina to Silicon Valley and traveled to the heart of capitalism (a.k.a. Davos) to lecture the world's most powerful businessmen about socialism. He has also met with Donald Trump, Benjamin Netanyahu, Georgia Meloni, Viktor Orban and Nayib Bukele, as he aims to build his image as a leader of the global right.
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He describes himself as a „proud disciple of the Austrian school, a liberal libertarian, and an anarchocapitalist“. In fact, he traveled to Hamburg past weekend to receive the Hayek-Medaille from Friedrich-August-von-Hayek-Gesellschaft, one of his favorite economists, along with Ludwig von Mises. He has five English mastiffs, all named after economists, except one: Milton (Friedman), Murray (Rothbard), Robert and Lucas, and Conan, like „Conan the Barbarian“ from the Arnold Schwarzenegger movie.
After receiving the award, Milei traveled to Berlin to meet with Chancellor Olaf Scholz to discuss several topics: from the European Union-Mercosur agreement and Argentina's admission to the OECD, to the importance of critical minerals, and the support of Ukraine and Israel, according to the Argentine's government.
With his direct (sometimes brutally so) unapologetic style, his messy hair which he doesn’t like to comb, ‚the lion‘ –as his supporters call him– walks around like a rockstar. Last month he even rented one of Buenos Aires most iconic arenas to present his latest book and sang rock songs to an audience of more than 5,000 people, before giving a 50-minute lesson on economic theory. His supporters say it takes a madman to make the reforms Argentina needs; his critics say he is a madman because of the severe economic pain he is inflicting on the country that has already been in crisis. The Argentine's president says that the difference between a madman and a genius is success.
The chainsaw and the blender
Milei is making, in his own words, „the biggest adjustment, not only in Argentine's history, but in the history of humanity“: he has eliminated price controls, devalued the peso by 58% and cut public spending by 13 points of the gross domestic product. This shock therapy is having some positive results, especially with the inflation, which has reduced from 25,5% in December to 4.2% in May, the lowest monthly figure in more than two years. In line with this slowdown, the Central Bank has cut the interest rate six times, from 133% to 40%. The government also achieved results on the fiscal front (“the mother of all battles”, as Milei calls it), with five consecutive months of fiscal surplus, a feat not achieved since 2008.
But the cost of stopping that, for Milei, was a straight path to hyperinflation, was a massive adjustment especially for the vulnerable and middle classes, who saw their purchasing power plunge as energy, public transport and services prices kept rising. About half of the country is now below the poverty line, according to several universities. Pensions had an inflation-adjusted drop of more than 30%, according to different think tanks. Even the IMF has highlighted the need to maintain social assistance. The meat consumption, heavily symbolic in the country, fell down by 15% in the first five months of the year and is at its lowest level in 30 years, according to the chamber that represents the industry.
Record approval despite mass impoverishment
However, in this difficult context of the „chainsaw“ (the spending cuts on the State and politics) and the „blender“ (the trimming of spending in real terms due to inflation) Milei has been managing to maintain his approval at levels around 50% –close to the 55% he obtained in the November election. In addition, he has managed to get a major portion of the society to agree with the economic policy (49%), although most of them believe that the adjustment is being paid by the ordinary citizens (75%) and not by the political „caste“ –as Milei calls it–, according to a recent survey by the research firm Opina Argentina. Another survey by Giacobbe points out that although an overwhelming 86% of those surveyed consider the effort to be heavy or unbearable, 50% believe it is worth it because in the future their economy will be better off.
Years ago, some of Milei’s colleagues, more moderate and prominent, had concerns about the effect for the libertarian cause, watching him blast „Keynesians“ who were supporting the Government's intervention into economic affairs, live on tv. But it is precisely this bold style –which has been his trademark since he became a goalkeeper in the second division club in Buenos Aires–, that sets him apart from the stereotype of the conventional politician rejected by a large part of the society.
For many analysts it is a surprise that Milei has not only has such high approval numbers, but that he has managed to keep them stable after six months of harsh austerity measures. During that period the president went through two general strikes by Argentina's main trade union confederation, and a massive demonstration to defend the public university attended by hundreds of thousands of people, including many of Milei's voters. None of these events seem to have had a strong impact on his image.
Reasons for approval
For Alejandro Catterberg, the director of the local pollster Poliarquía, there are several reasons that explain this phenomenon. First, slowing inflation is playing in favor of the Government. Hyperinflation –ironically, the reason why Milei decided to study economics– is out of the question right now, but it was a serious threat back in December.
Furthermore, there is a picture that emerges from the Poliarquía's studies that included some focus group discussions: the idea that Argentina is in a crisis and that the situation would not be solved overnight; that it were the politicians who had led the country to this situation; and that it was precisely that „caste“ that did not want to let Milei govern. This scenario “makes people give credibility, credit and time to the Government and to maintain the support", said Catterberg to LN+ news channel.
Another part is explained by the fact that Milei has no rivals, at least for now. The opposition is still reorganizing itself after last year's elections and, although it has made its presence felt in Congress, a leader who really challenges the President has not yet emerged.
A new concern on the rise
But the reality may not be as generous, and it seems to be catching up quite quickly. While the Argentines’ concern about the inflation is going down, a new one is on the rise: unemployment. As Guillermo Oliveto, a consultant, who specializes in social trends and consumption, pointed out in LN+: „Society has a stoic level of tolerance to this recession process and may be willing to lose 20% of purchasing power… but that is one thing with jobs, and another without them“.
According to the official data, in the first four months of the year almost 95,000 jobs were lost in the private sector. The most affected area was construction, with the Government's refusal to finance some 2,000 public works projects. In the public sector, 25,000 jobs were wiped out and the Government plans to cut another 50,000, to keep his promise of using the „chainsaw“ and eliminate the fiscal deficit.
Also, data from the Central Bank indicates that 275,000 salary accounts were closed in the first quarter. A report by the Argentine Industrial Union (UIA) states that more than half of the companies suffered a drop in production, while the majority (60%) saw a downturn in sales. Moreover, some of them are starting to have problems meeting their obligations, and most of them are choosing to delay tax payments. The scenario is even more grim for the SMEs. Most of the manufacturing companies are resorting to the reduction of shifts, although there have also been layoffs and suspensions, according to the UIA report. The national statistics office, Indec, recorded an 8.4% YoY decline in economic activity in March, with construction, manufacturing and commerce leading the fall.
The Economy Minister, Luis Caputo, said that the worst part of the crisis was over, but economists surveyed by the central bank, forecasted that the GDP would contract 3.8% this year. However the IMF estimated a more optimistic scenario in its latest World Economic Outlook: a 2.8% contraction this year and a 5% growth for 2025.
Milei said that he still had 3,000 reforms to send to Congress, but due to his minority position –he has only 15% of the representatives and only seven of the 72 senators– the Government had to wait six months for the legislators to approve its first law. Although Argentine's bonds experienced a rally in the first months of 2024 and the Government won praises from the likes of Tesla's CEO, Elon Musk, and the billionaire investor, Stanley Druckenmiller, for now the investors prefer to wait and see how sustainable Milei's reforms really are. The President has a key date: 2025. The midterm elections could change the configuration of the Congress and allow him to move forward with his plan. The question is how long society will be willing to put up with the austerity program.
Cecilia Filas is an Argentine journalist specialized in economy, finance and international affairs