Of all the things President Javier Milei said this week — which was particularly active due to the inauguration of Donald Trump and his trip to Davos — one line stood out: “Sometimes one also has to learn.”
This is promising language from a president who often seems above all criticism. He said it during an interview with Bloomberg, referring to his change of opinion on China, a country he had described as being run by “corrupted Communists” during the 2023 election campaign. He now calls Beijing “a very good trade partner.”
This is not the first thing Milei seems to have learned during his first 14 months in office — and hopefully it will not be the last. For starters, on the economic front, he has learned that it was better to keep the peso instead of replacing it with the US dollar and that the Central Bank may have a role to play, so better not to close it down just yet.
But there are other, more structural lessons he will have to learn if he means to run Argentina for an extended period. One, perhaps the most important one, is what to do with his strength.
Milei said in that same interview with Bloomberg that he runs the country with three verticals: one, the administration, whose main goal for now is to continue lowering inflation; two, the construction of a political machine to run in the midterm elections and beyond (i.e. 2027), a task he assigned to his sister, presidential Chief-of-Staff Karina; three, waging a “cultural battle” because, he says, no economic programme is sustainable without killing the “woke virus.”
The president and his followers are putting a lot of effort and resources into the third item, but they might be overestimating its importance. The Chinese learned this more than half a century ago when Deng Xiaoping coined the phrase, “It doesn’t matter if a cat is black or white, as long as it catches mice.” Deng was defending his pro-market economic pragmatism, only a few years after Chairman Mao’s “Cultural Revolution” had gone the opposite, disastrous direction. Always, ideology gets in the way of results.
The planets may be aligning for Milei to deliver a good presidency, something Argentines have not seen frequently since the return of democracy in 1983. Raúl Alfonsín only had half a good presidency in the 1980s, Carlos Menem had a good first presidency in the 1990s, and the Kirchners arguably delivered a decent presidency and a half in the 2000s. The last two examples, Menem and the Kirchners, show good conditions wrecked by policy stubbornness — Menem leaning toward the orthodox right and the Kirchners toward the unorthodox left.
Milei perhaps addresses this issue when he says that he is a libertarian but not a “liber-idiot.” After all, he keeps the ‘cepo’ capital controls alive and kicking, and there is no immediate indication he will lift them unless ongoing negotiations with the International Monetary Fund over a new financing programme end on a surprisingly high note — meaning new cash worth about US$15 billion for the Central Bank reserves.
Economy Minister Luis Caputo excused himself from the World Economic Forum and Davos to fly back to Buenos Aires and lead discussions with an IMF delegation that has already landed in the country. IMF boss Kristalina Georgieva said a day before Trump’s inauguration that she was working “expeditiously” on a new agreement with Argentina.
Milei’s learning curve should take note from his predecessors: too much orthodoxy or unorthodoxy leads to trouble. The Achilles’ heels of the 1990s, when Menem made Argentina neoliberal, and the 16 years of the Kirchners in this century, was getting caught in ideological battles that diverted attention from the real problems voters cared about. It was jobs under Menem and inflation under Kirchner. They both moved to the extremes of their economic models, making those problems worse for the people until the people just had enough.
Given his economic vision and the way his government is moving, Milei’s administration risks falling into the Menem flaw: low inflation at any cost, a strong peso, a fully open economy, and automatic alignment with Washington.
It is way too early for Milei to want to see the red flags. With no real opposition and no economic black swans ahead, at least in the short term, the ruling party looks on track to cruise to a good victory in the midterm elections in October. But if Milei wants to learn, it is better to do it now than learn the hard way later.
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