The election of the radical rightwing economist Javier Milei as president of Argentina would probably inflict further economic “devastation” and social chaos on the South American country, a group of more than 100 leading economists has warned.
In an open letter, published ahead of Argentina’s crunch 19 November election, the economists said they understood the “deep-seated desire for economic stability” among voters, given Argentina’s frequent financial crises and recurring bouts of very high inflation.
Four in 10 citizens currently live in poverty and annual inflation is close to 140% – a crisis Milei has vowed to fix by defeating his rival, Argentina’s finance minister, Sergio Massa, and taking dramatic measures such abolishing the central bank and dollarizing the economy.
“However, while apparently simple solutions may be appealing, they are likely to cause more devastation in the real world in the short run, while severely reducing policy space in the long run,” warned the letter, whose signatories include influential economists such as France’s Thomas Piketty, India’s Jayati Ghosh, the Serbian-American Branko Milanović and Colombia’s former finance minister José Antonio Ocampo.
The letter said Milei’s proposals – while presented as “a radical departure from traditional economic thinking” – were actually “rooted in laissez-faire economics” and “fraught with risks that make them potentially very harmful for the Argentine economy and the Argentine people”.
On the campaign trail, Milei – a self-described anarcho-capitalist – has brandished a chainsaw to symbolize his desire to slash subsidies and drastically reduce state expenditure on social programmes. He has also repeatedly claimed “taxes are theft” and called the “social justice” programmes they finance an “aberration”. “The state was invented by the devil, God’s system is the free market,” he has said.
But in their letter the economists warned that “a major reduction in government spending would increase already high levels of poverty and inequality, and could result in significantly increased social tensions and conflict.”
“Javier Milei’s dollarization and fiscal austerity proposals overlook the complexities of modern economies, ignore lessons from historical crises, and open the door for accentuating already severe inequalities,” they wrote.
Ghosh, a development economist from the University of Massachusetts Amherst, said she and the letter’s other two co-authors, Piketty and Milanović, worried Milei’s policies “would be deeply damaging for Argentina and very unfortunate for the entire continent”.
“This is not just the social chaos that could be generated by extreme right positions but also the economic chaos that would ensue from a decline in both public revenues and public spending,” Ghosh added.
“Argentinians are going to vote in an election where there are these very tough choices. But a libertarian solution that vilifies the public sector will only add to the suffering.”
With less than a fortnight until one of the most important elections in Argentina’s recent history, the election looks too close to call.
Milei was widely considered the frontrunner before last month’s first round, although he unexpectedly finished second with 29.9% of votes to Massa’s 36.6%. Since then, however, the eccentric economist has been endorsed by two prominent conservatives: the third-placed candidate, Patricia Bullrich, and the former president Mauricio Macri. Fuel shortages have also undermined Massa’s campaign.
Juan Cruz Díaz, the managing director of the Buenos Aires-based consulting firm Cefeidas Group, said that as they entered the final straight the two candidates needed to spin the election in different directions.
Milei needed to focus the debate on the economic failings of his opponent’s Peronist movement which has held power for 16 of the past 20 years.
Massa meanwhile needed to concentrate on Milei’s volatile character and convince voters not to support an “extravagant, angry, crazy” loose cannon such as his rival. “He will try to show him as emotionally unstable and a violent and aggressive and extremely polarizing and divisive figure,” said Díaz, who was not sure such efforts would be enough given Argentina’s economic woes. “If you ask me, Milei has an edge.”
Milei, who bursts into uncontrollable fits of rage at the mere mention of the 20th-century English philosopher and economist John Maynard Keynes, is unlikely to be impressed by the open letter. Milei considers Keynes, who challenged the idea that free markets could provide full employment and economic growth, a Marxist.
A new podcast by the Spanish newspaper El País interviewed one of Milei’s former neighbours who, in an attempt to make small talk, mentioned Keynes in the lift. “But you are a communist piece of shit,” Milei reputedly shouted at the woman all the way up to the 10th floor. Milei has also attacked Piketty in the past, calling him a “turd” and “a criminal disguised as an intellectual”.
