Javier Milei

So what is the difference between a madman and a genius? Success.

The following is a conversation with Javier Milei, the president of Argentina. He is a libertarian, anarcho-capitalist, and economist, who campaigned with a chainsaw that symbolized his promise to slash the corrupt bureaucracy of the state. He stepped into the presidency one year ago, with a country on the brink of hyperinflation, deepened debt and suffering from mass unemployment and poverty. He took this crisis head on, transforming one of Latin America’s largest economies through pure free market principles. In just a few months in office, he already achieved Argentina’s first fiscal surplus in 16 years, and not just avoided the hyperinflation but brought inflation down to its lowest in three years.

We discuss all of this in detail, both the successes and the challenges. His depth of knowledge of economic principles, metrics and data was truly impressive and refreshing to hear from a world leader. But even bigger than the economic transformation of Argentina, Javier represents the universal fight against government corruption and the fight for freedom, economic freedom, political freedom, and freedom of speech. He has many critics, many of whom a part of the corrupt establishment he’s seeking to dismantle, but many are simply Argentinian citizens, scared of the pain his radical policies may bring, at least in the short term. But whether one disagrees with his methods or not, no one can deny that his presidency marks one of the most ambitious attempts at economic transformation in modern history, and that Javier Milei is truly a force of nature, combining the rigor of an economist with the passion of a revolutionary in the fight for freedom of a nation he loves. Argentina is one of my favorite countries, so I sincerely hope he succeeds.

This interview was conducted with the President speaking Spanish and me speaking English with an interpreter simultaneously translating. We make the episode available overdubbed and subtitled in both English and Spanish, thanks to our great friends at ElevenLabs. If you’re watching on YouTube, you can switch between English and Spanish by clicking the gear icon, selecting audio track, and then choosing the language. Same with the captions. If you’re watching on X, I’ll post both Spanish and English versions separately. If you’re watching on Spotify or listening elsewhere, I’ll probably only post the English version. This is a first time for me doing something like this in a foreign language. It was challenging, but illuminating. I hope to talking to many world leaders for two to three hours in this way, including Volodymyr Zelenskyy, Vladimir Putin, Narendra Modi, and Xi Jinping. I want to explore who they are, how they think, and how they hope to help their country and humanity flourish. This is the Lex Friedman Podcast. To support it, please check out our sponsors in the description. And now, dear friends, here’s Javier Milei. Economic freedom

When did you first understand the value of freedom, especially economic freedom?

Well, actually, I came to understand the ideas of freedom as an economic growth specialist back in the years of 2013 to 2014. I could see that per capita GDP statistics over the last 2,000 years of the Christian era essentially looked like a hockey stick, indicating that per capita GDP remained almost constant until around 1800, after which it accelerated sharply. In the same context of that phenomenal increase in productivity and per capita GDP, the population had multiplied sevenfold over the preceding 200 years.

So basically, in economics, that means you get increasing returns, and the presence of increasing returns implies the existence of monopolies, concentrated structures, and according to traditional neoclassical economic theory, the presence of monopolies and concentrated structures is not a good thing. But at the same time, one could see that living standards had increased tremendously and that middle-income people ended up living far better than emperors did in the Roman era, and the population had gone from having 95% of people in extreme poverty to less than 10%. And in that context, the question was, how it could be that something that had lifted so many people out of poverty, that had improved human conditions so much, could be something bad for economic theory, meaning something was not right.

So in that context, I remember that one of the people who worked on my team suggested I read an article by Murray Newton Rothbard called Monopoly and Competition. I remember reading it like it was today, and after reading it carefully, I said, “Everything I’ve taught about market structure in the last 20 years in courses on microeconomics is wrong.” This caused a very strong internal commotion in me. So I called this person who used work with me, and they recommended a place to buy Austrian School of Economics books, and I remember I bought at least 20 or 30 books, which I went to pick up one Saturday afternoon. And when I visited the bookstore, I was fascinated by all the stuff they had there.

So I went back the next day and I started calculating how much money I needed to pay for my dog’s food. That’s my four-legged child, and how much I needed to spend on the taxi fare and food. And then with what I have left, I spent all of it on more books. And then I started to read very intensively, and I remember for example, the experience of reading Human Action by Mises, and this was a book that I didn’t know about. And I remember that on the following weekend, I started to read this book right from the first page, and I didn’t stop until I finished it, and that was a true revolution in my head. And having the chance to read Austrian authors like Rothbard, Mises, Hayek, Hoppe and Jesus Huerta de Soto, or others like Juan Ramon Rallo, Philipp Bagus and Walter Block, for example.

That was very inspirational, and at one point I got the opportunity to read related to the works of Alberto Benegas Lynch [foreign language 00:07:38], and I also had the pleasure and honor to meet him. And today we are actually friends. So that paved the way for me to approach the ideas of freedom. And another book that was a very significant influence and impact on me was the Principles of Political Economics by Menger. It was truly eye-opening, or let’s say, for reading Eugen von Böhm-Bawerk, these were things that really challenged all of my former thinking. I had a vague idea and poor about the Austrian School. The only thing I had read about the Austrian School until then had been Money and Time, a very good book by Garrison. But now that I understand a little bit more about Austrian economics, I know that it was rather poor. This doesn’t mean that the book isn’t good, but there were a whole lot of things to read that ended up being truly fascinating. Anarcho-capitalism

So from that, what is now, today, and maybe you can talk about the evolution, is your philosophy, economics philosophy. You’ve described yourself as an anarcho-capitalist, market anarchists, libertarian. That’s the ideal, and then maybe in practice and reality, you’ve said that you’re more of a minarchist. So lay it all out. What’s your economics philosophy today?

Strictly speaking, I am an anarcho-capitalist. I despise the state government. I despise violence. Let us suppose we take the definition of liberalism. I usually use the definition of liberalism given by Alberto Benegas Lynch [foreign language 00:09:37], which is very much in line with the definition of John Locke, which essentially matches the definition by Alberto Benegas Lynch, Jr., who said that liberalism is the unrestricted respect for the life project of others based on the principle of non-aggression and in defense of the right to life, liberty, and property. So I frame all of the discussions within those terms. And the fact is that when you get to that notion, I would dare say that you become an anarcho-capitalist de facto. And what that describes, it is an idea which represents my ideal world. I mean, that is the ideal world.

Now, real life poses a whole lot of restraints, and some of those you can lift, and those restrictions and others you can’t. So in real life, I am a minarchist. I advocate for minimizing state size. I try to remove as many regulations as possible. In fact, that is what I used to say during my campaign, and let’s say, that is what I’m now carrying out. We have just carried out the largest structural reform in Argentine history. It is a structural reform that is eight times larger than Menem’s, which had been the largest structural reform in history. And we did that with 15% of the representatives and 10% of the senators. Furthermore, we have a deregulation ministry where basically every day we eliminate between one and five regulations. On the other hand, we have 3,200 additional structural reforms pending, to the point that the day we finish all these reforms, we will be the freest country on the planet, with the consequences they have in terms of well-being. Think about this, when Ireland started market reforms just over 40 years ago, it was the poorest country in Europe. Today, its GDP per capita is 50% higher than that of the United States. So I have a current situation, and what I am constantly looking for, whether from my academic works and my outreach notes and books, is the world we have today, that every day we are closer, that every day we gain more freedom because there are some very interesting things here. First, I would like to quote Milton Friedman. There is a moment when they do an interview with Milton Friedman and they ask him about liberals, and then he says that there are three types of liberals. There are the classical liberals where, for example, Adam Smith or Milton Friedman himself could fit. Some say that Hayek could fit into that category. For me, Hayek is a minarchist.

Then you have the minarchists where you could clearly find in that place Mises, Hayek. One could find in philosophical terms Nozick and basically Ayn Rand. And at one point, Milton Friedman, based on his own son, he says, “But if you look closely, there are some who are anarchists.” Let’s say, probably from my point of view, the person who has been the greatest inspiration in my life is essentially Murray Newton Rothbard. So therefore, there are two dimensions. One is where I want to go, and the topic is where I stand. So the most important thing is to try each day to advance further toward that ideal of anarcho-capitalism. In that sense, sometimes we face strong and harsh criticism regarding that ideal vision. I think that’s the nirvana fallacy. If you compare yourself against paradise, everything is horrible and miserable, but you don’t live in paradise. You live on earth. Basically, what you need to understand is something called the state conditions. Let’s suppose that you don’t like rectangular tables. You prefer circular tables. Now the reality is, I have only a few hours until I go and catch my flight and the table is rectangular. You like a circular table, a round one, but there isn’t one. What you have is a rectangular table. So either we do the interview here or we just can’t do it. So what do you do? You adapt to the current conditions. This is what there is now. So then you have some restrictions that you can change and others that you cannot. The idea is to modify all the ones that can be changed in the short term, and start working on those that can be modified in the medium or long-term. For example, if you really like round tables, perhaps the next interview we may do at a round table. We’re going to try and solve it, but today it’s something that we couldn’t possibly solve. So that’s basically the idea, right?

Let’s say it’s about understanding that some restrictions you can change, others you can, and there are institutional restrictions too. There are many anarcho-capitalists who are dedicated to criticizing, and incredibly, they do so with more violence towards liberals, and many of them actually criticize me, which truly make no sense because it is precisely the nirvana fallacy but the reality is that… Look, in Argentina, for example, the most popular sport is soccer. When you go to watch an Argentina match, it is beautiful. The stands are full, and they’re all painted with sky blue and white colors. There is a lot of joy. People sing songs that are very fun, that are very distinctive. It’s very much part of Argentine folklore, so to speak. But you see that beautiful show is external. That is to say it does not determine the outcome. You place the ball in the middle of the field, and no matter how much people shout, the ball doesn’t move. The one who moves the ball and scores the goals is Messi.

So what do I mean? If you don’t get involved and don’t get into it, no, you don’t do anything. So what do I know is that there are many liberals, libertarians and anarcho-capitalists who are really useless because all they do is criticize, let’s say, those of us who want to lead the world toward the ideas of freedom. And what they don’t realize is that power is a zero-sum game, and if we don’t have it, then the left will have it. Therefore, if you level your harshest criticism at those in your own ranks, you end up being subservient to socialism probably. And also, for instance, you have cases of strong hypocrisy, let’s say. I have seen cases of agorists. It’s the anarcho- capitalists who criticize Rothbard because he said that you have to get into politics, otherwise the socialists will advance. And it’s interesting because some of them, I have seen them criticizing, proposing agorism, and I remember one of them, one day the police showed up and honestly, he was peeing himself.

So it’s very easy to criticize, propose, and suggest, but if he was truly such an agonist, he should have been willing to endure going to jail. However, when it was time to face the consequences of the idea he was promoting, he froze, wet his pants and ended up, let’s say, accepting all the restrictions because clearly it was better to be out of jail than in jail. But in doing so, he sold out his ideas. So it seems to me that no, not taking into account the restrictions of the situation, only serves to be functional to socialism because all it does is strike against one’s own. Presidency and reforms

So you became president 11 months ago. Can you, again, describe some of the actions you took? For example, you cut half the number of government ministries, layoffs, removed price controls. It’ll be interesting to lay out the first steps and what’s next.

If you allow me, I will first give you a description of the situation we received, and based on that, I will tell you each of the things we did. When we first took office, basically what we found was that in the first week of December, inflation was rising at the rate of 1% per day, which means 3,700% annually. In the first half of December, it had accelerated to 7,500% annually. When you look at wholesale inflation in December of last year, it was 54%, which if annualized would equate to an inflation rate of 17,000% per year. And in addition, Argentina for the previous 10 years had not been growing, with a drop in GDP per capita of approximately 15%. And the reality was that nearly 50% were living in poverty.

Now, later I will get deeper into that discussion, and the reality is that we had a fiscal deficit, which amounted to 15% of GDP. Five points were in the Treasury, 10 points were in the Central Bank, which was endogenous monetary issuance. And the reality is that we also had interest-bearing liabilities at the Central Bank, equivalent to four monetary bases maturing in one day, meaning we could have quintupled the amount of money in one day. We had peso-denominated maturities, amounting to the equivalent of $90 billion. The Central Bank had negative net currency foreign reserves, minus $12 billion. We had commercial debts in the Central Bank equivalent to $50 billion. There were company dividends held back amounting to $10 billion. Therefore, if we had instantly opened up… You see, I say we are liberal libertarians. We are not liberal fools. That’s what some anarchist liberals suggested, meaning that we basically open everything on the first day.

So in that context, of course, if we had done that, we would’ve encountered hyperinflation. Therefore, that would have led to the number of poor people being around 95% and probably, and by December, the Peronist party would have organized supermarket’s lootings, and would’ve done all sorts of things, and would’ve probably been ousted. And by the first part of the year, the Peronists would’ve gone back to office. So to us, it was crucial to end fiscal deficit.

One of the things we promised during the campaign had been to reduce the number of ministries, and indeed we reduced to less than half the number of ministries because we went to nine ministries, today we have eight. We have also laid off a large number of civil employees. Today, I can say that we’ve already dismissed about 50,000 of them, and we practically don’t renew any contracts unless the positions are absolutely necessary. At the same time, we have stopped public works and we have eliminated discretionary transfers to the provinces. We have also diluted public sector wages. Also, we have eliminated economic subsidies by restoring utility rates to the right levels. And in that, let’s say, in this context, we achieved fiscal balance as far as the Treasury is concerned. This is very important because in the last 123 years, Argentina had a deficit for 113 of them, and in the 10 years it did not have a deficit because it was not paying the debt. So that was absolutely false, and they told us it would be impossible to do that.

We had planned to do so within a year, and they said it wasn’t possible to adjust by more than one percentage point, and we achieved fiscal balance in the month of January. That is the first month of administration. At the same time, we also cut social plans linked to intermediation. This is very important because we knew we were going to make a very tough adjustment, and we knew that this was going to have a court in social terms, and we knew that we had to offer support during the first month, I mean, the first quarter and second quarter in office. One of the things we did was to eliminate what are known as poverty managers. That is intermediaries. Basically, people have a guard through which they receive assistance, but it happens that they had to provide a counter service, and that counter service was verified by a group called the piqueteros.

So in that context, when they were going to sign, the counter service took away half of the money. So by removing that payoff, they stopped extorting them, stopped stealing their money, and with the same amount of money, they received double the resources. And of course, we also provided an additional boost. So let’s say that this is related to the five adjustment points in the Treasury. Now, what happens, as we began to achieve fiscal balance and no longer needed to issue money to finance ourselves, and as we also met interest payments and some capital repayments, one of the things that happened is that the debt market began to be recreated. So we were able to take debt out of the Central Bank and transfer it to the Treasury where it should have always been, and that meant an adjustment of approximately 10% of GDP. Everyone said this would be impossible and couldn’t be fixed.

Essentially, what we did was implement a fiscal adjustment at the Central Bank, amounting to 10% of GDP. So if you ask me, it’s clear that we have not only made the biggest fiscal adjustment in the history of humanity, because we made a fiscal adjustment of 15 points of the GDP, but also most of that went back to the people as less seigniorage, as a lower inflation rate. It’s true that we temporarily raised the country tax, but we lowered it in September, and now in December, we’re going to eliminate it. Today, for example, we also announced that in December we are eliminating import taxes. In fact, in that regard, what you have is that we return to the people 13 and a half points of GDP because the real tax burden is the size of the state. So while back in December we were discussing hyperinflation, today we are discussing 30-year loans.

In other words, all those resources that the national government used to take are now back in the private sector. And that’s what has allowed it to be very dynamic. And this has two very strong impacts. The first one is that if you look at wholesale inflation, it went down from 54% to 2%. So it went down by 27 times. It was divided into 27. So we had inflation at the rate of 17,000% annually, and it’s now close to about 28% a year, but it’s not only that. You could consider consumer inflation, the latest consumer inflation rate was 2.7%. Now, it happens that we essentially, due to a matter that is related to the Central Bank’s balance sheets and also due to the debt stocks, we still have controls in place and we are eliminating restrictions, day by day. Now, the interesting thing is that we have a 2% monthly devaluation standard, and there’s international inflation of course, which means that you then have to subtract two and a half points from the inflation observed by the consumer.

This indicates that inflation in Argentina, the true inflation, not the induced one, but the actual monetary inflation is 0.2% per month. At 0.2% per month, this equates to 2.4% annually. What I’m saying is, the original discussion was about whether inflation could reach 17,000%. Now we are bringing inflation down to levels of 2.5% annually, and that is amazing. And we achieved this by considering a number of factors. The first one is that we did not experience a previous hyperinflation, which would’ve simplified the process of implementing a stabilization program. Typically, when hyperinflation occurs, monetary assets are diluted, leading to a natural restoration of demand. And besides, we did not resort to any expropriation. For example, before the Convertibility plan, which was the most successful program in Argentina’s history, Argentina experienced two instances of hyperinflation. During Alfonsin’s administration, inflation reached 5,000%, and under Menem was 1,200%.

Additionally, there was the BONEX plan, under which debt was exchanged on a compulsory basis. In other words, what we did instead was clean up the Central Bank balance sheet. So with that, we cleaned up the Central Bank’s balance sheet. We cleared a loss of $45 billion, all voluntarily. And the most amazing thing is that we did it in just six months, and at the same time, we have not controlled prices.

And at the same time, we have not controlled prices nor have we fixed the exchange rate. And this is very important. All previous stabilization programs in an effort to show quick results used to do this. What they would do is, before announcing the plan, they would adjust the rates. And once the rates were adjusted, they would launch the plan. But in our case, we couldn’t afford that luxury, so we had to implement it on the go. And also over the past few months, that is to say companies brought in rates that covered only about 10%, whereas today they cover 80% so you get the picture. Just imagine the adjustment we are making. And in that sense, it is also incredible what we have achieved because if we were to work with the inflation we have in our country today, considering the exchange rate situation, the figures are even better than during the convertibility program, which was the most successful economic program in Argentina’s history.

And in fact, there is an article called Passing the Buck, which is by Gerardo della Paolera, Bózzoli, and Irigoin that demonstrates that Menem’s first government was the best government in history. And basically, it argues two things in the success of the stabilization of the convertibility program. So if you take a closer look, when you examine it carefully, when you account for all these factors, our disinflation process is actually much more genuine. And not only that, it’s also much deeper. We are restored freedoms to Argentinians while simultaneously implementing a structural reform eight times larger. And we accomplished this with only with 15% of the representatives, 10% of the senators, and within the first six months of government. In other words, our deregulation agenda continues daily and we still have 3,200 structural reforms pending. This will ultimately make Argentina the freest country in the world.