Trump and Musk want to borrow Javier Milei's chainsaw

But how well would the Argentine president's radical budget-cutting regime translate to the United States?

When a mop-haired economist brandishing a chainsaw won the presidency of Argentina a year ago, the world greeted Javier Milei’s victory largely as a blip. The election of a budget-slashing libertarian nicknamed “El Loco” was seen by many as a desperate lurch in his country’s chronic struggle for economic stability.

Today Milei’s crusade is a lot closer to central stage. Since taking office last December, he has turned Argentina’s economy upside down. He’s slashed the government — cutting the budget by nearly a third, firing tens of thousands of employees and reducing the number of ministries by more than half. With those cuts and the help of a temporary tax increase, Milei has wiped out the budget deficit. Inflation has plunged from 13% a month to 2.7%.

Forecasters say the country is poised to emerge from recession and grow its economy at a fast pace next year, though it struggles with a high rate of poverty and partly relies on controls on the outflow of capital.

It’s too early to judge the long-term success of Milei’s economic revolution, but it’s already being hailed as a model by President-elect Donald Trump and his chief budget-cutting advocate, Elon Musk. In turn, the Argentine leader is an unabashed fan of the incoming administration and of Musk. He was the first foreign leader to meet with Trump after the U.S. election.

The Economist put Milei on its cover and called him “the most fascinating figure in world politics at the moment.” It added that he’s “an eccentric character, with both bold and sometimes crazy ideas. But there are lessons for the rest of the world in what he is trying to achieve.”

Governments everywhere are struggling with unprecedented debt burdens. Argentina still has its own debt mountain — it owes the International Monetary Fund $42 billion, more than any other country.

In an interview on Lex Fridman’s podcast, Milei said his government eliminates between 1 and 5 regulations every day and has set an agenda of “3,200 additional structural reforms.”

Taking an ax to the rules enforced by the administrative state is the same method Musk and Vivek Ramaswamy have proclaimed for their DOGE organization, an advisory group seeking to radically downsize the US government once Trump takes office.

Whether this approach could succeed in a superpower, a complicated nation vastly larger than Argentina, is an open question. The per capita GDP of the US is six times larger than Argentina’s. And whether Donald Trump is really interested in shrinking the state, or would rather retain a muscular government he could use to punish his “enemies” and reward his donors, is a big unknown.

The president-elect’s enthusiasm for tariffs flies in the face of Milei’s free-market philosophy. And the experience of other radical budget cutters in Washington suggests the government is a lot more resistant to reductions than at first glance.

Milei, flanked by Musk and Trump, at Mar-a-Lago.

Milei’s worldview

The key to Milei’s worldview is his opposition to an activist government. An adherent of the Austrian school of economics, he sees the last two millennia of human history as an instructive lesson. Until 1800, per capita GDP remained essentially flat, “after which it accelerated sharply, he told Fridman. In the same context of that phenomenal increase in productivity and per capita GDP, the population had multiplied sevenfold over the preceding 200 years...”

“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.”

The growth of government in the past 100 years, seen as a huge positive by opponents of monopoly and supporters of the social safety net, limits freedom, according to Milei’s school of thought. In an ideal world, he would be an “anarcho-capitalist,” favoring the elimination of the state, but says a more realistic philosophy is to be a “minarchist,” supporting the least amount of government necessary.

The ‘freest country’

When his work is done, Milei promises, Argentina “will be the freest country on the planet. 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.” (Ireland benefits from the presence of hundreds of multinational corporations seeking a lower tax-rate environment.)

Milei sounds an awful lot like Trump when he swerves into other topics. Like his friend at Mar-a-Lago, he blasts the media, saying, “You read a newspaper in Argentina, and 85% of what you read is a lie.”

He views the left’s social goals as signs of “a woke virus”: Concern over climate change is a neo-Malthusian ruse. “All environmental policies are nothing more than an excuse to collect taxes so that a group of parasitic bureaucrats can live at the expense of others and finance sinister ideas, where the most sinister idea of all is that there is no room for everyone on planet earth.”

A former goalkeeper, Milei told Fridman he considers his countryman Lionel Messi the greatest soccer player ever. He is devoted to his dogs (“my four-legged children”) and speaks passionately about Puccini’s music and about his own faith in God. The historical figure he admires most is Moses, for bringing his people freedom.

Socialism is Milei’s bete noire. As he noted, the Berlin Wall fell in 1989, but he told Lex Fridman that socialism actually “fell in the year 1961 when they had to build the wall… they built it because people were leaving Communist Germany for capitalist Germany. They realized that those on the western side were much better off…”

“What a wonderful system, right? So I mean, they had to trap people. They couldn’t let them go. I mean, these are such wonderful ideas that they had to apply them at gunpoint.”

Photo by Tomas Val on Unsplash

The real test

Some believe the real test of Milei’s approach will come if and when his administration moves to a much freer market by lifting controls on the flow of capital.

“Argentina has had strict currency controls in place for the past nine out of 13 years,” the Buenos Aires Times reported. The controls “include a tightly managed exchange rate that is on average 20 percent stronger than the market rate. As part of the so-called ‘cepo,’ the government also limits the purchase of foreign currency for savings to US$200 a month, charges taxes to overseas travellers and curtails US dollars for importers. Exporters, on the other hand, have to sell their dollars for pesos.”

“At least for now, Milei is sticking to this regime, despite his pledges to free up all facets of the economy,” the Buenos Aires Times noted. “Many investors expect the restrictions, which are aimed at curbing inflation, to remain in place until the fourth quarter of 2025 after Argentina’s mid-term election.”

“Milei’s La Libertad Avanza party is looking to boost its position and wants to avoid anything that might cause a sudden plunge in the currency before.”

In his podcast interview with Fridman, Milei took note of criticism of the controls from fellow libertarians who argued that “we basically open everything on the first day.”

Scoffing, he said, “We are liberal libertarians. We are not liberal fools.”