The presidential elections in Argentina begins with first-round voting on October 22 and the candidate favored to win is Javier Milei, leader of the political coalition La Libertad Avanza (Liberty Advances). The international media has published several articles about Milei, describing him as a “populist alt-right,” a “fascist” and even a “Nazi.” However, these serious accusations sound quite laughable. Milei is a renowned libertarian, who promotes individualism, free markets and limited government, while the ideology of fascism/Nazism advocates collectivism and the centrality of the state (concepts shared with communism and that Milei strongly opposes).
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Surely, the leader of La Libertad Avanza is a flamboyant character: he was a goalkeeper, a rock n’ roll singer, and he is known for his wild haircut that gave him the nickname “el Peluca” (the wig). However, behind this exuberant personality is a serious and knowledgeable economist, who aligns himself with the Austrian School of economic thought, which was shaped by important names such as Ludwig von Mises (1881–1973), who promoted free markets, and the unhindered exercise of the right of private property, and Nobel laureate in economics Friedrich Hayek (1899 –1992), whose work focused on the decentralized market system with free competition and pricing. Moreover, Milei is proponent of Western values and a staunch supporter of Israel.
Dollarization of the economy
If Milei wins the October election, his victory will represent a revolution. It will be a nation’s rebellion against failed socialist economic and political policies that were pushed for decades by governments not only in Argentina, but in the whole of Latin America, which led many countries of the continent to poverty. Today’s main problem in Argentina is actually the economy in shambles. In August, the country’s annual inflation rate shot up to 124.4%, deepening the cost-of-living crisis.
Ian Vásquez, director of the Center for Global Liberty and Prosperity at the Cato Institute, explained that behind this inflation figure is a chronic problem of uncontrolled public spending: “This has led to recurring debt crises and defaults. [In addition,] the growing dependence on the public sector… has only worsened economic performance. Per capita income is below what it was 15 years ago and more than 40% of the population lives in poverty.”
Hence, in order to protect the purchasing power of Argentinians, the leader of La Libertad Avanza suggests a radical solution: the dollarization of the country; that is, to get rid of the Argentinian currency, the peso, and replace it with the U.S. dollar. This seems to be the only way to decrease the country’s fast-growing inflation. In the past, three other Latin American countries, Ecuador, El Salvador and Panama, dollarized their economies and have experienced since then the lowest inflation rates in the region. “The dollarization would also eliminate the exchange rate risk, which scared away capital from the country, and would reduce the interest rate, which is now at 118%," Vásquez added.
Dollarization does not mean Argentina’s submission to U.S. monetary policy
Critics of Milei’s economic program say that Argentina should not be deprived of its own monetary policy. However, the reality is that Argentina is already unofficially “dollarized.” It is estimated that Argentinians have more than $260 billion outside the system – in mattresses, in foreign banks and so on. This figure is more than enough to dollarize the country, and this reform would allow those dollars to be seen. When Ecuador announced it would dollarize in 2000, bank deposits in dollars immediately increased. That is why it is also laughable that dollarization implies a loss of sovereignty. "Argentinians have already chosen the dollar precisely because, as citizens, they have not had sovereignty over their purses,” Vásquez stressed. In addition, dollarization does not mean Argentina’s submission to U.S. monetary policy. Discussing the lessons from Panama’s dollarization, economist Juan Luis Moreno‐Villalaz stated that the Federal Reserve “does not run Panama’s monetary policy or interfere with its sovereignty,” as the changes in the money supply are the ones to determine it. Hence, the Federal Reserve has the same impact on Panama’s monetary policy as it has to the rest of the world.
Why Argentina’s presidential elections are important to the world
Argentina does not have many options to improve the country’s economic situation. Either it will elect Milei and try a radical change that has a hope to bring back Argentina to be one of the wealthiest places on the planet, as it was in the beginning of the 20th century, or it will continue to be ruled by Peron-style corporatism policies that risk it becoming a failed state.
It is worth noting that Milei’s elections represent an opportunity as well for Israel and the West. If Milei is going to be elected as Argentina’s president, he would create a crack in the shaping of a multipolar world, so much wanted by China and Russia. For decades, Argentina, one of the most important countries in Latin American, did not have problems in entertaining relations with some of the West’s unfriendly counties. Instead, Milei wants to reclaim for Argentina its role as a member of the West and not of a Global South that feels victimized by the Global North. Milei’s election could also become a push for the West itself, to rediscover its lost values. Meanwhile, in La Libertad Avanza’s presidential campaign, the word “liberty” keeps on resonating powerfully, bringing people from all spectra of society to yearn for dignity and freedom to pursue happiness.
Anna Mahjar-Barducci is a researcher and author