Argentina's president Javier Milei cut 30,000 government jobs. The country’s inflation rate dropped more than 20%, but poverty is soaring.
Trump advisors Elon Musk and Vivek Ramaswamy celebrate Milei as the perfect model to slash government in the U.S.
Guests
Natalie Alcoba, Argentine-Canadian journalist based in Buenos Aires.
Monica de Bolle, senior fellow at the Peterson Institute for International Economics. Former director for Latin American studies and emerging markets at the School of Advanced International Studies at Johns Hopkins University.
Transcript
Part I
MEGHNA CHAKRABARTI: Argentina's President Javier Milei loves a chainsaw.
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(CHAINSAW SOUND)
That's him on the campaign trail last year, promising to take a chainsaw to Argentina's state spending. He even brandished an actual chainsaw at campaign rallies.
In a 2023 TikTok video, Milei stands in front of a whiteboard with stickers labeled with the names of Argentina's different governmental agencies. One by one, he reads agencies names, and then rips them off the board, shouting, "Afuera!" or "out!"
Milei has delivered on his promise. He's a libertarian economist and a self-described anarcho-capitalist. He proclaims nothing but contempt for government. And in his first year in office as Argentina's president, his administration has slashed at least 30, 000 government jobs and cut the number of state agencies roughly in half in order to combat a deep deficit.
In that time, Argentina's inflation rate has dropped from where it was a year ago, an eye watering monthly rate of 25% a year ago. Now it's down to below 3%. However, Milei's chainsaw approach is cutting into the overall standard of living in Argentina as well. Many social service programs have been eliminated, as well as subsidies and price controls for certain goods and services.
Water, gas, and electricity are five times more expensive now. Fares for public transit have increased sevenfold.
CHAKRABARTI: Aida Segot, a teacher, told the Indian news organization, The Economic Times, quote:
"I don't know much about inflation, but I know that when I get my salary, it's gone in two days.
End quote. In fact, in the first six months of Milei's presidency, Argentina's poverty rate soared to almost 53%.
A man interviewed by NBC News could not contain his frustration.
(INTERVIEW IN SPANISH)
"Bad, bad, bad!" He's saying the children have nothing to eat. They are starving to death, and many neighborhoods aren't receiving aid.
However, far away from Buenos Aires or Mendoza, Milei has influential fans. Two of them happen to be advisors to President elect Donald Trump, Elon Musk and Vivek Ramaswamy.
ELON MUSK: Governments around the world should be actively deleting regulations, questioning whether departments exist. Obviously, President Milei is, I think, seems to be doing a fantastic job on this front just deleting entire departments. Fantastic.
CHAKRABARTI: That's Musk speaking at the Cato Institute conference in June of 2024.
Milei and Musk have met in person several times. Vivek Ramaswamy also met Milei at this year's Cato conference. Conservative Political Action Conference, or CPAC, where Ramaswamy made a joke referencing Milei's whiteboard "Afuera!" video.
VIVEK RAMASWAMY: (SPANISH) Marxismo, afuera! (LAUGHS)
JAVIER MILEI: Afuera!
RAMASWAMY: You're more of a von Mises guy, I'm a Hayek guy.
MILEI (LAUGHS)
RAMASWAMY: But the good synergy is there. And we want to bring that mentality to the U.S. That's what we need to learn. How you actually shut things down. You can't reform these agencies. You have to shut them down if you're doing it. So I'm proud of you for doing that. You set a good role model. We want to bring that to the U.S.
CHAKRABARTI: You've heard Ramaswamy say you can't reform these agencies, you have to shut them down, as you're doing, referring to Milei. In fact, Ramaswamy posted on X, aka Twitter, in November, quote, a reasonable formula to fix the U.S. government? Milei style cuts on steroids, end quote.
Musk and Ramaswamy are set to co-chair a Trump administration initiative called the Department of Government Efficiency, or DOGE.
It's not yet clear exactly how DOGE will work or what will it do, but its goal is purportedly to eliminate some $2 trillion out of the United States federal government. So can Javier Milei's so called shock therapy fix decades of financial crises in Argentina? And if so, at what cost? And therefore, what, if anything, can the United States learn from Argentina, given the members of the incoming Trump administration so admire Argentina's president?
That's what we're going to try and understand today, and we will begin with Natalie Alcoba. She's an Argentine Canadian journalist based in Buenos Aires. That's where she joins us from. Natalie, welcome to On Point.
NATALIE ALCOBA: Hi, Meghna. How are you?
CHAKRABARTI: I'm well. For Americans who don't really know that much about President Milei's background, can you tell us a little bit about him? Has he been a lifelong politician, or where did he come from?
ALCOBA: Yes, he's had, I think what we can describe as like a meteoric rise to power. He, in some ways, came out of nowhere a few years ago, starting to appear on television. He's an economist by trade and worked in companies as an economist.
And a few years ago ... he started to appear as a pundit on television, showing off what we now see as the Milei brand of this unruly, unvarnished character. Who spoke, in very crude terms, attacking policies from the government.
On both sides of the political spectrum, attacking both conservative policies and more left-wing policies. And a lot of that persona took off during the pandemic, he became a bit of an internet star, clips of what he was saying circulating on TikTok.
And he built this sort of following that at first was really based around young men turning and seeing this person, speak to them about the problems that they had been observing in their own families and the sense of being left out of the picture in Argentina.
And so a couple of years ago, he forms a party, a political party called La Libertad Avanza, Freedom Forward. And was really like dismissed at the beginning, as this eccentric outsider, which he in many ways was. But he turned that into really like an attribute and it's through that, that he was able to connect with the electorate.
So he forms this party, he runs in midterm elections. He wins a couple of party, wins a couple of seats. He's won them, literally two seats. And then he quickly says he's going to run for president. Again, laughed at, dismissed, he's got this look about him too, he's got this mop of hair, these like thick mutton chops. Stories around dogs, I mean he has a number of dogs that are cloned, there's so many things about him that are larger than life.
CHAKRABARTI: Natalie, can I just jump in here for a second? Because of course, everything that you're saying is ringing very familiar, right? To the ears of American listeners, because it sounds like his trajectory, Milei's trajectory into the highest level of Argentina's politics is rather, at least shares some similarities with Donald Trump's trajectories.
Now, about his dogs. I found this utterly fascinating. You're right. He has four dogs. They're cloned from his original beloved English Mastiff. And we have a little bit of tape of Milei speaking about his cloned dogs, which he lovingly calls his four legged children.
(MILEI SPEAKING)
So Milei there is saying, they all have names of economists. Murray is called Murray after Murray Rothbard, the inventor of anarcho-capitalism. Milton after Milton Friedman. Robert after Robert Lucas, who was an heir to Milton Friedman. And Lucas, also after Robert Lucas. And of course, Milton Friedman, the famed University of Chicago economist, who really brought unfettered free market capitalism to the fore in the United States.
So, you know, the other thing about Milei that rings so familiar to me, Natalie, I just happened to be fortunate enough to be in Argentina in January of this year, so about a year ago. And I saw a not insignificant number of Make Argentina Great Again hats. They were blue though. Was I imagining it?
ALCOBA: Yeah. No. Yeah, that's right. He's certainly seized on MAGA. And given it an Argentine spin. I think so much of Milei's success is about his own persona that he's been able to cultivate as this outsider, as this person who's going to, as you talked about, take a sledgehammer and take a chainsaw to the state, like literally blow things up.
But then he also comes at a time in which the society was looking for that, exhausted after years of economic crisis, moments of boom and bust, succession of governments. Argentina also is a politically polarized country, like the United States.
And so generally power swings between left and right. And there have been left and right governments in power in recent years. And this sense that things weren't getting better. And so that, of course, is like fertile ground for somebody like Javier Milei to come in and say you need something, we need something different.
And he really, truly capitalized on this idea that he wasn't part of the political caste. Yes, he campaigned with a chainsaw, but his message during the campaign really was around, it's the politicians. It's corrupt politicians. He uses this term political caste.
That is the reason why Argentina is perpetually impoverished. And so the belt tightening, like the cutbacks won't hurt you. That was his message in the campaign. He wins and he quickly like shifts that, of course, still using the same idea that there needs to be a dramatic overhaul and there needs to be huge cutbacks.
But he starts to just very quickly talk about, okay, like now it's crunch time. Now it's time for this shock therapy and it's going to hurt now, but it's going to be worth it in the end.
So shifting to this horizon that will be better, that for a country that has been through, like I said, years of this perpetual sense of things not getting better. That horizon of hope was something that really people gravitated to. Because even though, you know, his base at the beginning was this idea of like young, politically disaffected men, ultimately, he wins because he achieves a broad cross section.
Part II
CHAKRABARTI: Natalie, let me just ask you, play a little bit of tape from everyday Argentines here. This is from the Indian newspaper, The Economic Times.
They spoke with Dolores Sagasta, who's a business owner and she told them she thinks president Milei needs more time in office.
(INTERVIEW)
Dolores there is saying, I think it's important to understand that this is the way forward. And while some are struggling, as long as we stay on this path, it's going well. We need to give him more time. It's only been a year. We need to give him more time.
Here's another one. This is Aram Boyaciyan, a textile merchant in Argentina.
He told The Economic Times that he thinks Argentina is, in fact, through the worst of its economic troubles.
Quote, My perception is that we've already passed the worst. It seems to me that the economy hit bottom two months ago. In my sector, where we work with the middle class and lower middle class, those who are stable, we have a formal salary, seem to be recovering purchase power. He goes on and says, we understand the rules of the game and what's next.
Six months ago, we did not know where we were heading, but now we do, and everyone has to accept these rules. End quote. So Natalie, it seems as if, as with all things, depending on where you are in Argentina's economy, the experience of these cuts, these Milei cuts, is quite different. Because, as I mentioned earlier, there's the simultaneous fact that the poverty rate in Argentina has soared to something like 53%.
In your reporting there, what have people been telling you about their personal experience of these massive changes in government?
ALCOBA: Yeah, I think, I think some of those clips do reflect that range. Even the clips that you had, that you aired earlier about, in particular, poor sectors of a society that are literally like having a hard time putting food on the table.
Without a doubt, the first few months of the year were brutal and chaotic. Because you saw this dramatic increase in the price of various things that came out of the government eliminating price controls, deregulating a whole bunch of services, cutting subsidies, so the cost of using public transit skyrocketed, cost of utility bills has gone up dramatically, rent is up significantly, your health insurance premiums are up.
The price that you might be paying to send your kids to private schools, which are not necessarily an elite experience here in Argentina. All of that jumped in a very, internet bills, all that jumped really quickly, and at the same time, we were seeing this slowdown of inflation, of the price of goods, at the grocery store, of materials that you were buying for your house and so forth.
So there was this sense of, okay, so now Javier Milei is in power. What does that look like? How does that feel? You talked about the tens of thousands of public service jobs that had been cut, the government also halted public works projects.
So there were all of these changes. It felt palpable that people were like a bit stunned by it all, because now this is the leader of this country. And this is the direction that he's taking it, with a strong measure of support.
And it sparked, there were some pretty dramatic scenes of protests from different sectors. From pensioners who weren't seeing like their pensions, keep it being able to keep up with inflation, from students who were out on the street protesting the fact that the government was cutting back on funding for public universities, because there are public universities here that are free.
So there was this real volatile sense, but I do think that in the second half of the year, there is also, now there's like a sense of something that appears to be more stable in some respects, so there is this contradiction. In some ways, 2023 in Argentina, I think, was really marked by this sense of literally, prices were jumping in the double digits every month.
And so you went to a grocery store and the next time you went it was likely that those prices were going to change. You would go looking for certain products and you couldn't find it because merchants said, I don't know what price to give to them, because we feel like our providers are going to bump up the price.
So you couldn't find stuff, because of that sense of economic instability. That was really palpable. Now, that isn't the case, but people are still, swaths of, not everybody, of course, but there's still large chunks of society that are having a really hard time to meet because of these costs that have gone up.
I think Argentina also, like lots of other countries in Latin America, has like a really high level of informal work. So that's work that's off the books. You asked me, like, how is it that people are making, how are they paying their bills?
If like their utilities are more than double, right? I think, the answer that you get is people are hustling harder. They're pulling in extra jobs. They're making decisions about the things that anybody would do, like cutting back on what they're spending. Like maybe they're cashing in on savings.
And so now a year in, we're in that, okay, things feel in some ways more stable. But we're still just a year into this government.
CHAKRABARTI: Yeah, Natalie, on that point, again, as you said, the people are still trying to figure it out, even though it might be feeling a little bit more stable. That is coming hand in hand with that very high poverty rate that I quoted earlier.
And in fact, on that specific issue, President Milei was asked about that on the Lex Fridman podcast just last month in November of 2024, and you're going to hear his answer through an interpreter.
Milei says that he claims that his government did not create the poverty in Argentina, but inherited it from a previous administration.
(TRANSLATION)
JAVIER MILEI: The poverty was an inherited poverty. The point is that what we did was to reveal it. You are in the middle of an island, and they give you $1 million, what can you do with that? What happens? When you are faced with that situation, the statistics show that you are much better. But the reality is you couldn't buy anything.
If you left the situation as it was, people were going to starve because they couldn't buy anything. Those goods were not available. What is the only thing you can do to save people? Make the prices transparent and allow products to reappear. When you make the prices transparent, you also make transparent the cost of the basic food basket and the total basic basket, meaning the poverty line, sorry, the indigence line and the poverty line respectively.
And when you do that, clearly you will see a jump in poverty.
CHAKRABARTI: So that's Argentina's President Javier Milei on the Lex Fridman podcast just last month. Natalie, hang on here for just a minute. Because I want to bring Monica de Bolle into the conversation. She's a senior fellow at the Peterson Institute for International Economics and former director for Latin American Studies and Emerging Markets at the School of Advanced International Studies at Johns Hopkins University.
Monica, welcome to On Point.
MONICA de BOLLE: Hello, Meghna. Thank you very much for having me on.
CHAKRABARTI: So what I'd like to do actually is take a few steps back and talk about how Argentina's economy got to where it was at the beginning of President Milei's administration. Because as Natalie accurately described, it didn't matter whose administration there was in power in Argentina for some time, but the fundamentals of the economy were never as strong as they could be.
So where would you look to, Monica, for sort of the beginnings of this problem?
de BOLLE: So firstly, let me apologize, Meghna, for getting your name wrong in my introduction.
CHAKRABARIT: It's okay. (LAUGHS) Call me whatever you want. It's alright. Don't worry.
de BOLLE: But with respect to the historical roots of what we're seeing in Argentina, it is correct that, the problems that Milei has inherited are inherited.
So he didn't generate those problems. He came in with those problems at hand. They were already present. And there, the result of years and years of just complete mismanagement of the economy. Under a political system that's been, for a very long time, extremely turbulent. Argentina has not really known any situation that has not been politically turbulent in its recent history.
So with that kind of history, you can't really have a stable economic history either. So the two things go hand in hand.
CHAKRABARTI: Just to remind folks, obviously some folks may know about the Peronism in Argentina, but there's also been military governments. That's the kind of instability you're talking about.
de BOLLE: Exactly. So it's constant sort of flips between authoritarian governments and democratic governments. This was in the past. Argentina has now pretty much established itself as a democracy, like other countries in the region, that have military dictatorships in their past or other forms of dictatorship in their past.
But that's not to say that political turmoil has gotten any better. In fact, it hasn't, because when we look at the past 20 years or so, what we have seen is mounting political turmoil in Argentina, leading to this situation that Natalie so aptly described of Milei coming in as a complete unknown. Someone who really didn't have any kind of reverberation or repercussion in Argentinian politics.
And then all of a sudden, he's there as this figure that's offering people hope, just because he is so different from everything else or every other politician that Argentina has seen. ... That of course rings very familiar. I know, but it is also very Latin American.
CHAKRABARTI: Ah, okay, hold that thought for a second, because I do want to come back to it.
But for the sake of being as detailed as possible, when we talk about the economic problems in Argentina. Natalie, once again, she did a really good job in outlining the hyperinflation. That's been going on for some time. Then also, I mentioned earlier that the government is, has a quite a large deficit in Argentina.
What are the other sort of economic problems you would point to that were so appealing to voters for Milei style reforms?
de BOLLE: So on the one hand, so you've mentioned too, the fiscal issue and the other issues that Natalie was talking about, the third issue that we haven't touched upon, and it is really critical for Argentina, is the currency.
And what you do with the currency, because Argentina is a country that given its very turbulent history and given that also this isn't the first time, when Milei was coming into office, Argentina seemed to be heading into hyperinflation. It isn't the first time this has happened in Argentina. Argentina had hyperinflation back in the 1980s. For years, like other countries in the region as well.
And at that time, the country chose to deal with the hyperinflationary problem by allowing people to hold U.S. dollars. So Argentina is an economy that functions with two currencies, not one. So it has its own currency, the peso, and it also uses the U.S. dollar in kind of the same things that it uses the peso for.
So people have deposits in dollars. They have their savings in dollars. They may do certain transactions in dollars. And so one major problem, structural problem that Argentina has had, is that this kind of dependence on the U.S. dollar makes it vulnerable to shocks, turns in sentiment or even domestic problems that make people become more pessimistic with respect to Argentina and move their dollars out of the country.
When that happens, it throws the country into crisis. So every time Argentina has had a crisis, it has had that component to it.
CHAKRABARTI: Okay. Let me just jump in here for a second. I'm so sorry I had to do this, but housekeeping, I'm Meghna Chakrabarti. This is On Point. Okay, so you're pointing out the importance of understanding sort of the currency vulnerabilities in Argentina, is well taken.
In that case, Monica, what has President Milei done to address that particular issue?
de BOLLE: That's just it. He hasn't really done anything on this particular issue directly. What he has done, as Natalie was saying, and as we have seen, he has set in motion a number of measures and reforms that have so far managed to bring down inflation from the very, very extremely high levels that they were at in 2023, down to something that is a little bit more recognizable as just high inflation.
So put differently, the country is by no means out of the woods when it comes to its inflationary situation. I think Natalie made that very clear in the things that she spoke about, and the sorts of prices, price pressures that are present in the country. But it is important to say that this achievement of bringing down inflation.
While it could, in principle, induce people to think inflation is coming down. Maybe it's okay for me to hold some pesos because inflation is not going to eat away the value of my currency, the value of my pesos, but it doesn't quite work like that. Because currency, when you speak about currencies, yes, there are all the economic policies and institutions attached to that.
But holding a currency is about trust. If people don't trust the currency, they're not going to hold it. And that's the basic problem Argentina has. And so far, nothing has been done to try to address that situation.
CHAKRABARTI: Okay. Natalie thank you so much for listening to Monica along with me. I'm just wondering what you think about the unresolved question of stabilizing Argentina's currency.
ALCOBA: I would echo what Monica says, I moved back to Argentina six years ago and I was really struck by the presence of the U.S. dollar here, like in many respects, it's absolutely a bi-monetary economy. There are items here that you purchase in, specifically around real estate, you're buying property in a dollar figure. But this idea that the dollar is, like the value of the dollar for the average Argentine is very present in relationship to its own peso.
So you're constantly thinking about what the value is of your local currency in relation to this foreign currency. And I think some of that has eased in this year, because the value of that dollar also has stabilized somewhat under Milei. And so you're not constantly bombarded by these headlines.
So much of it is perception, right? Like you're not constantly bombarded by these headlines, that the dollar is up, or typically it's talking. It's interesting also, that people will talk about the dollar, versus, actually it's the peso is down, but we're speaking about the dollar. Because people wanted dollars, because people see dollars as the currency that they can bet on and that they know will be solid, for their savings and so forth.
Part III
CHAKRABARTI: Now back to our conversation about Argentina's President Javier Milei and his deep cuts to Argentina's government in an attempt to stabilize that economy. And what, if anything, the United States can and should learn from Argentina's experience. Here's another taste of the persona that President Milei has.
In May of this year, in a book launch event, he was at the event wearing a leather jacket and he performed one of his favorite heavy metal songs before a crowd of 8,000 in Buenos Aires. A different lawmaker was reportedly on drums, and Milei's biographer played bass. The song Milei performed is called Panic Show by the band La Renga. And the lyrics go, I'm the king, I'm the lion, I eat the elite for breakfast. Here's a little bit of that performance.
(PERFORMANCE)
Argentina's President Javier Milei shredding, there. Monica de Bolle is with us. She's a senior fellow at the Peterson Institute for International Economics.
And Monica, before we talk about what the U.S. can learn from what's happening in Argentina, I do want to just get a little bit more nerdy with you, if I could. Because you were talking about the currency and then the underlying stability of Argentina's economy. And that reminded me that, if I remember correctly, Argentina's biggest creditor right now is still the IMF, is that correct?
de BOLLE: It is correct, Meghna. Absolutely. It is the IMF. And once again, Argentina is right now in the business of attempting to negotiate another, yet another IMF program.
CHAKRABARTI: And the fact that the IMF is still its biggest creditor has put Argentina in this strange position of taking new tranches of loans from the IMF in order, in part, to pay back the loans that's already taken from the IMF.
And the reason why I bring this up is there's what, a 23 yearlong experience that Argentina has with the IMF? Because I remember at the beginning of the 2000s, there was that huge implosion of Argentina's economy that many Argentines blamed on IMF meddling. Has the opinion on the reliance of currency from the IMF, or loans from the IMF. Has the opinion in Argentina changed about that?
de BOLLE: Yeah, so this is a very frazzled history, to say the least. Argentina and the IMF have been at longhorns for decades. And this business of Argentina having a lot of debt owed to the IMF, and the IMF having to lend to Argentina in order to repay itself isn't new either.
This is basically the 1980s, the 1970s and the 1980s wrapped up in a bowl. This is exactly how the situation has always been. Has popular sentiment or population sentiment changed with respect to the IMF?
I worked on both the Argentinian financial crisis of the early 2000's that you mentioned, Meghna, as well as on the Uruguayan financial crisis, which happened at the same time and was the result of Argentina, because of the connection between those two countries.
And so what I can tell you, having watched Argentina for such a long time. Is that frankly, it's a country with too much of a convoluted history and too much of a complicated history for us to have any sort of conversation about easy paths out. There aren't any, and there aren't any even formulae with what he's attempting to do.
He has managed to get some stability for the economy. But there's still a long road ahead.
CHAKRABARTI: is where I was going to go next. Thank you for predicting my next question. So what are the next steps that you think are on that long road ahead?
de BOLLE: So I think currency reform has got to be on that long road. Because if it isn't, the perennial problem that Argentina always has, which is, not enough dollars to quench a thirst, when that thirst arises, will always land it into a crisis.
And so it's a matter of time, unless you deal with that problem. It's a matter of time until expectations and sentiments shift. So right now, overall, people are looking at Argentina in very positive tones. Everyone's seeing the stability that seems to have more or less been achieved.
Everyone is very optimistic about that. When I say everyone, that's financial markets, both within Argentina and outside of Argentina, as well as a chunk of the population in Argentina, as we heard from Natalie. But then the question that remains is still the same, what happens when that sentiment switch changes, when there's a swift change, because these changes are usually very fast, it's the snap of a finger.
And if people suddenly turn pessimistic, because the poverty situation is very bad, because there are no real prospects for growth in Argentina, with such high levels of poverty, and so on and so forth, the moment that flip switches, on sentiment, that's a moment when Argentina heads back into crisis mode. And that is still the case, that hasn't changed.
CHAKRABARTI: So then, I guess I'm asking if you have a crystal ball, Monica, which maybe is not fair. Do you hazard to guess what would it take to, let's say, bring down that poverty level, to position Argentina, let's put it this way, for more long term growth, rather than even just stability, which as you're saying, is not enough.
de BOLLE: Exactly. Exactly. And I think now you've summarized it perfectly. Because it's exactly that stability will only get you so far. It's going to give you a little bit of grounding, but you will lose that grounding unless you compliment it with something else. And that's something else has to be real hope, real hope that the country is going to get out of this funk, that it's been in for such a long time, where is that hope?
Right now, it's in popular sentiment. At least those who are supporting Milei's government, but it's just that, it's just a feeling. Because there's nothing really in the reform efforts and in the way that the country is set up, that is conducive to the sorts of growth, sustained growth that Argentina needs to reduce poverty.
CHAKRABARTI: What do you mean by in the way the country is set up?
de BOLLE: So it's a very complicated country, Argentina, and one thing that I think needs to be very well understood. Is that in Argentina, you have the federal government and then you have a whole bunch of local governments, the provincial governments, the provinces, Argentina is like an octopus.
Okay. If you can think of the federal government, the head of the octopus and the provinces are the arms of the octopus. And the arms do their own thing, that's very much how Argentina behaves, and the fact that the provinces have this kind of autonomous behavior, they have the ability to spend on their own.
They have the ability to issue debt on their own, leaves the federal government in a very difficult position. Because when Milei has to do the kinds of cuts that he did, he has to do them in a much, much deeper way than would be desirable, because the provinces are not going to follow suit.
The provinces are in the hands of governors, which some of them may be supporters of Milei, but by no means are all of them supporters of Milei.
CHAKRABARTI: I see. So that's a very clear, as you're saying, structural problem in terms of the way governance is set up across the country. OK. Monica, this has been absolutely fascinating, right?
Because I began this hour thinking the parallels between Milei and Trump are just screamingly obvious, right? But as we talk in much more detail about the specifics of Argentina's, obviously, history, its governance structure and its economy, aside from the personalities, the parallels between Argentina and the United States start falling away.
Which is why it's still interesting to me that, as we mentioned earlier, Elon Musk and Vivek Ramaswamy are singing Milei's praises to the point where Ramaswamy says we should do Milei style cuts in the United States, on steroids. And here's another sort of maybe accidental similarity.
Natalie, a little bit earlier, had been saying that during Milei's campaign, he was saying he was going to just cut back on politicians, and those cuts wouldn't hurt the average Argentine. But then, once the austerity measures started getting put in, President Milei was saying instead, it's going to hurt for now, but it won't hurt for long.
Okay, so with that in mind, that reminded us of October of this year, when Elon Musk held a town hall for his America PAC on X, and he was encouraging people to vote for Donald Trump then. And in this town hall, he said he was very eager to start cutting the U.S. government spending through the so called Department of Government Efficiency.
MUSK: The reality is that there is so much government waste, it's like being in a room full of targets you can't miss, you fire in any direction, you're gonna hit a target. But overall, we just, as a country, obviously, we need to live within our means. And that necessarily involves some temporary hardship, but it will ensure long term prosperity.
CHAKRABARTI: Monica, are Milei style cuts what the U.S. economy needs?
de BOLLE: No. But before I dive deeper into that, let me say that it is, Meghna, ironic to no end that we have a department of government efficiency in the works. That is exactly what you don't do if you want government efficiency, you're not going to create yet another bureaucratic arm, but that is precisely where we are.
CHAKRABARTI: (LAUGHS)
de BOLLE: Having said that, it is also fascinating and ironic in equal measure, pretty much, that the U.S. has gone so Latin American in its approach towards some countries in the region and here in particular, Argentina.
CHAKRABARTI: Interesting. Okay. We could do a whole hour just about that, but go ahead.
de BOLLE: Exactly. And, the situation in Argentina could not be more different than that of the U.S. On the one hand, you have a country that is still struggling with so many huge structural issues that it has. On top of that, it's a country that's had a very fraught history when it comes to financial crises. And its role in the world economy, and its regional role. And its internal issues, the political turbulence that I mentioned, and that we talked about a bit, that if you just step back for a moment.
And you think that the country, and you're speaking of the United States, that is the issuer of the global reserve currency, the currency that is most widely used in the world. And by Argentina in particular, that country sees Argentina in itself, it's bizarre. So I couldn't, I can't stress enough that Milei's approach to cuts is very much context dependent.
It's mandated by Argentina's situation. And Argentina alone, you can't replicate the Milei model anywhere else in the world. Because it is very particular to that country's history, Argentina's history.
CHAKRABARTI: To put it back in the framework of the three major pain points in Argentina's economy hyperinflation, the deficit and the currency issue, as you pointed out, the U.S. issues, the dollar. The world's reserve currency, so that's not the same. Deficit, maybe, right? There's a lot of concern over the U.S. deficit.
de BOLLE: Yeah, but then again, everybody has a deficit, right?
CHAKRABARTI: Yeah, and the hyperinflation, we did have a short period of higher than, much higher than usual inflation in the United States, but we're not talking about years and years of double-digit inflation.
It's just not the same thing.
de BOLLE: Exactly. So then, it doesn't seem to me to make much sense as to why aggressive government cutting would be in the wish list of Elon Musk and Vivek Ramaswamy. Their point, their goal must be something different. They won't say yes to interviews with us, but I'm just guessing it's a different goal.
de BOLLE: I'll hazard an educated, I hope, guess, if I may. I think it has to do with a push that they represent, but a wider push, which is also within the private sector or parts of the private sector in the U.S., towards greater deregulation of the economy. That's what it's about.
At the end of the day, Elon Musk and the business interests he represents does not want the sort of regulation that we should be having on the tech sector, on AI development, and all of these other things. So it is very much about that. Because as part of this reduction of government plan that Milei has, deregulation is a very important aspect of that. Because it is very easy to do, also.
So there are two things going on here in Argentina's case. On the one hand, they do desperately need to remove some regulations, because the economy is overregulated. It's one of its problems. But on the other hand, if you need to cut things in government fast, because you want to show people that you're delivering on your campaign promise.
Deregulation is the low hanging fruit. It's like the easy fix. Because you can do that without much in the way of needing Congress and needing political support and all of these other things. So that is, I think, let's say the umbilical cord that is now connecting the United States with Argentina. It's the issue of regulation and deregulation. That's what it's about.
