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.
Argentine President Javier Milei attends a ceremony celebrating the 214th anniversary of the May Revolution, which marked the beginning of the country's independence from Spain, in Cordoba, Argentina, May 25, 2024.
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!" 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.
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.
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. 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.
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. 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.
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%.
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 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.
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. Milei says that he claims that his government did not create the poverty in Argentina, but inherited it from a previous administration.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.
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: 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.
When that happens, it throws the country into crisis. So every time Argentina has had a crisis, it has had that component to it. 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.
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.
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. 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.
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.
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.de BOLLE: So it's a very complicated country, Argentina, and one thing that I think needs to be very well understood.
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? 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.
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