If the pragmatic James Carville gave us the slogan “It’s the economy, stupid,” we now have an ideologue’s response. Javier Milei, the self-described “anarcho-capitalist” President of Argentina, won the 2023 presidential election off the back of his rallying cry “Long live freedom, Goddamnit!” Just last month, Milei’s slogan, glistening and italicized, found itself engraved on a chainsaw gifted to Elon Musk by the President himself. To understand why Milei gave Musk this gift and what it means for Argentina, we must understand the origin and purpose of this political symbol.
What Is Javier Milei’s Political Project?
Before entering politics, Milei worked as a professional economist for more than twenty years. He was deeply influenced by the Austrian school of economics – a school of thought that insisted on seeing the government as needlessly and harmfully intervening in people’s lives when decisions should really be left to individuals and markets. Therefore, the slogan captures Milei’s ‘infinite’ contempt for what he perceives to be the burdensome shackles of government bureaucracy. Milei has said that ‘reducing the size of the State is in itself an act of justice’ and that ‘state intervention is always bad’ by its coercive nature, highlighting the moral conviction on which his ideology seems to be founded.
Milei’s ideological libertarianism has defined his actions as president. Milei quickly started to cut government spending by more than 5% of GDP, making plans to cut 70,000 civil servants. In a move that makes Trump’s talk of abolishing the Department of Education look meek, he reduced the number of governmental departments from 18 to 9. Milei’s government has been relentlessly taking the axe to bureaucratic regulations that restrict what private actors can do. Just in the first year of his presidency, Milei’s newly instituted Ministry of Deregulation made more than 670 regulatory reforms. He has called his almost-militant attack on the size of the state the ‘Chainsaw plan,’ and this strategy can be clearly traced to his pre-presidential ideological bent.
It is crucial to view Milei’s small-state, low-spending project in the context of Argentina’s chronically ill economy. Before he became president, Argentina experienced an annual inflation rate of 211.4% paired with no GDP growth. Argentines suffered due to weak wages, currency devaluation of the Argentinian peso, and weakening purchasing power. Milei placed a large portion of the blame on excessive government spending and regulations that stifle productivity, hence his aggressive slashing of the state. In a promising sign for Milei’s project, inflation dropped to an annual rate of 84.5% by January 2025.
Therefore, we cannot view Milei’s plan as merely being an ideological obsession. Milei’s chainsaw plan is a marriage of two modes; on one hand, his plan expresses his devotional love for freedom from the state, but simultaneously, it serves as his pragmatic solution to rescuing Argentina from the economic abyss of stagflation.
Why Did Milei Gift Musk a Chainsaw?
There are clear parallels between Elon Musk’s DOGE initiative and Milei’s project, and this is no coincidence. Musk has been following Milei since he ascended to political prominence. When Milei won the 2023 election, Musk claimed that ‘Prosperity is ahead for Argentina.’ Shortly after, Milei praised Musk for ‘defending the ideas of freedom’. Now that Musk is leading the effort to reduce the size of the US federal government, Milei boasts of how the methods of his ‘dear friend Elon Musk’ are similar to his. Vivek Ramswamy, who was meant to co-lead DOGE with Musk, explicitly said that he saw ‘Milei-style cuts’ as the ‘formula’ to fixing the US government. Trump himself said that Milei was his “favourite President.” Therefore, we can see Milei’s gifting of the ‘bureaucracy chainsaw’ last month at the Conservative Political Action Conference (CPAC) as a consummation of this long-term political relationship, a passing of the anti-state torch from one man to another.
Trading Places?
Musk and the wider Make America Great Again movement have clearly been guided by Milei’s example in their DOGE venture to cut the government to size. However, it now seems to be Milei who is finding political inspiration from MAGA. Following Trump’s footsteps, Milei promoted a cryptocurrency online called $Libra to his millions of followers on X. The currency rocketed in value before crashing after the most prominent stakeholders sold their shares; around $250 million of mostly amateur investors’ money was lost to the scheme. Coincidentally enough, the coin was sold on the same platform, Meteora, as Trump’s own $Trump coin, which, for its part, resulted in nearly $2 billion of losses for investors.
The affair has landed Milei in a scandal of his own making, but one with clear Trumpian overtones: Milei’s opposition has demanded his impeachment, accusing him of defrauding their constituents, whilst federal investigators have opened an investigation into the matter.
In addition to courting public scandal, Milei is now following Trump’s line on the Russia-Ukraine war. When the war started, Milei backed Ukraine against Russia’s alignment and bragged about being the ‘first to defend Ukraine’. However, having claimed he would never be ‘on the wrong side of history’, Argentina abstained in a UN vote condemning Russia for its invasion. This vote, in which America voted against the very same resolution, was just days after Milei gifted Musk his chainsaw and has widely been interpreted as part of an alignment with the United States.
But why is Milei discarding his ideological credibility in order to hitch onto Trump’s political positions? The answer may lie in the dual nature of Milei’s project. I pointed out how, although his project was deeply ideological, it served as his practical response to Argentina’s economic woe. It may now be the case that MIlei sees alignment with America as providing an opportunity for economic growth, which reduces his pursuit of freedom at all costs as a secondary concern.
The reasons for this view are multiple. Firstly, Milei has expressed interest in pursuing a Free Trade Deal with the United States, even if it meant the extreme move of taking Argentina out of Mercosur, the South American trading bloc. Such a free trade deal would represent a huge win in Milei’s battle to bring vital investment into the Argentine economy.
Secondly, and perhaps most importantly, Milei is currently negotiating a crucial arrangement of Argentina’s lending programme with the International Monetary Fund (IMF). As it stands, Argentina is already the IMF’s biggest (and most notorious) debtor, owing more than $40 billion to the organization. However, Milei wants to reach an arrangement for more money that would replenish Argentina’s Central Bank and let it repay its debts. In his vision, this would allow Argentina to take off its capital controls, which limit the use of foreign currencies in the country in order to prop up the peso. It is Milei’s hope that this would create the conditions that would lead companies from outside of Argentina to invest in Argentina’s economy. Importantly, for this deal to happen, America, which is the biggest contributor to the IMF and essentially has a veto on its decisions, must give its blessing. Therefore, we can see his shift towards Trump as a part of his attempts to make this move to open up Argentina’s economy to the world and to economic growth.
How Wise Is This Alignment?
Milei’s motivations for closer ties with the world’s biggest economy are clear enough. The question that remains is whether or not the convergence of Milei’s and Trump’s corresponding political projects can bear fruit for Argentina.
Milei may think that a closer political alignment with America will help land a trade agreement with the United States; however, if Brexit Britain under Boris Johnson is an indication, political affinity is no guarantor of a successful deal. Furthermore, if leaving Mercosur was the price of such a deal, as Milei has suggested is possible, the risks would be huge. Leaving a customs union with its closest neighbours and biggest trade partners would hardly count as a positive for the economic growth and free trade that Milei desires.
Additionally, although kinship with Trump, Musk, and the wider MAGA world may serve Milei in his pursuit of a deal with the IMF, we can argue that in the long run, this relationship can only be so useful. The similarities between Trump and Milei are so often stated that it is easy to forget how much their political compasses really differ. They may both be pursuing the shrinking of the state, but Trump has none of the philosophical or ideological underpinnings that define Milei’s project. Milei is deeply anti-protectionist; Trump is one of the leading proponents of tariffs in the world. You will be hard pressed to find Donald Trump talking about economic freedom in the intellectual terms that Milei does. A prime example of this schism is the current 25% tariff on aluminium and steel that Trump imposed without exception. In this case, as may easily be the case again, Trump’s only priority is American Industry’s interest. It does not matter much for Argentinian steel and Aluminium exporters that Trump likes their president, they are still paying the same tariff as everyone else.
Conclusion
Milei’s political project was formed as an ideological response to Argentina’s sick economy. Yet in his pursuit of alignment with America, Milei risks capitulating on his deepest-held political beliefs. This may not immediately harm his economic agenda, as in the case of his abandoning Ukraine. However, there are limits to alignment and what it can obtain. A full alignment with Trump could be very costly for Argentina if it meant the erection of trade barriers with its neighbours, and as it is, Trump’s affinity for Milei has won no concessions in Trump’s wider trade war.
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