Javier Milei’s Chainsaw Plan and the Five Principles of Oppression

Exactly two decades ago, Alvaro Vargas Llosa published Liberty for Latin America: How to Undo Five Hundred Years of State OppressionThis work invited us to reflect on why attempts to generate prosperity in this region of the world, whether through socialism, populism, and nationalism, as well as the nascent capitalism of the 1990s, repeatedly foundered.

The handful of obstacles that, according to the author, have prevented Latin America from overcoming underdevelopment since the pre-Columbian era can be summarized in what he calls the “five principles of oppression”: corporatism, state mercantilism, privilege, bottom-up wealth transfer, and political law. Unfortunately, for more than five hundred years, we Latin Americans have not managed to free ourselves from the influence of these five principles, which have transformed the state into an omnipotent and suffocating entity. Obviously, Argentina has not been an exception to this dynamic.

Corporatism arises when authorities visualize society not as sovereign individuals or individual rights holders but as corporations possessing collective rights. In contrast, state mercantilism refers to the situation in which the government chooses the losers and winners in society, resulting in those closest to political power enjoying a higher social status. 

The principle of privilege is closely linked to the above, indicating how, through laws, the government imposes its interests and discriminates against certain social groups. The fourth principle, redistribution of wealth, refers to a system in which the majority of individuals generate wealth from which a few benefit: those in power or close to it.

Finally, this infernal quintet of principles culminates with the last one, the politicization of law, which acts as the key that makes all of the above possible. The state enacts numerous laws, often absurd and sometimes contradictory to each other, generating divisions in society and fostering a disconnect between rules and reality. In this way, the absence of impartial rules to protect individual rights and ensure compliance with contracts makes wealth creation little more than a mirage.

With the assumption of Javier Milei to the presidency of Argentina, a nation where the pernicious devastation caused by the application of these oppressive variables is clearly evident, the country seems to have a golden opportunity to at least begin the process of cutting some of the five wires of that explosive machinery. In the last decades, such machinery has only succeeded in generating more poverty, frustration, unsustainable levels of public spending in relation to GDP, and a system of relative prices deliberately destroyed to hide the consequences of a spurious monetary emission, causing one of the highest inflation rates on the planet. What is more is the worrisome deterioration of the educational system, which plunges large sectors of the population into stagnation.

The new government seems to intend to promote a regime change, a radical reform involving the transfer of power to citizens in all areas and restoring greater levels of autonomy to them. This has been evidenced by a Decree of Necessity and Urgency (DNU) and a bill presented during the first month of its mandate. The extensive DNU, consisting of 83 pages and 366 articles, declares “the public emergency in economic, financial, fiscal, administrative, social security, tariff, health and social matters until December 31, 2025” and proposes more than 300 measures to deregulate the economy within a framework of “an economic system based on free decisions.”

Milei’s so-called “chainsaw plan” is complemented by the “Bill of Bases and Starting Points for the Freedom of Argentines,” known as the Omnibus Law. With 351 pages and more than 664 articles, this project is destined to be discussed in Congress during the extraordinary sessions. The areas covered range from pensions and the labor market to transforming state-owned companies into “corporations.” It also includes price liberalization, modifications to the electoral system, relaxation of environmental regulations, and educational reform.

Unfortunately, so far, one of the main campaign slogans of the current president has been shelved: dollarization. This measure, by recognizing the inability of the local central bank to provide a quality currency and eliminating the peso, would have given Argentines sovereignty over the fruits of their labor.

Needless to say, following the announcement of all these reformist measures, each sector involved has come out tooth and nail in defense of their privileges and supposed acquired rights they have enjoyed for decades. They are eagerly seeking to maintain a status quo that allows them to continue living at the expense of others through legal plunder. In this way, the “five principles of oppression” cling desperately to the slippery deck of a ship that, if it does not change course and get rid of them, has no alternative but to sink completely.

Javier Milei’s ability to defuse the principles of oppression will depend on several factors, including the political support he can garner, the strategies he implements, and the resistance or acceptance he encounters in different sectors of society. Changing entrenched structures and overcoming historical obstacles is a titanic challenge. Nor does a mere change in political leadership automatically guarantee the deactivation of these principles, as it usually requires a continuous process of reforms, effective policy implementation, and consensus building.

Since its 1994 constitutional reform, the country has been governed by a system that limits the powers of the executive. This reform has generated various objections regarding the viability of the measures the government is currently seeking to implement. Formal and legal restrictions, fundamental in a republican system, must be respected and accepted. If it has been held that the republic is above the whims of eventual popular majorities, it is imperative to abide by these rules of the game. The defense of a principle entails the obligation to respect it even in situations where one would prefer to avoid it since the end can never justify the means.

In his final paragraph of Liberty for Latin America, Álvaro Vargas Llosa writes: “My hope is that one of these days, by making the right kind of resolution, Latin America will prevent the umpteenth revolution of the wrong kind. And then, challenged by the enemies of Liberty, who will be never cease to be active, it will begin what promises to be an enthralling history of permanent evolution, turning the wheel of the individual to its rightful place.”

No one denies that this will be a challenging mission, as it will demand great courage from the new authorities, as well as honesty and empathy from the ruling class. In addition, the population will have to show patience and be willing to make sacrifices. Hopefully, this time, Argentina will succeed!


This article was originally featured on El Instituto Independiente and has been translated from Spanish to English. 

Gabriel Gasave is a Research Fellow and Director of ElIndependent.org at the Independent Institute.
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