Warning of Peril for the Western World: A Closer Look at Milei's Davos Speech Amid Argentina's Crisis

Buenos Aires - Argentina's President Javier Milei addressed the World Economic Forum in Davos Wednesday, telling the audience that the "Western world is in danger." His remarks come as Argentina rounded out 2023 with the highest yearly inflation on the planet.

During his speech, which lasted approximately 25 minutes, Milei said that some leaders of the Western world have "abandoned the model of freedom for different versions of what we call collectivism."

The president, who has openly praised global conservative leaders such as former US President Donald Trump, went on to praise capitalism and libertarianism and bash socialism and "radical feminism."

Speaking only briefly about Argentina, he said that ever since the country "abandoned the model of freedom that had made us rich, we have been caught up in a downward spiral" that made the country increasingly.

He warned Western leaders not to follow Argentina's path.

"The case of Argentina is an empirical demonstration that no matter how rich you may be, or how much you may have in terms of natural resources, or how skilled your population may be, or how educated or how many bars of gold you may have ... if measures are adopted that hinder the free-functioning of markets ... the only possible fate is poverty."

According to Nicolás Dvoskin, a postdoctoral researcher at the Center for Labor Studies and Research (CONICET), Milei's speech was "quite surprising" as the president spoke less from the position of representing a nation, "rather he came to represent a set of ideas."

"He raised bizarre ideas that do not coincide with the objectives set out in the forum itself regarding certain issues that have to be defended, for example gender equality or climate change," added Dvoskin. "In that sense it was a global embarrassment."

However, others in the conservative spectrum across the world celebrated the ideas exposed by Milei. Among stood out Elon Musk, who made different posts in his social media network, X, highlighting that the speech was a "good explanation of what makes countries more or less prosperous." Milei has been quick to repost these publications.

Donald Trump also had praise for Milei on Friday, saying in Truth Social that he is "working hard and, according to many in the 'know,' MAKING GREAT PROGRESS!."

Argentina's inflation

On January 11, Argentina's National Institute of Statistics and Census announced that the country finished 2023 with an annual inflation of 211.4%, the highest in the world.

Milei has blamed the outgoing administration of President Alberto Fernández for the economic troubles and has attempted to unilaterally deregulate the economy and privatize national industries through a series of shock decrees, to varying success.

On December 20, the president announced over 300 measures for the struggling economy, some of which have been criticized as unconstitutional by the opposition and led to an injunction in the courts by the country's largest labor union.

At the time, Milei's administration said that the economy would get worse before it gets better. In December, inflation hit 25% and prices on goods such as gasoline, carbonated beverages, milk and red meat showed even larger increases.

Rocío Bisang, an economist with Eco Go, told Ámbito Financiero last week that some prices are beginning to correct after potentially overshooting. "We are beginning to see a retraction in some prices, with some categories such as meats correcting prices downwards, due to the retraction of the consumption," she said.

However, the depreciation of some of the peso's exchange rates during the past weeks could threaten to reverse the trend.

During the previous administration, prices for some goods and services such as fuel, utilities and telecommunications were heavily controlled. After Milei's deregulation measures, salaries of ordinary Argentines haven't caught up to increasing expenses, leading to 15% decrease in citizens' purchasing power in the first four weeks of Milei's administration.

"There are still some key price corrections such as basic services, private health care, fuel, education and transportation, which are expected to continue keeping the [inflation] index above double digits," Bisang told Ámbito.

Last week, Argentina's Central Bank forecast a 25.5% inflation rate in January 2024, falling to 18.2% in February, 15% for March, 12% for April, 10% for May, and 8.3% by June.