Capitalisn’t: The Argentinian DOGE

Federico Sturzenegger: By putting in place all those safety measures, what is it that you’re destroying? There are a lot of things that cannot occur in the economy because people cannot go through the hurdle of all this regulation, so what you kill is much more damaging than what you’re trying to protect.

Bethany: I’m Bethany McLean.

Phil Donahue: Did you ever have a moment of doubt about capitalism and whether greed’s a good idea?

Luigi: And I’m Luigi Zingales.

Bernie Sanders: We have socialism for the very rich, rugged individualism for the poor.

Bethany: And this is Capitalisn’t, a podcast about what is working in capitalism.

Milton Friedman: First of all, tell me, is there some society you know that doesn’t run on greed?

Luigi: And, most importantly, what isn’t.

Warren Buffett: We ought to do better by the people that get left behind. I don’t think we should kill the capitalist system in the process.

Luigi: If the audio is a little bit off, I need to apologize to my listeners because the desire to produce timely episodes of Capitalisn’t make me work even when I’m traveling.

Bethany: At this point, it’s almost impossible not to have heard of DOGE. It’s the acronym for the brand-new Department of Government Efficiency, which is going to be headed by Elon Musk and Vivek Ramaswamy. DOGE is also a play on the cryptocurrency Dogecoin, I guess a favorite of Elon Musk—clever.

The name also serves to obscure the fact that DOGE is not, in fact, a government agency. But, for sure, its goals are grandiose: streamlining government, something that has eluded pretty much everyone who has set out to do it, including Ronald Reagan. Nor is DOGE going for small. Musk spoke of cutting $2 trillion from federal spending, which is about 30 percent of the annual figure. Trump has called DOGE the Manhattan Project of our time.

Luigi: In their op-ed, Musk and Ramaswamy said that, at every step, DOGE would pursue three major kinds of reform: regulatory rescissions, administrative reductions, and cost savings.

If you believe that the reduction in rules is, in itself, a good, then it does seem like there are rules to reduce. But if you believe that the government needs to get its spending under control, then that may be a different issue, especially given that, under the first Trump administration, the national debt actually increased by $7.2 trillion.

Bethany: They write with great fury about the “rules and regulations that are promulgated by unelected bureaucrats, tens of thousands of them each year,” they say. Maybe that’s true, but that still begs the question of what cutting those rules does for most people, other than those who don’t want any rules at all.

Luigi: You may already see some realism creeping in. In his op-ed, he wrote, “DOGE will help end federal overspending by taking aim at the $500-billion-plus in annual federal expenditures that are unauthorized by Congress or being used in ways that Congress never intended,” so that’s a lot of reduction from the beginning.

There is also a question of whose spending is waste. The National Park Service seems to be a particular target of conservatives, but why are national parks less valuable than space exploration? Given that Musk has made his fortune on the backs of government subsidies for electric vehicles and space, are those cuttable?

Bethany: Which raises a bigger question that also ties into some of our previous episodes. This is certainly going to be full employment for lobbyists who are gearing up to protect their industries.

Another question I have about DOGE: my friend Justin Fox pointed out recently in a Bloomberg column that state and local government jobs together make up almost 13 percent of nonfarm payroll. Maybe that’s too much, but taxpayers’ expenditure on those jobs is a lot of people’s income, so can you cut those jobs without cratering the economy?

If you crater the economy, does Donald Trump’s enthusiasm for DOGE start to dissipate, given that he views economic performance and the stock market’s performance—which can be two different things— as a barometer of his success? While I have sounded skeptical about what it can accomplish so far, the big subject of government spending and government regulation is near and dear to our hearts here at Capitalisn’t.

We don’t believe—at least, I don’t believe—that capitalism functions best with no rules at all. Without rules—bankruptcy law, for instance—free markets would simply be a free-for-all. But we need the right rules.

I don’t believe in no government spending, but I do believe that getting the deficit under control is incredibly important for the future of our country. The amount we’re spending on interest is only sustainable under perfect conditions, i.e., great economic growth, but ultra-low interest rates.

I am big-picture enthusiastic about DOGE despite my skepticism. I think I’m just worried about whether the goals are possible, and I’m worried about the mechanisms that Musk and Ramaswamy might use in order to accomplish them, and I’m worried that the whole thing will just end up being an exercise in political power rather than something that genuinely reshapes America in a way that allows everybody to thrive.

Luigi: Enthusiastic? I’ve never heard you enthusiastic about anything, so I’m really surprised about this enthusiasm.

I’m all in favor of cutting useless expenditures. I think everybody is. Certainly, there are plenty in the federal government, but as you correctly pointed out, I think it’s very important to separate the two tasks. One is to cut down expenditures, or if not, raise taxes in order to reduce the deficit.

But the second is to streamline regulation, which doesn’t mean to destroy and eliminate regulation but streamline. The combination of the two seems a bit misleading, in my view.

Bethany: Right now, it’s impossible to know what DOGE will do or if Trump and Musk will even still be talking by the time Trump takes office. Bets on that?

But there is another example of someone doing something similar in Argentina. The backstory here is the election of Javier Milei, who became the president of Argentina about a year ago with a promise to take a chainsaw to the state. He actually wielded a chainsaw.

Argentina needed it. It was on the brink of collapse, with inflation running at over 17,000 percent annualized. As part of that, Milei appointed an economist named Federico Sturzenegger as the minister of state deregulation and state transformation of the Argentine Republic. Now, that’s quite a title.

The Financial Times wrote this: “Federico Sturzenegger has a big ambition to turn Argentina from one of the world’s most heavily regulated countries into the freest economy on the planet.”

A lot of what Sturzenegger is trying to do does sound a lot like what DOGE is setting out to do. Milei said recently that he has spoken to Elon Musk after Trump’s victory and that Musk is in contact with Sturzenegger, so without further ado, here’s Federico Sturzenegger.

Luigi: What I heard is that you actually started writing a program way before Milei’s election, and then when Milei was elected, they passed a law that created your ministry and gave you the authority that you’re now using. Can you tell us a bit about how this was conceived and what was the goal of all this?

Federico Sturzenegger: Well, I think this starts about two-and-a-half years ago. One of the presidential candidates asked me if I wanted to help her out with a presidential race. I said, “I’m happy to help you out, but you have to understand that once you become president, you will fail.” She says, “What do you mean, I’m going to fail?”

“Yeah, you’re going to fail because Argentina has built a legal architecture which protects several interests. You have the interest of the unions, you have the interest of part of the business community, you have the interest of the political class. These interests have a lot of resources, and they have a lot at stake. They’re pretty concentrated, and they’re not going to let go of their privileges easily. I can go and try to fight with you against these guys, but it’s a little bit like getting into the ring with Muhammad Ali. I’m not going to be of much use. After two seconds, I’m going to be lying on the floor.”

She says: “OK, but you’re teasing me. There has to be something that can be done against this establishment, against this status quo, against this system.”

The important thing is something which I call the Marx principle. It’s, I think, the most important lesson I give my students. Marx happens not to be Karl Marx. It happens not to be Groucho Marx.

It refers to a guy called Daniel Marx, who is just a friend of mine whose last name is Marx. The story is that, in 2001, I was secretary of political economy and he was secretary of finance, below Minister Cavallo. We have a discussion with Cavallo one day, a very lengthy discussion.

Cavallo was a big debater. “OK, we have to do A or B? A or B?” We discussed for six hours, and finally, we conclude we have to do A. The next day in the morning, the resolution is doing B, not A. But we had discussed it for six hours and we have concluded A, so I go to talk to Daniel Marx and say: “Oh, we were fooled. I mean, we discussed A, and they did B.”

He says, “No, no.” He says, “We were not fooled.” Horacio Liendo, who was the legal advisor of Cavallo, had come that morning with the resolution written, and the resolution was B.

When Cavallo had to decide, he said, “We had a big theoretical discussion about doing A and no paper on the table,” and then they had this lawyer who put that paper on the table and said B, so they did B.

I learned the most important lesson in politics is that if you want to shape a debate, you just have to put the paper on the table. You have to put the solution on the table.

I said, I’m going to do this with this loss, trying to carve out from the legal system in Argentina all the privileges for these . . . well, these capitalists, who are not capitalists, who are rent seekers, for the unions, which have a lot of perks.

I mean, the unions in Argentina take . . . You won’t believe this, it’s 3 percent of all formal salaries in Argentina monthly. That’s in the law. It’s written in the law.

My strategy is David versus Goliath, so I told this presidential candidate, “I’m going to prepare the stone of David for you.”

She said, “Oh, and what is the stone of David?”

I said, “After, you have to throw it, and you have to hit the guy.” I said: “OK, the stone is as follows. I’m going to read the last law that the government has passed, and I’m going to tell you, this law should stay, should be repealed, or it should be changed. If it should be changed, I’m going to write how it should be changed.

“After reading the last law, I’m going to read the one that comes before the last law, and then I’m going to read the one that comes before that one, and then I’m going to go all the way back to 1880 and review the whole legal structure of Argentina, and I’m going to be trying to carve out of this legal architecture all the privileges that have been built in the law.”

She said, “You’re totally nuts.”

I said, “You’re probably right, but we’re going to start.” I started doing a job that eventually involved around 100 people. Argentina has 4,200 laws. They’re filed in chapters.

Let me give you an example. You have the environmental chapters. Say, for example, one important environmental law in Argentina is what we call the Glaciers Law, which is a law which protects surfaces surrounding glaciers and prohibits economic activity in these areas surrounding the glaciers. In some cases, some provinces completely cannot do economic activity in mining, for example, because of this law.

You think this law has a problem, download the law from the website, and you start typing the changes that you want in the law. What I’m going to do is I’m going to analyze the changes in the law. Everybody who participated in this was not paid, so it was voluntary. We were working for Patricia Bullrich, who was the front-runner candidate at the time. The Milei Phenomenon was not so much on the horizon at the moment, and then comes the election.

The morning after Milei wins, this candidate I had been working for says, “Federico, don’t get disillusioned.” We immediately decided to bring this program and this work that we had done, and Javier loved it. He was moaning when we were actually describing the thing. He was having an orgasm.

When he became president, we basically had everything there. We started with an executive decree. In emergency circumstances, the president can exercise legislative powers, so we issued a very sweeping deregulation decree, which repealed dozens of laws, changed dozens of laws, and it had a tremendous impact right away. It deregulated entire markets, et cetera.

A few weeks later, we presented to Congress a comprehensive set of reforms. It was a 1,000-article omnibus bill. This law, in its Article Three, grants the executive, for a year, the power to remove legislation that we think is obnoxious or useless, or is just a deadweight loss on the economy.

What happened is that, initially, I told Milei that I was going to help him on the side, not taking a position. But when the law came into effect and we had one year of these, what we call delegated powers to change legislation, he said, “Now, Federico, you have to become a minister and go full throttle with what remains to be done.” Correct? Because we’ve already done quite a bit. That’s how I started in July as minister of deregulation and state reform. The president has two very significant ideas, which are economic freedom and fiscal balance.

Bethany: How did you find your way out of the conundrum between what you wanted to get done, the laws that were set in the constitution, and the caste power? In other words, how did that get broken such that you were able to do anything? That seems like a conundrum that just could have stopped everything from moving whatsoever. Especially given that Milei, at least my understanding, had only small majorities in Congress. How did these sweeping laws get passed that allowed you to take action?

Federico Sturzenegger: Well, I would say he didn’t have a small majority. We had even small minorities, because for example, we only had 38 deputies out of a chamber that is close to 300, and only eight senators over a chamber of 70-something.

The mandate was very strong. He had a very strong electoral win. It’s difficult, for a president who is sworn in with such a mandate, not to give him some initial support. Now, of course, we came in with a law and we left with a completely different law. We had to exercise a lot of discussions and things that we had to leave along the way, things that we had to change. I think we lost a lot of the things that I would have loved to have seen, but I think it’s tremendously impressive what the president has achieved in terms of the piece of legislation that we got.

For example, if you take the unions, the union power is built from the fact that many, many years ago, a military dictatorship did two things. First, he granted the unions the ability to manage the health system, which is a unique institutional environment.

The other thing is that there’s a mandatory contribution to the unions even if you are not unionized. For example, in the executive decree, we removed that, but then the unions got an injunction in the judicial system immediately, which stopped that reform.

Eventually, we brought the reforms to Congress, because we got it stopped there, and then Congress passed very significant pieces of labor reform in the Bases Law. But for example, this issue, which has to do with the financing, was not touched, so we couldn’t get that through. These groups, I call them blocking agents. They were going to block the reforms, so how do you deal with the blocking agents?

Well, for me, the only way to deal with the blocking agents is to reduce their financing. If you drain them of resources, then you weaken their ability to block the reforms. For example, a very significant thing in Argentina was support for the most vulnerable in the society. The government made transfers to them, and they were typically made through what we called some intermediaries. There were social organizations which take the money, who took the money from the government, gave it to the people.

For 20 years, it has been like that. These guys, of course, took a cut from their money, but then they forced people to march against the government so that they could tell the government: “Look, people are marching against the government. You have to give me more money so I can calm the people.”

The protests against the government were financed by the government. You say, “How do I get rid of this?” Well, I transfer the money directly to the people, which has all sorts of benefits because nobody takes a cut of their money. They’re the most vulnerable, so you want as much money as possible to get to them.

They also don’t have to spend five days, a whole week, a whole labor week, doing this protest against the government. They can work during that week.

But nobody dared challenge the system. When Milei came into power, he said: “I’m going to challenge the system. This is ridiculous.”

They cut the financing. They transferred the money directly to the people. These guys lost their financing, and when they lost their financing, they lost their power to maneuver.

I’m going to say one more thing, which I think is very interesting because it’s new. The president tweets a lot. That is one of his most important jobs. Say, for example, I say, “OK, this industrial group has this particular privilege,” and I say it in a conference. I name the group. The newspapers put that on the cover. When you actually name the company, it’s a good story.

Milei retweets that. When he retweets that, he’s sending a signal. Maybe he’s just retweeting it because he’s supporting his ministers, he likes the idea. But the guy who has to lobby against that reform says: “What should I do? I mean, the president is supporting this.”

I think it’s a whole combination of things, of which I think this last point, I think it’s kind of interesting that Twitter may be one of the most important weapons and the most effective weapons to fight against these corporate groups that are trying to block the reform.

Luigi: Let’s talk a bit more about these corporate groups, because you went into details about the unions. I’m more interested in the industrialists. I heard this story that when Milei went to the Casa Rosada, which is the White House of Argentina, there was a butler who was retiring after many, many years at the Casa Rosada.

He asked the butler what his experience was, and the butler said: “Oh, I’ve seen a lot of presidents come and go, but the families were all the same. Sometimes they were the children because the old parents were dying, but the families were all the same.” What is the strength that allows Milei to fight against those families, and can you give me an example of a big family that pressured the president, and the president stood up and cut their privileges?

Federico Sturzenegger: There are different versions of stories that it was a chef here. He says, “Well, the presidents come and go, but those who come for dinner are always the same.” It’s the same idea.

In the case of Milei, let me just give you an example of these kind of things. For example, in Argentina, satellite internet was forbidden. There are a few companies that provide internet in Argentina associated with large media conglomerates, and these guys had blocked the access of satellite internet.

That’s why I say sometimes countries are poor not because they don’t have the technology, they don’t have the capital, they don’t have the human capital. It’s because there’s a paper. Look, there’s a paper. The paper says you can’t be rich, because I’m telling you here that this, you cannot do. The only thing you have to do is tear up the paper, and then you’re rich.

What we did in the executive decree was open up satellite internet, and immediately, several companies started operating. The one that is more visible, of course, is Starlink, but the thing about Starlink is that, suddenly, you could get internet wherever you wanted in Argentina. The state spent zero pesos. The only thing you had to do is the paper that you lost and writing that you could do it.

The pushback has been in Congress. These interest groups have been much more effective in having Congress block the reforms. I have a very funny story that I tell, which is that when we did the executive decree, the CEO of one of the largest corporations in Argentina calls me and says, “Federico, I want to congratulate you.” Ten days later, we sent the law to Congress where all the privileges of that industry, of that company, were removed. My phone rings. The same guy calls me, and he says, “Ah, Federico, I knew you were an academic,” because you know when you hit their interest, the insult is that you’re an academic.

That piece of the legislation lasted four days in the bill. Four days later, a governor calls us and says: “Oh, well, you need our votes for the Bases Law. You have our votes, but those articles have to go.”

Obviously, it was an industry that was located in that province, so I think the business community in Congress has been very effective. Of course, they also have a little bit of mixed feelings, because for example, if company valuations have doubled, have tripled . . .

The business community is not homogeneous. You have the guys which are the, how do you say, the capitalisn’ts. You have those guys, and then you have some guys who are victims. I would say the agricultural sector is a victim of the system, or the small and medium-sized enterprises are victims of the system. It’s not a homogeneous thing. I mean, the capitalisn’ts, those who are not capitalists even though they say they are, are generally the more concentrated groups.

Bethany: That’s funny. Now I know, Luigi, when you disagree with me, I’m just going to accuse you of being an academic.

Luigi: I think you already do that.

Bethany: Maybe. Seriously, it’s been reported that either Milei has spoken directly to Trump, or you’ve spoken directly with Elon Musk. Is that true, and can you give us any details on it? More broadly, do you think there are any analogies or lessons in what Argentina is doing for what Musk and Ramaswamy are going to try to do in the United States?

Federico Sturzenegger: Milei has spoken repeatedly with Elon Musk and Trump about what he’s doing, and I think this deregulation thing has captured the imagination of many people because of how massive and how strong it has been, the attempt and the change.

Everywhere you deregulate, prices fall in real terms around 30 percent. That’s my ballpark figure. But to be honest, I think the inspiration of Elon Musk—I’m a big admirer of Elon Musk, I wrote his biography—comes from the problems he’s had with regulatory pushback for SpaceX.

He said something to the team, which I repeat in my deregulation sessions here when I talk with other ministers. He said to the team: “It’s not about minimizing risk. It’s about finding quickly when you have a problem and solving it.”

With a rocket, if you want to make sure that in the first launch, it doesn’t fail, and then you have to put in this machine, this machine, this machine to cover different risks. At the end of the day, you have a rocket that weighs twice as much, takes you 10 years more to construct, and costs $2 billion.

He launches the rocket. If it explodes, he figures out why it explodes, and then he corrects it the next time, and it’s a much cheaper procedure. If you think about that for a second, it’s very much the same with regulation, because the bureaucracy feels that their job is to reduce risks. You go to a meeting and say, “OK, I want to free this,” and then the bureaucrats are saying: “Oh, but this could happen. Oh, and this could happen.”

I’m telling the guys: “Look, you’re trying to solve a problem that we don’t even know exists. Why don’t we give freedom, and then if there is a problem, we solve the problem?” What you cannot assess is by putting in place all those safety measures, what is it that you’re destroying? There are a lot of things that cannot occur in the economy because people cannot go through the hurdle of all this regulation, so what you kill is much more damaging than what you’re trying to protect.

The other thing, which I thought is very interesting of Elon, which I also use a lot, is that in the Tesla production, he said: “We have to delete processes, delete processes. We have to simplify. The only way I know you’ve done enough is when, one day, you come back to me and say, ‘Look, Elon, I’ve eliminated this, and now I realize I made a mistake. I should not have deleted this.’ Only when you ask me to put something back, then I know you’ve deleted enough.”

I think his business experience already had the seed of this thing that he’s trying to do in the US, and we’re going to be watching very closely to learn from that. I know that Javier gave him my contact, and I’m definitely waiting for him to call, but unfortunately, I have to report that it has not happened yet.

Luigi: We know that a lot of the regulation is rent seeking, et cetera, but some is also for good reason, especially environmental regulation. To protect glaciers, the area that they protect might be excessive, but they need to protect against speculation, et cetera, et cetera. What is your test when you’ve gone too far?

In the case of a line of the code, you say, “Oh, I actually need it, so I will go back.” In some cases, it is that a rocket explodes. In some other cases, maybe some people die. What is your rule to say you’ve gone too far?

Federico Sturzenegger: To be honest, I don’t have a rule. It’s kind of intuition. Each case is different in terms of assessing the benefits and risks of each particular thing.

I’ll give you an example. We have a discussion now that in most countries in the world, you have a guy who basically brings the boats into port. Now, in Argentina, these guys are almost like a monopoly. They charge 50,000. I told my guys, “Look, we have to leave the ministry and go to work on that, because if it’s 50,000 to bring a boat into the port . . .” I said, “OK, we’re going to get rid of this. We’re going to make the use of this option.”

The people said: “Oh, you’re totally nuts. You’re absolutely nuts,” because when the Exxon Valdez came into Anchorage and hit the rocks, it created a catastrophe.

But it so happens that in the River Plate in Argentina, there are no rocks. There are only sandbanks, so we’ve never had in our history that when you are going into the port of Buenos Aires, you can break the hull.

The most that can happen is you can get stuck in a sandbank, and then someone has to pull you out. Of course, you get a big fine, so it’s a risk that you’re taking. Now, it’s 50,000 per boat that you pay in every boat that comes in for a risk. You have to make an assessment about this. It’s a difficult one in each case, but I think we’re so, so far to the tail of this, Luigi, and we’ll see how it works. Now, if you say people will die, certainly, you’re going to be more careful with that.

Bethany: Another big-picture, philosophical question. Has any of this made you think about what the line is between the appropriate use of the levers of power to achieve an outcome no one thought was possible and inappropriate use? There’s desperate times call for desperate measures, the end justifies the means, but even if the ends are what everyone wants, are there some means that aren’t OK as a way of getting there?

Federico Sturzenegger: Not really. I mean, we have a republic and it’s a constitutional republic, so we have operated fully within the margins of the law. We’ve respected all the judicial . . . As I was telling you a while ago about the labor reform and then the labor reform got an injunction in justice. OK, fine. We got the injunction. We waited to see if the Supreme Court would reverse that. They didn’t. We took it to Congress. But beyond that, it’s all by the book.

Luigi: President Milei has declared that he wants to minimize the size of the state, even getting out of a role like antitrust or stuff like that. What is your boundary? Where do you want to go? Are you really a minimalist in which only the state should only do administration of justice or even less? Sometimes Milei said he’s an anarcho-capitalist. Anarcho-capitalists, as you know, would like to privatize even law enforcement. Where do you stop?

Federico Sturzenegger: Well, I would say that we truly believe that the state is totally overblown in size. We did an exercise that I thought was very interesting. Initially, we cut about 15 percent of the public employees, we cut 30 percent of the bureaucratic structure, and now we’re doing the deep motosierra, the deep chainsaw. We go from chainsaw to deep chainsaw.

What is the deep chainsaw? Now, we want to go into every area and ask people, “What do you do?” and then we figure out if that should continue or not. When we started doing that, I immediately realized that I needed a framework to have that conversation. What are the things that we think this government should do or what should it not do? I asked the president to use one of our cabinet meetings to have this discussion. What should a libertarian government do? Detached from every specific area—it’s more like a conceptual thing.

We drafted a list of the things that we thought the government should do and the things that the government should not do. For example, if something could be done at the municipal level, the national government should not do it. If it’s something that should be at the provincial level, if it’s something that the private sector could do, why should the government do it? If it’s credit, why should the government give credit to people? There’s a financial sector to do that.

The government has to provide macroeconomic stability. That’s the national government. We have a little bit of a problem, which is not our problem, but Argentina is a federal country. You have the national government, you have the provinces, and you have the municipalities. Over the last, I would say, 15, 20 years, both the provinces and the municipalities also grew.

Now, the president has a very, let’s say, respectful approach to federalism. He says: “In a particular province, the governor supports very big government expenditures and has to charge people a lot of taxes, and people are willing to vote for that. It’s their problem. It’s not something that I should make a statement about. I basically proposed for the national government a small government. People voted for me, and I’m going to implement it. I’m going to put candidates in the next elections who are going to carry the message that I want to reduce government expenditures, say, to a third or 40 percent and reduce taxes, and then people will decide if they want to go that way or not.”

But there’s one thing that is interesting, which is that over the last 23 years, the provinces and the municipalities get their resources through mechanisms that are managed by the national state, by the federal government.

For example, the municipalities get their taxes from adding them to the electricity bill. Of course, everybody pays it, because who’s not going to pay for electricity? It’s a fantastic way of collecting taxes with . . . It brings up the base, but the problem is that it works so, so well that this guy has doubled the size of government expenditures.

It has been so effective as a means of tax collection at the provincial and municipal level that we’re basically thinking about the fact that maybe it’s time to say, “Well, if you’re going to spend this, you have to take responsibility for this.”

If it’s going to be visible that you are charging this, then maybe this will reduce the . . . I’ll give you an example that we discussed in the cabinet, which was that in a municipality here in the Greater Buenos Aires area, a mayor added a tax on gasoline. You go to fill the tank, you were paying a municipal tax, which was added onto the price of gasoline.

Imagine how different that would be if, when you pull into the gas station, there’s a little thing there where the mayor says, “Oh, sir, how much are you going to charge here at the pump?”

“Oh, 50,000 pesos.”

“OK, you have to give me 10,000 pesos.”

You see the difference? One thing is you go to the pump, you charge, you pay 10,000, there’s no one from the municipality there. There’s a municipality that says, “You have to put in 10,000.” I think they burned . . . They burned that. In two minutes, the thing is burned, and obviously, the service station blows up to pieces and everything. You can imagine the whole scene.

We’re thinking, how can we make the provincial governments and the municipal governments more accountable for their expenditures? Because today, it’s like their tax collection has a low political cost. But to be honest, beyond that, we think that for the provincial and municipal decisions, I think many governments have made a big effort to change the way provinces and municipalities behave.

President Milei says: “Guys, we have to make the national government work. That’s our responsibility. That’s why people voted for us, so we’re going to focus on this thing here.”

Luigi: I think that the first thing that we need to tell our listeners is that we shouldn’t necessarily transpose everything from Argentina to the United States, because Argentina is a particularly bad scenario. What is the expression: for extreme pain, extreme remedies? I think that when the situation is really desperate, people take extreme actions. I’m not so sure that we need the same kind of actions in the United States.

Bethany: I was thinking the same thing, but I actually disagree with you a little bit in the sense that I think there’s obviously a lot of low-hanging fruit in Argentina, and obviously, the problems were dire, so you had a population that was willing to go along with Milei’s proposals out of exactly that desperation.

The US isn’t there yet, and I’m actually not sure how much low-hanging fruit we have. I mean, if you talk to Elon Musk or another conservative, and they talk about chopping funding for Planned Parenthood and talk about getting rid of the National Park Service, OK, but none of that is going to fix our budget deficits, so I’m not sure the low-hanging fruit is there.

But I guess the place where I disagree with you more is that I thought the mindset was very revealing, and I think that that mindset is very Trumpian or very indicative perhaps of how Trump and maybe Musk think about this. Listening to Federico talk, I thought that I could hear them all in a room together, and so, I did feel like listening to him that I got a little bit of insight into the mindset.

Luigi: I have to disagree with you that, in the United States, there is not a similar demand. After spending Thanksgiving with my wife’s relatives who are all Trumpian, I feel that there is a big chunk of America with a huge demand to deregulate, deregulate, deregulate. Fortunately, the situation in America is not as bad as the one in Argentina, but certainly, there is a huge pent-up demand for this.

Bethany: Well, let me be clear. I think that gets back into the muddle of what DOGE has presented, which is, yes, I agree there’s a huge demand to deregulate, but that’s different from spending cuts, and whether there’s a huge demand to cut spending.

I suspect there is probably lower-hanging fruit on the regulatory front than there might be on the spending side—at least, on the spending side, in a way that makes a meaningful difference in the budget. But you know what, I’m actually guessing, and so I guess it’ll be interesting to see what DOGE comes up with.

Luigi: But on the insights that I got to apply to the United States, one thing where I was quite impressed by him is the fact that he prepared this plan for a year and a half before the elections. I don’t know to what extent Ramaswamy and Elon Musk have done that or had a team of people doing that in advance, because now it would be much more difficult to do it, now that everybody knows that this is in play and the pressure is going to be enormous.

Imagine the poor employees of this DOGE. They will be pressured by an enormous amount of people all over the place. I think that the ability to work under the radar for a year and a half is priceless, and so they’re already starting with a big disadvantage vis-à-vis Argentina.

Bethany: I thought he was very upfront about the way corporate interests have tried to protect their own pork as Argentina has attempted to dismantle the regulatory state. I thought that, too, was applicable for the United States and perhaps a roadmap of here lie dark places or here in these dark corners, danger lies for anybody trying to do this in the US, because you can only believe that special interests will be lobbying ferociously in order to keep the parts of the rules and regulations and government spending that benefit them.

Luigi: Yeah. To this point, I’m not a legal expert, so I don’t know whether you could do in the States what has been done in Argentina and what I know could be done in Italy, which is to give this legislative power temporarily to the executive.

I think that the separation of powers in the United States does not allow this to take place. I stand to be corrected by somebody who knows more, because I think this is very important. In a moment with a very strong mandate, you got Congress to basically write a blank check that you can do whatever you want—of course, under certain parameters. But then you can implement it in a room without the constant assault of all the lobbyists and the blackmailing power of all the lobbyists. The example of the governor that was blocking the law is very indicative. Imagine how many senators in the United States can block a law.

Bethany: I actually started to wonder how much of what Musk and Ramaswamy might see as bloat is actually under the control of the federal government and how much is at the state level, and how much control of spending jobs, anything, actually rests with the federal government versus the states and where the problem really is. I thought that would be a really interesting topic for further exploration that I’ve not seen written about, although it’s possible I just missed it.

Luigi: Let me break it to you, Bethany. The losers here are us, from Illinois, and people from New York and other blue states, because the low-hanging fruit for the federal government is to cut transfers to states that are in structural deficit forever. With the excuse of COVID, the Biden administration transferred a lot of money to states, particularly blue states. This is going to end. This is low-hanging fruit for the federal government, but it is a real pain for the state and local governments, and Chicago is the No. 1 target on this list.

Bethany: I’m going to ask a really naive question, just for the sake of getting you to expound on that. Do you think that’s true, that more money perhaps than was necessary or disproportionately was steered to blue states, and do you think there’s a risk now that Trump will be unfair and disproportionately cut the money going to blue states? I can’t even say that without starting to laugh.

Luigi: Yeah. Why don’t we go to the next question? This is such a softball that I didn’t expect that from you. You wanted me to say the bad stuff, and so you thought—

Bethany: Yes, I do. But it just actually is yet more evidence that the US has gone in the wrong direction, because I asked that question tongue in cheek and I was laughing as I said it, and yet it’s actually horrifying that I should have to ask that question and that I should be laughing as I said it, because that’s . . . Allow me to sound idealistic, but that’s just not the way it should work.

Luigi: No, I completely agree. But to be fair, some states are particularly poorly governed, and Illinois is one of those. There’s no particular reason that other states should subsidize this bad governance, so there is something to be said to reduce this, even if we are on the losing side of that equation.

Bethany: On a more humorous note, I thought it was really interesting—I wasn’t aware until Federico said it—that Milei is so active on Twitter. It’d be fascinating to actually compare Milei’s and Trump’s Twitter accounts and see if his communication style is actually Trumpian, who’s more effective, who says more outrageous things.

Luigi: I did know about the outrageous things, but I actually thought that the point he made was not just humorous, it was really substantive. It is true if there is a strong executive, lobbyists are more afraid to go after him. More often than not, they don’t even try because they don’t want to waste time and money. The moment you see that there is weakness, then it is basically a feeding frenzy.

Bethany: I agree with you. While I made a lighthearted comment, I was actually thinking the same thing, which is that I’ve always been adamantly opposed to Trump’s use of Twitter as utterly unpresidential and how awful.

This actually made me think, huh, maybe there’s a purpose to the madness or a method to the madness and even a method that we might all celebrate, which is that if it allows somebody an executive access to the population that isn’t mediated by lobbyists in the political process, maybe that can be a positive thing as well, not just a negative thing.

Luigi: Wow, Bethany. You actually admit that disintermediating the journalists is a good thing.

Bethany: Oh, well, the journalists were disintermediated a long time ago. Believe me, I no longer have any illusions about that.

Now, if the journalists had to be disintermediated, we need to disintermediate the lobbyists and the other politicians. If I had to be disintermediated, then, for sure, I want the lobbyists disintermediated.

Anyway, I did wish that he had offered a slightly different answer on this issue of authoritarianism, because I understand that everything they’re doing is within the letter of the law and the Argentine constitution. But at the same time, there is this interesting line that comes into play whenever you have somebody using the rules.

Even if you are using the rules, not abusing them, but using the rules to get things done that no one thought you could do, the line between that and authoritarianism is a fine one. I think it’s easy to celebrate it when it’s the things that you want to see get done and easier to see that the line has been crossed when the things that are happening are things you don’t want to have done. The intellectual consistency that it’s necessary to have around authoritarianism . . . It can’t be good when it’s the things you want to see happen and bad when it’s the things you don’t want to see happen. You have to have a line.

Luigi: I agree, but I think it’s a little bit excessive at this stage to call Milei authoritarian, because—

Bethany: Oh, I do, too. I do, too, but I still think it’s an interesting philosophical question, even if it doesn’t apply here.

Luigi: I think it is a very interesting philosophical question, but at some level, if you don’t have some strong government, you have government by strong or powerful interests. That’s one of the reasons why I was a bit disappointed by . . . I understand he’s a politician in this phase, not an economist, so he didn’t want to put a limit on what he’s doing, but the fact that he was basically unwilling to say that there are some limits in how much you want to cut the government.

Honestly, it was pretty shocking when he said that he took the risk of polluting the Río de la Plata that basically provides water for the entire city of Buenos Aires because he wanted to cut the power of those unions or whatever. I think, kudos to him that he’s cutting the power of the unions, but the risk is pretty big.

Bethany: Yeah. What do you need to keep in place? I’d actually love to hear people in the US answer that, too. If you do want to strip away rules and regulations, and you want to strip away government spending, what, in your view, should be left? What rules and regulations do we need? What spending do we need?