Deregulation in Argentina: Milei Takes “Deep Chainsaw” to Bureaucracy and Red Tape

Argentine President Javier Milei has lowered inflation, drastically reduced government spending, and dismantled large parts of the federal bureaucracy. But as Ian Vásquez points out in his guest post, one of the most far-reaching efforts by his administration has been its deregulation push, with officials implementing about two deregulations per day on average since he took office, and using ingenious ways to discover where most needs deregulation. It's an Example for the World, if only New Zealand were not too sclerotic to learn from it ...

Deregulation in Argentina: Milei Takes “Deep Chainsaw” to Bureaucracy and Red Tape

by Ian Vásquez
At the heart of Argentina’s chronically crisis-prone economy is a political system that encourages unconstrained public spending and overregulation in the extreme. It is the system set up by Juan Domingo Perón in the 1940s that strengthened in subsequent decades, and that President Javier Milei promised to cut down with a chainsaw and replace with classical-liberal policies of the kind that made his country one of the most prosperous in the world a century ago.

Since assuming power in December 2023, Milei has been slashing government to that end. His priorities have been to get spending under control and to deregulate. Milei cut the budget by about 30 percent and balanced it one month into his term. That facilitated more disciplined monetary policy and the reduction of inflation from 25 percent per month when the president came to office to 2.2 percent in January 2025.

The success that Milei’s economic stabilisation has had so far is now widely acknowledged. The president took an economy from crisis to recovery much faster than most people expected: Growth returned in the second half of 2024, wages have increased, and the poverty rate, after having initially risen, has fallen below the 40 percent range that the previous government left as part of its legacy.

How much Milei has been deregulating, however, and the role that deregulation plays in Argentina’s success, is less widely appreciated—yet it is every bit as important as cutting spending. To understand why, it helps to know something about what makes Argentina’s politics different from that of most countries.

Argentina’s Peronist System

For more than seven decades, Argentina has had a corporatist system that Perón set up using Mussolini’s fascist Italy as a model. Under that system, the state organises society into groups—trade unions, business guilds, public employees, and so on—with which it negotiates to set national policies and balance interests. It’s a kind of collectivism that erases the individual, centralises power in the state, and incentivizes interest groups to compete for government favoritism through public spending and regulation.

This system gave rise to a proliferation of rules intended to protect and promote particular sectors through price controls, licensing schemes, differential exchange rates depending on type of economic activity, capital controls, preferential borrowing rates, compulsory membership in (and support of) guilds, and other interventions.

The system that the Peronist party set up discouraged free exchange, competition, and productivity but became deeply entrenched. Privileges accorded by regulation were politically difficult to lift. Legal scholar Jorge Bustamante, moreover, notes that regulation plays a more significant role in redistributing wealth in Argentina than fiscal policy does. He adds that “the waste of scarce resources caused by regulations is more serious than the direct activity of the state in the economy itself [fiscal policy], which is known to be in deficit.”

Unions in particular gained immense political power. Such was the case that Bustamante describes the Argentine system as one that “converts the unions into organs of the state when the party to which they belong [the Peronist party] is in power or converts the state into a prisoner of the unions when the party is in the opposition.”

Federico Sturzenegger, Argentina’s minister of deregulation and state transformation, made a similar point at the Cato conference we held in Buenos Aires in June 2024 with President Milei and other leading classical liberals. “The Peronist party,” Sturzenegger said, “is the manager of the status quo.… It is the manager of the vested interests; it is the conservative party of Argentina.”

The Peronists may want to conserve the system, but Milei is right in cutting it down. According to Cato's Human Freedom Index, the Argentina that the president inherited is one of the most regulated countries in the world, ranking 146 out of 165 countries in terms of the regulatory burden. As of last year, it ranked 81st.

Milei’s Cuts in One Year

Since coming to power, Milei has made wide-ranging cuts to Argentina’s bureaucracy. In his first year, he reduced the number of ministries from 18 to 8 (eliminating some and merging others), fired 37,000 public employees, and abolished about 100 secretariats and subsecretariats in addition to more than 200 lower-level bureaucratic departments.

The president has also aggressively pursued deregulation. Using a conservative methodology, my colleague Guillermina Sutter Schneider and I calculated that during Milei’s first year in office, he implemented about two deregulations per day. Roughly half of the measures eliminated regulations altogether, while the rest modified existing regulations in a generally market-oriented direction.

Milei has implemented these reforms legally and constitutionally, and they have resulted mainly from two broad measures. First, Milei began his administration by issuing an emergency “megadecree” that consisted of 366 articles. Emergency decrees are consistent with Argentine law if they meet certain conditions. They are also reviewable by Congress, which has the right to reject the orders within a specified period of time. Since the legislature did not object, most of the deregulations in the megadecree went into effect.

Second, Congress approved a massive bill (“Ley Bases”) last June that allows the government to issue further deregulatory decrees for one year. Most of Argentina’s deregulations are taking place under that authority and have been led by the new Ministry of Deregulation that began operating the following month.

The ministry is literally in a race against time, and its sense of urgency is palpable. When I visited Minister Sturzenegger and his team in November, they showed me a countdown sign outside his office that read “237 days left,” indicating the time remaining for the government to continue issuing deregulatory decrees. Sturzenegger’s team—made up of legal experts and accomplished economists—also has a clear sense of mission: to increase freedom rather than make the government more efficient. When reviewing a regulation, therefore, they first question whether the government should be involved in that area at all.

Following that approach, the government implemented deregulations in sectors of the economy ranging from agriculture and energy to transportation and housing. 

Looking at Prices

To help prioritise those reforms, the ministry looks at prices. If the cost of a good or service is significantly higher in Argentina than internationally, the regulatory burden often explains the price differential. Sturzenegger reports that deregulation in Argentina has tended to make prices fall by about 30 percent. The ministry has also set up a web portal called Report the Bureaucracy that takes recommendations from businesses and the public, resulting in numerous reforms.

Some of the reforms have been procedural. For example, government inspections are now sometimes conducted after a firm begins engaging in business (on the assumption that it is following the law and may be subject to inspection), rather than before any business is allowed to even go forward. This “ex-post” inspection of the labeling of imported textiles, for instance, led the price of textiles to fall by 29 percent. 

The government has also instituted a “positive administrative silence” rule affecting several activities by which requested permission is considered approved if the government bureaucracy does not respond within a fixed period of time. In yet another example, Milei prohibited legally sanctioned hereditary positions that had become normal practice at numerous government agencies.

Much of the impact of the deregulations has not yet been measured, but the hard or anecdotal evidence that does exist suggests that the reforms are making a significant difference. The following are some accomplishments from Milei’s first year:

• The end of Argentina’s extensive rent controls has resulted in a tripling of the supply of rental apartments in Buenos Aires and a 30 percent drop in price.
• The new open-skies policy and the permission for small airplane owners to provide transportation services within Argentina has led to an increase in the number of airline services and routes operating within (and to and from) the country.
• Permitting Starlink and other companies to provide satellite internet services has given connectivity to large swaths of Argentina that had no such connection previously. Anecdotal evidence from a town in the remote northwestern province of Jujuy implies a 90 percent drop in the price of connectivity.
• The government repealed the “Buy Argentina” law similar to “Buy American” laws, and it repealed laws that required stores to stock their shelves according to specific rules governing which products, by which companies and which nationalities, could be displayed in which order and in which proportions.
• Over-the-counter medicines can now be sold not just by pharmacies but by other businesses as well. This has resulted in online sales and price drops.
• The elimination of an import-licensing scheme has led to a 
• 20 percent drop in the price of clothing items and a 35 percent drop in the price of home appliances.
• The government ended the requirement that public employees purchase flights on the more expensive state airline and that other airlines cannot park their airplanes overnight at one of the main airports in Buenos Aires.

Many more examples could be given, but there’s no doubt that Argentines are beginning to feel the results of the reforms. Those results also help explain Milei’s approval rating of 50 to 55 percent, according to recent polls.

Year Two of Milei: The “Deep Chainsaw” Begins

In his address to the nation on his one-year anniversary as president, Milei explained that the cuts he’s made so far are only a beginning. “We will continue to eliminate agencies, secretariats, subsecretariats, public companies and any other State entity that should not exist,” he promised, and then went further: “Every attribution or task that does not correspond to what the federal state is supposed to do will be eliminated. Because as the state gets smaller, liberty grows larger.” Milei declared that he would now begin applying the “deep chainsaw.”

Minister Sturzenegger is leading the charge. A decree in February instructed all ministers to review all laws and regulations under their purview and recommend comprehensive deregulations within 30 days. In a country with nearly 300,000 laws, decrees, or resolutions, that is no small task. But according to Sturzenegger, the government has cut or modified 20 percent of the country’s laws; his goal is to reach 70 percent. He adds that the pace of firing public employees will increase.

Regulatory reforms have already picked up pace. In January, Sturzenegger announced a “revolutionary deregulation” of the export and import of food. All food that has been certified by countries with high sanitary standards can now be imported without further approval from, or registration with, the Argentine state. Food exports must now comply only with the regulations of the destination country and are unencumbered by domestic regulations.

That innovative reform, which outsources regulation, is intended to generate “cheaper food for Argentines and more Argentine food for the world.” But it is also an example of how the ministry takes input from Argentine citizens about the need to change nonsensical regulations. As Sturzenegger explained: “Countless companies have told us of the incredible hardships they had to go through to meet local requirements that were not required by the destination market. A producer who needed to certify a sample to see if he could enter the US market was asked to set up a factory first.”

In another case, Argentina required a watermelon exporter to package his product in a way that was different from what the recipient country required. So, in practice, the exporter would load the ship in compliance with Argentine law and, once the cargo left port, the watermelons would immediately be repacked.

Other examples abound. A decree in February facilitated farmers’ use of new seeds by eliminating the requirement to conduct extensive testing of those seeds. As Sturzenegger observed, in a country where agriculture plays a significant economic role, those restrictions were especially perverse: “Brazil has tripled its soybean production, largely with seeds made by Argentine researchers, working in Argentine companies but based in Brazil. The dramatic thing is that the increase in production in Brazil sinks the price of the grain while we are relatively stagnant because we cannot access our own technology!”

Another decree reduces the cost of warehousing imported containers awaiting customs inspections by an estimated 80 percent because it allows importers to keep their goods in competing locations during that time rather than solely in places run by the customs service. That cost reduction, like countless others that result from accelerated regulatory reforms, will be passed on to Argentine consumers. And to the extent that the chainsaw really does go deeper and faster in year two, the benefits will be even more pronounced.

An Example for the World

Milei’s task of turning Argentina once again into one of the freest and most prosperous countries in the world is herculean. But deregulation plays a key role in achieving that goal, and despite the reform agenda being far from complete, Milei has already exceeded most people’s expectations. 

His deregulations are cutting costs, increasing economic freedom, reducing opportunities for corruption, stimulating growth, and helping to overturn a failed and corrupt political system. Because of the scope, method, and extent of its deregulations, Argentina is setting an example for an overregulated world.

* * * * 

Ian Vásquez is Ian Vásquez is vice president for international studies at the Cato Institute, holds the David Boaz Chair, and is director of Cato’s Center for Global Liberty and Prosperity. He is a weekly columnist at El Comercio (Peru), and his articles have appeared in newspapers throughout the United States and Latin America.

His post first appeared at the Cato at Liberty blog.

Thank you Adam Smith

It's a busy week. This week also marks the 250th anniversary of Adam Smith's Wealth of Nations, the first in-depth exploration and explanation of (in PJ O'Rourke's words) why some nations are prosperous and wealthy and other places just suck.In honour of the anniversary, here are several of Adam Smith’s most insightful observations:

It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our necessities but of their advantages. [The Wealth Of Nations, Book I, Chapter II]

It is the great multiplication of the productions of all the different arts, in consequence of the division of labour, which occasions, in a well-governed society, that universal opulence which extends itself to the lowest ranks of the people. [The Wealth Of Nations, Book I, Chapter I]

Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism, but peace, easy taxes, and a tolerable administration of justice: all the rest being brought about by the natural course of things. [Lecture in 1755, quoted in Dugald Stewart, Account Of The Life And Writings Of Adam Smith LLD, Section IV, 25]

It is the maxim of every prudent master of a family, never to attempt to make at home what it will cost him more to make than to buy. [The Wealth Of Nations, Book IV Chapter I]

By means of glasses, hotbeds, and hotwalls, very good grapes can be raised in Scotland, and very good wine too can be made of them at about thirty times the expense for which at least equally good can be brought from foreign countries. Would it be a reasonable law to prohibit the importation of all foreign wines, merely to encourage the making of claret and burgundy in Scotland? [The Wealth Of Nations, Book IV, Chapter II]

Consumption is the sole end and purpose of all production; and the interest of the producer ought to be attended to, only so far as it may be necessary for promoting that of the consumer. [The Wealth Of Nations, Book IV Chapter VIII]

People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices…. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies, much less to render them necessary. [The Wealth Of Nations, Book IV Chapter VIII]

To widen the market and to narrow the competition, is always the interest of the dealers…The proposal of any new law or regulation of commerce which comes from this order, ought always to be listened to with great precaution... It comes from an order of men, whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it. [The Wealth Of Nations, Book I, Chapter XI]

It is the highest impertinence and presumption… in kings and ministers, to pretend to watch over the economy of private people, and to restrain their expense... They are themselves always, and without any exception, the greatest spendthrifts in the society. [The Wealth Of Nations, Book II, Chapter III]

There is no art which one government sooner learns of another than that of draining money from the pockets of the people. [The Wealth Of Nations, Book V Chapter II Part II] 

Every individual... neither intends to promote the public interest, nor knows how much he is promoting it... he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.
    Nor is it always the worse for the society that it was no part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good. [The Wealth Of Nations, Book IV, Chapter II]

What improves the circumstances of the greater part can never be regarded as an inconveniency to the whole. No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable. [The Wealth Of Nations, Book I Chapter VIII]

Mercy to the guilty is cruelty to the innocent. [From his 1759 work, The Theory of Moral Sentiments]

The man of system…is apt to be very wise in his own conceit; and is often so enamoured with the supposed beauty of his own ideal plan of government, that he cannot suffer the smallest deviation from any part of it… He seems to imagine that he can arrange the different members of a great society with as much ease as the hand arranges the different pieces upon a chess-board. He does not consider that in the great chess-board of human society, every single piece has a principle of motion of its own, altogether different from that which the legislature might choose to impress upon it. [The Theory Of Moral Sentiments, Part VI, Section II, Chapter II]

National is a party for business. For *specific* businesses.

"[S]ince we begin this week’s column at this beautiful [convention centre] let’s take a moment to remind ourselves how it was paid for...

"John Key wanted a convention centre. Since he couldn’t get a flag he needed something to show for his eight years in power. To induce SkyCity to build him a legacy, his government increased the number of permitted slot machines, extended their license, and gave the listed operator a regional monopoly until 2048.

"This is how National believe economics is done. Deals. Haggling. Concessions. Foreign visits and handshakes with oligarchs. National is not a party of free enterprise, it is the party of business."

~ Damien Grant from his column 'ACT is in a death match with NZ First, and the stakes couldn’t be higher'

What is "Neoliberalism" anyway?

A viral video by young lawyer Riana Te Ngahue is doing the rounds purporting to explain (for her aunties) something called Neoliberalism.

'A' for effort. 'F' for content. As libertarian Alberto Mingardi observes, very few who use the term have actually taken the time to define it correctly and to trace back its origins. She does take the time, but just like the folk she notes in her video (Tamitha Paul, Chloe Swarbrick, et al) Ms Te Ngahue fails to either define or understand where it came from. 

To be fair, it's not clear. Neoliberalism is like "trickle-down" in economics, or "austerity" in political economy: a term used almost exclusively by critics to characterise and critique a whole ill-defined whole cluster of policies and people, none of whom actually exist. (Take a look at Phil Magness for example explaining 'Why I Am Not a Neoliberal.') "Capitalism" of course was famously one of those words too -- used initially by French socialist Louis Blanc and anarchist Pierre-Joseph Proudhon -- before being taken up by capitalism's supporters. A bit like "queer."

But (apart from Scott Sumner, who thinks it's "awesome") there's no sign of that happening with "neoliberalism."

As Jeffrey Tucker explained way back in 2016, "We need a fix on what this term means. Is there a founding thinker, book, or meeting?" Or, in other words:

What is "Neoliberalism" anyway?

by Jeffrey Tucker

The term “neoliberalism” is being flung around everywhere these days, usually with a haughty sense of “everyone knows what this is.” But do we really? You may think you know, but there’s very little agreement among everyone else.

Is there a founding thinker, book, or meeting? The most common search phrases on Google are these: “definition neoliberalism,” “what is neoliberalism,” and “define neoliberalism.”

The confusion is understandable. Sometimes the term is used approvingly by the mainstream press, as for example to describe France’s Emmanuel Macron. Or Javier Milei. (As if there were much in common between the two.)

More often the term is used as a pejorative by the far left and the alt-right. Here it is said with a sneer to be a synonym for capitalism, globalism, elite rule, ruling-class privilege, and the administrative state.

It's true that there's more doubt around these days about cradle-to-grave government.

What are the reasons for this change?

First, there is the rather obvious fact that government management has failed to live up to its promise. People are far more likely to dread than appreciate any real-world contact with the state. Where would you rather be: the DMV or McDonald’s? The school-district office or a local bar? A military base or a car plant? The courthouse or the shopping mall? Want to deal with a government cop or a private security guard?

Second, private enterprise has turned out to produce far more amazing improvements in our lives; health, prosperity, education, transportation, security, and all the other “commanding heights” of life have been well-served by innovation stemming from entrepreneurship and commercial exchange. Pick your example, but a favourite one is how much transportation alone has improved with ride-sharing technology.

Third, a quiet intellectual revolution has been taking place in the postwar period, with generations of outstanding scholars having rediscovered, then improved, then propagated the insights of classical economics. To be sure, it is now conventional wisdom on the Left that this “neoliberal” intellectual shift is a result of an elite conspiracy dreamed up by billionaires and pushed by well-funded institutions and public intellectuals.

But there is a simpler explanation: the ideas of classical liberalism explain the world better than any alternative. Whether the intellectual change is the prime cause of the shift or incidental to it is unknowable. But this much is true: the shift in ideas is both real and necessary for a change in the paradigm.

Still, a classical liberal is not a neoliberal. We need a firmer fix on what this term "neoliberal" means. Is there a founding thinker, book, or meeting?

Liberalism Needed a Champion

The answer is yes. The thinker is the American journalist Walter Lippmann (1889-1974). He is often called the founder of modern American journalism. Also, if any writer/thinker can be called the founding father of neoliberalism, it is he. His life and times roughly overlap with both Mises and Hayek, the twentieth century’s two most prominent proponents of the classical idea of liberalism. Unlike Lippmann, there was nothing particularly “neo” about either of them. 

In fact, Mises himself had already written the definitive book to champion liberalism in the classical form in 1929. But it was published in Austria, in German. Lippman, as a New Yorker, would never have seen it.

Lippmann was not a professor, though he had an elite education and his brilliance was unmistakable. He was one of the most famous public intellectuals of his time, and a paragon of what was called liberalism in the Progressive Era and through the New Deal. As a founding editor of the New Republic, he was a defender of civil liberties, a proponent of peace, and opponent of socialism and fascism. No one would call him a dissident intellectual but he did resist the totalitarian winds of his time.

The Ideological Crisis

In the interwar period, this class of intellectuals had a sincere concern for the preservation of all the gains of liberty in the past, and sought to find a way to protect them in the future. The situation they faced was grim both in the United States and Europe. Two main extremist factions were struggling for control: the communists/socialists and the fascists/Nazis, which, Lippman realised, were two sides of the same authoritarian coin. The New Deal seemed to be borrowing from both while trying to hold on to certain liberal ideals. It was an unstable mix.

Where was the opposition? In Europe, the U.S., and the U.K, there was also a rise of what might be generally called Toryism or conservatism (or, in the American South, agrarianism). This was not a positive program but rather a reactionary or revanchist pose, a longing for the order of days gone by. In Europe, there were waves of nostalgia for the old monarchies and, with it, the desire to roll back the legitimate gains of liberalism in the 19th century. And with this pose comes a series of demands that are absolutely incompatible with modern life and contemporary human aspirations. 

Lippman knew that some form of liberalism had to be the way forward. But not the old liberalism, which he believed had failed (it led to economic depression and social instability, in his view). His goal was a renovated liberalism. He never used the term neoliberalism (that was invented by a colleague), but that is what it came to be called.

The Good Society

Lippmann’s great book – and it truly is a great book and very much worth a read – appeared in 1937: The Good Society. The book celebrated liberalism and thus rejected socialism, fascism, and Toryism. However, it also rejected laissez faire with equal passion, although you have to get pretty deep into the book to discover this. Lippmann had very casually accepted the bulk of the Keynesian criticism of free markets. He tried to thread the needle: opposing statism, loving liberty, but innovating what he regarded as liberal ends through quasi-statist means.

The book made such an impact that it inspired the calling of a hugely important scholarly colloquium held in Paris in August 1938, in the midst of a growing conflict in Europe and the world. Six months later came the German annexation of Austria, and one year before the Nazi invasion of Poland. These were extremely volatile times, and these intellectuals believed they had a responsibility to do something about righting what was going wrong in the world.

The “Walter Lippmann Colloquium” was organized by French liberal philosopher and logical positivist Louis Rougier. It was attended by Lippmann, and included several other leading French intellectuals, including the great monetary theorist Jacques Rueff. Also in attendance Michael Polanyi from the UK, as well as Germans Wilhelm Röpke and Alexander Rüstow. Most notably Friedrich Hayek came from London, and Ludwig von Mises arrived from Geneva where he was then living in sanctuary after having fled the Nazi invasion of Vienna. 

In short, this was a high-powered group, consisting of the world’s most important liberal intellectuals in the year 1938. It was at this event that Alexander Rüstow coined the term "neoliberalism" to label what they favoured. It was intended to apply only to Lippmann’s vision.

Hayek: neither neoliberal, nor conservative

Again, this was a new way of thinking about liberalism. It was democratic, tolerated a wide degree of regulation, plus welfare states, public education, and public provision of healthcare and infrastructure. But it maintained the core competitive processes of the market economy. The hope was to come up with some stable mix of policies that would lead to rising prosperity and bring about a general public contentment with the social order such that the demand for extremist ideologies like fascism and socialism would be kept at bay. The rising progress and demand for new technologies among the public would similarly outcompete revanchist and conservative sentiments in the political marketplace.

That was the hope in any case. I’m not aware of a report of precisely what took place in this Colloquium but one can imagine that both Mises and Hayek were alternatively pleased and unhappy about being pressed to agree with this view.

Hayek was emerging as the main opponent to John Maynard Keynes, while the other participants had made their peace with Keynes. For his part, Mises held the view that any mixture of state management into the market mix only diminishes the individual’s range of choice, slows economic growth, and introduces distortions that cry out for some political fix at a later date. Neither were believers in the great new Lippmann/Rüstow vision.

The Ur Text

To really understand this vision, let’s take a look at Lippmann’s treatise. It is not shabby. In fact, it is an excellent tutorial in the history of liberty. If only it had stuck with that. Still, the rhetoric is powerful and inspiring. You get a flavour from this passage:

Everywhere the movements which bid for men’s allegiance are hostile to the movements in which men struggled to be free. The programmes of reform are everywhere at odds with the liberal tradition. Men are asked to choose between security and liberty. To improve their fortunes they are told that they must renounced their rights. To escape from want they must enter a prison. To regularise their work they must be regimented. To obtain great equality they must have less freedom. To have national solidarity they must oppress the dissenters. To enhance their dignity they must lick the boots of tyrants. To realize the promise of science they must destroy free inquiry. To promote the truth they must not let it be examined. The choices are intolerable. 

Absolutely wonderful! And for the most part, the book continues in this lovely spirit, enough to feed the soul of the most radical libertarian. You have to get pretty far into the book to discover the “neo” part of neoliberalism. He believed that “liberalism must seek to change laws and greatly to modify property and contract” in a way that rejects laissez faire, a term and a system he completely counterposes to his own.

Neoliberalism includes public provision of education, health care, environmental protection, financial regulation, fiscal policy management, monetary control, and more. In fact, “the purpose of liberal reform is to accommodate the social order to the new economy; that end can be achieved only by continual and far-reaching reform of the social order.”

What Lippmann wanted was a new constitution for a “free state.” What he was rejecting was a state that is neutral to social outcomes – the “nightwatchman state” that the old liberals believed in.

Whereas the original liberals wanted law to be stable and general, pursuing only the most limited functions, the neoliberal vision is of a state that is an active part of the guarding, maintaining, and promoting liberty itself, as understood by a particular vision of what should be. It asserted that liberalism is so important that it must be the primary goal of the state to see it realised. 

In practice, there are no limits to how far this can go.

As an example of a state neutral to outcomes, consider the US Constitution. It is a framework for government and law. It specifies what various branches can do and why, and spells out what they cannot do and why. It contains no great aspiration for how society should look (well, perhaps the “general welfare” clause might apply) but mostly sticks to creating a framework and letting the people take it from there.

Neoliberalism instead wants a living state that is not only adaptive but even aspirational. It should take an active role in the lives of people with the expressed purpose of helping them live freer, flourishing, more fulfilling lives. The state must never lord it over the population but rather be the people’s partner in building prosperity and living out the promise of liberalism.

Where Lippmann Goes Wrong

All of this is interesting, but mostly fantasy. In his many chapters on the liberal state, Lippmann lays out all the ways in which his vision of an expansive state does not trend authoritarian. The official and the citizen are just people and there are no royal prerogatives. Bureaucracies aren’t issuing commands such much as behaving like publicly held corporations, always responsive to the public. There are all kind of intermediate institutions between the individual and the state. The public sector is humane, hospitable, adaptive, creative, and why? Because their power comes from the people, not the dictator or king.

All of this is interesting, but it is mostly fantasy.

Lippman, writing in 1938, was blind to important developments that took place in liberal theory, mostly in response to his vision.

The first is that crucial Hayekian point concerning epistemic humility. Lippmann writes as if he knows for sure how to achieve and judge social results that accord with his vision. It is a normal presumption of most intellectuals. Hayek’s innovation was to see that the knowledge necessary for the right ordering society is not accessible in whole to intellectuals and much less to presidents, legislators, or bureaucrats. It is deeply embedded in social processes themselves, and, in turn, in the minds of individuals making the choices that constitute the driving parts of that process.

The second point completely overlooked by Lippmann is that the players within the state itself have their own interests and designs, just as market actors do. They pursue their own interests. They seek to maximise their welfare. They look for more power, more funding, more prerogatives, and those they serve are the interest groups who can bring them more of it.

The idea that a public bureaucracy can be consistently much less permanently directly toward serving the genuine public interest is lacking in evidence. In other words, Lippman was blind to how the truths that would later be associated with the Public Choice school of economics might impact his vision of liberty.

A third problem is the one Mises identified: neoliberalism chooses the wrong means to realise its ends. Legislating higher wages does not actually raise wages; it throws people out of work. Regulating to protect the environment doesn’t end in doing so; it only devalues property which leaves it to be ravaged by irresponsible stewards. Instituting single-payer health care guts the sector of its signaling systems, its incentives for innovation, and its capacity to be rolled out to ever broader sectors of the population. And because intervention doesn’t achieve its stated ends, it becomes the pretext for ever more meddling in the market process.

These problems doom his system to be as much a fantasy as the authoritarian ideologies he opposed.

The Dangers of Neoliberalism

It was in response to Lippmann that both Hayek and Mises crafted many of their arguments over the coming years. Mises never stopped pointing out that laissez faire does not mean “let soulless forces operate,” as Lippmann seems to suggest. It means letting individuals make the choice over what kinds of lives they want to live, and let those choices drive forward the path of social evolution. Mises’s book Human Action was as much a response to Lippmann as it was to Keynes, Marx, and all the other anti-liberals.

Let’s just posit that we have a state that is determined to advance the cause of liberty – not a state neutral to outcomes but one directed at a certain end. Where will this lead us? It could lead to another form of top-down planning. It can result in practices such as social insurance schemes, heavy regulation in zoning and the environment, taxes and redistribution with the aim of bringing more effective liberty to ever more people. In an imperial state, it can lead to the imposition of planning on foreign nations: the IMF, the World Bank, the so-called Washington Consensus, and the United Nations Declaration on the Rights of Indigenous Peoples. 

It can be the excuse for wars for “spreading democracy” and nation building abroad.

You can say that all these policies are well intentioned. In fact, neoliberalism is the very embodiment of good intentions: we shall free all people! In the best case, neoliberalism gives us a post-war German economic miracle. But it could just easily land in Pinochet’s Chile, often cited as a neoliberal state. In foreign policy, neoliberalism can inspire beautiful reform (Japan after the war), or create a destructive terror state that seethes in resentment (see Libya, Iraq, and Afghanistan).

All of which is to say: the neoliberal can quickly become the anti-liberal state. There is no institutional reason why it would not be so. A state with a social mandate is a roaming beast: you might hope for it not to do bad things but you wouldn’t want to be alone with it in a dark alley.

To be sure, the world owes a debt to neoliberalism. It was this formulation that inspired many countries to liberalise their economies, and even been a reason for many of the loosening of controls in the United States. It led to the reforms in Latin America, China, and even Eastern Europe after the collapse of socialism. Neoliberal ideology is partially responsible for the liberation of billions of people from suffering, poverty, and tyranny.

The downside is also present: the continuation of colonialism by other means, the spread of global bureaucracy, the entrenchment of the welfare state, and the rise of deep-state control over culture, society, and the economy. It is also not politically stable. These institutions feed public resentment and fuel populist extremism, which is the very opposite of what Lippmann wanted. 

At the same time, genuine liberals (often called libertarians today) absolutely need to understand: we are not neoliberals. The great part about neoliberalism is the noun not the modifier. Its primary value is not in what it innovated but what it recaptured. To the extent that it diverges from the beautiful system of liberty itself, it can be the source of the opposite.

Neoliberalism Today

That the term is strewn throughout viral videos and public discourse today is a tribute to the power of an idea. This little seed planted in 1938 has grown into a massive global presence, mostly embodied in international bodies, public bureaucracies, political establishments, media voices, and pretexts for every manner of foreign, domestic, and global action. 

And what has been the result? Some good but a vast amount of highly conspicuous bad. Huge public sectors have held back economic growth. Large bureaucracies have compromised human freedom. It gave life to what is called "crony capitalism" today. Global control has bred nationalist blowback, while corporate monopoly has fed socialist longings.

We are again faced with the same problem today that confronted Lippmann in 1938. Everywhere there are ideologies that seek to put men in chains. We do need an alternative to socialism, fascism, and Toryism. We need to get it right this time. Let’s take the neo out of liberalism and accept nothing less than the real thing.

Freedom is not the correct implementation of a public policy plan. It is not the condition of appointing high-minded and intelligent social and economic managers. It is not the result of sound intentions from a fleet of ruling class intellectuals and major economic stakeholders.

Freedom exists when a people, an economy, and a culture, undirected and unmolested by administrative elites with power, are permitted to live and evolve in peace according to the principle of human choice in all areas of life.

* * * * * 

Jeffrey Tucker is the founder and president of the Brownstone Institute, organiser of the Great Barrington Declaration, and a former Director of Content for the Foundation for Economic Education, where his post first appeared. 

"Bad economic ideas don't just create poverty—they destroy the institutional foundations of free society."

"When the line between public and private is erased," explains Reason magazine's Eric Roehm, "then politics is all about special favours."

If you want to understand the silly little scene that played out between Apple CEO Tim Cook and President Donald Trump at the White House on Wednesday," he says, "you might start by remembering something that Vice President J.D. Vance said two years ago."

While attending a conference for nationalist conservatives, Vance offered an astonishing view of politics. The 'idea that there is this extremely strong division between the public sector and the private sector' was flawed, Vance argued. In reality, he went on to say, 'there is no meaningful distinction between the public and the private sector in the American regime. It is all fused together.'

    That's a useful framework for understanding much of what has happened since Trump (with Vance at his side) returned to the White House in January. That includes various trade policies and tariffs, of course, but also the "golden share" in U.S. Steel that Trump secured for himself, and how the administration leveraged its regulatory authority to force Paramount to pay a huge settlement. In each case, the Trump administration has tried to erase (or has ignored) the distinction between the public and the private sectors ...

Trump takes a further step. To him, not only is the private public, but the public is also very personal. ... He will decide what deals are in everyone's best interest, no matter what consenting individuals engaged in peaceful, private commerce might want to do. If he's unhappy about something in Brazil, it will be your problem. And if he's pleased with gifts and tributes, then all is well.
    Do you run a foreign company trying to make a huge investment in American steel manufacturing? You'd better be prepared to cut Trump a piece of the action. Are you unhappy about Medicaid cuts that reduce the reimbursements your company receives from the government? That's nothing a $5 million donation and dinner at Mar-a-Lagocan't fix. There's a good reason why lobbying firms with direct access to the White House are reportedly keeping very, very busy these days.
    And that's why Cook found himself in the Oval Office this week, presenting Trump with a special gift from Apple: A gold and glass token of the company's appreciation for Trump's special attention."

    Shortly afterwards, Trump responded in kind. Apple is now exempt from the 100 percent tariff that Trump is imposing on high-end computer chips made in other countries. Officially, that exemption is because Apple is investing $100 billion in U.S. manufacturing. Unofficially, it sure looks like Cook's gift paid off.

This is how business is now being done in the United Police States. Make sure you give a cut of your business to the boss.

You want to secure an "export license" for chips to China, as Nvidia and AMD needed, then as they discovered too, you'd better pay your 15% bribe. That will apparently fix all security "issues. It's not about security, of course. It's just tribute to the government.

The Students of Liberty twitter feed explains the game.

Ludwig von Mises warned us 80 years ago: when governments start making individual 'deals' with private companies, we're witnessing the transformation from capitalism to something far more dangerous. The news about Nvidia and AMD giving the U.S. government 15% of chip sales to China? Mises saw this exact pattern coming. 

In his 1944 book Omnipotent Government, Mises identified a dangerous transformation he called "etatism." Think of it this way: You still "own" your business on paper, but the government tells you what to make, who to hire, what prices to charge, and who you can sell to. You're a manager, not an owner.

Mises wrote: "The entrepreneur in a capitalist society depends upon the market and upon the consumers. Every entrepreneur must daily justify his social function through subservience to the wants of the consumers." But when business success requires political deals, everything changes.

The pattern is accelerating across recent months: — Apple announced $600B U.S. investment after iPhone tariff threats — Intel's CEO visiting the White House after public criticism — Nvidia/AMD now paying 15% revenue cuts for China market access This isn't capitalism. It's what Mises called "etatism."

Mises warned that under etatism, "the government, not the consumers, directs production." When companies must seek political permission rather than consumer approval, we've crossed a dangerous line. Success becomes about relationships with power, not service to people.

So what's the big deal about these corporate negotiations? Mises saw where this leads. When Nvidia pays 15% to access China markets, they're not responding to consumer demand. They're buying political permission. This fundamentally changes how businesses operate.

Instead of competing on price, quality, and innovation, companies now compete on political connections. Resources shift from R&D and customer service to lobbying and government relations. The best politically connected firms win, not the most efficient ones.

Here's the terrifying part: even if current leaders have good intentions, they're building the infrastructure of control. Once government has the power to grant or deny market access through individual deals, that power doesn't disappear when leadership changes.

Future authoritarians won't need to seize control—they'll inherit a system where economic power already flows through political channels. Small businesses can't negotiate these deals. They face full regulations while big corporations get special arrangements. Perfect tools for political control.

Mises understood this doesn't happen in one election cycle. It's a slow infection of ideas that spreads across decades until everyone accepts that companies should negotiate with whoever holds power. Eventually, people forget that businesses once served consumers, not politicians.

Mises understood that ideas have consequences. Bad economic ideas don't just create poverty—they destroy the institutional foundations of free society.

DOGE represents both a triumph of cronyism & a scaling back of conservative ambitions

"Ostensibly, the goal of DOGE [the US Department of so-called Government Efficiency] is to cut government spending. ... 

    "Anyone who knows anything about the budget understands that the goals that DOGE has set are basically impossible to reach, and practically nothing it does will significantly impact the debt. As The Economist points out, ... 'no matter how aggressive DOGE is, its actions are focused on barely more than a tenth of the overall federal budget' ..."[E]ven if you let go of 1 in 4 government workers, you’d only reduce federal spending by 1%. You’d need to cut spending by about a quarter to balance the budget, so firing that many people would get you about 4% of the way there....
    "But even if DOGE has limited effects on the budget, that doesn’t mean that it won’t have a major policy impact ... the better way to understand DOGE is as a tool to reshape the federal workforce and its activities in accordance with the wishes of Elon Musk and Donald Trump. ...

"We can make an analogy here to the way that ... the Red Army used political commissars who reported directly to the Communist Party to maintain loyalty to Bolshevik ideology, a system that continued after the establishment of the Soviet Union. ...
    "DOGE ... maintains direct lines to Trump and Musk, ensuring that departments do not thwart the will of the president and his agenda. Members of the DOGE team have reportedly been conducting short interviews with employees asking them to justify their jobs. This is ostensibly to help the government work better, but in practice this control over personnel selects for loyalty to the administration and a willingness to do its bidding. ...
    "Getting past a screening process focused on 'government efficiency', as defined by Trump-Musk ... tells you a lot about a person’s politics.

"We can think of the administration right now as a coalition of three forces: Trump himself, Musk, and the entirety of the conservative movement. Each has its own reasons for being enthusiastic about the DOGE project. Trump would like to be able to do whatever he wants, and not face legal consequences ... Musk in turn has all kinds of business interests before the government, as shown in the figure below. If you’re a federal bureaucrat who makes a decision that goes against the interest of Tesla or SpaceX, good luck keeping your job.

"Conservatives, and probably Musk himself, also want to cut spending. However, that is a fundamentally difficult if not impossible thing to do through the executive branch alone ... DOGE [therefore represents] a scaling back of conservative ambitions. ... Republicans used to dream about cutting Social Security and Medicare and changing the budgetary realities of the federal government at a macro level. Now, they celebrate firing a DEI consultant, which will have no impact on the size of government or our fiscal outlook."

~ Richard Hanania from his post 'DOGE as a Control Mechanism of the Trump-Musk Co-Presidency'

Tech billionaires aren't crawling to Trump because they're powerful, argues Johan Norberg in this guest post. It's because they're weak...

The Flattery Towards Trump Reveals Fear

by Johan Norberg

TECH MOGULS AREN'T FLATTERING TRUMP because they're drunk on power, but because they're afraid. The political arbitrariness that began with Biden risks becoming even worse with Trump.

Mark Zuckerberg, Jeff Bezos, and Elon Musk were among the guests at Donald Trump’s inauguration. 

At Trump's inauguration, the new president was surrounded by a grinning, applauding Forbes list. Among them were the world’s three richest men, Elon Musk, Jeff Bezos, and Mark Zuckerberg, as well as relatively less wealthy figures like the CEOs of Apple and Google. Sitting in more prominent seats than the incoming cabinet members, it certainly looked like the happy plutocrats had bought themselves a president.

They all donated to the inauguration fund and have, in other ways, signalled an approach. Bezos blocked the Washington Post’s official endorsement of Kamala Harris, and Zuckerberg admitted that Facebook became too woke and now needs to be more Texas.

Is the U.S. on its way to becoming a tech oligarchy? Biden’s speechwriters are among those warning of a tech-industrial complex with so much power that they threaten to disable democracy.

As a liberal, I’m conflicted. The only thing worse than a Trump administration run by big corporations is a Trump administration not run by big corporations. Since their position isn’t built on charming inflamed MAGA fans, but on solving technical and business problems in a global economy, they will exert a moderating influence. When Trump wants to imprison opponents, stop global trade, deport all migrants, or invade Greenland, they will try to get him to count to ten (though I no longer dare rule out anything regarding Musk).

Tesla’s 15% stock increase after Trump’s victory shows that someone's proximity to power is disturbingly valuable.

On the other hand, it’s impossible not to feel deep concern when the most powerful state and the largest capital are in the same boat. Tesla’s 15% stock increase after Trump’s victory shows that someone's proximity to power is disturbingly valuable. When I recently interviewed Musk, he said the state should act as a referee but not interfere in the game, which was wise. But it doesn't get better when a player wants to play referee.

Money doesn't buy elections—after all, Harris had more than the eventual victor—but it can buy influence with its recipients. Especially with someone as notoriously "transactional" (we used to say unprincipled) as Donald Trump. Just a year ago, Trump wanted electric car supporters to "rot in hell." Today, he is pro-electric cars, “I have to be because Elon endorsed me very strongly.”

But unsuitability is not the same as oligarchy. In fact, tech companies haven't assumed this role because they're so strong, but because they're so weak.

THIS IS MISSED IF YOU simply follow stock prices, but the big change in recent years is that Big Tech has gone from being everyone’s hero to everyone’s villain. After Trump’s 2016 victory, previously friendly Democrats started seeing social media as sewers of disinformation and demanded strict content control. The Biden administration also launched potentially devastating antitrust proceedings.

And no matter what they do, someone takes a swipe at them. When platforms became cosily progressive and moderated more content (even stories that turned out to be true), the right started seeing them as leftist censorship machines. Republicans like J.D. Vance and Josh Hawley demanded regulation and breakups. Trump threatened fines and monopoly laws to crush Amazon and Google. With few watertight principles for such power exercises, there are real risks of political arbitrariness. During the election campaign, Trump threatened to imprison Zuckerberg for life.

Tech giants suddenly realised they had lost all political allies.

This is especially dire as they simultaneously face existential risks in key foreign markets. Regulation-happy EU threatens their business models. Many were also shocked last year when Brazil's Supreme Court responded to Musk's refusal to block a series of X accounts by shutting down the entire platform and freezing Starlink’s assets—a completely different company with other stakeholders.

If Big Tech wants a chance in international battles over antitrust, censorship, and taxation, they need the U.S. on their side. Zuckerberg explicitly stated this in his recent repentance speech. The world wants to censor us, and “the only way we can counteract this global trend is with support from the American government.”

This isn't about people who love Trump. Except for Musk, none of the major players supported him before his victory. On the contrary, they’ve long fought against him but lost and are now pleading for mercy—and protection. Musk’s new role made it even more important to be there as a counterbalance to him since he's a tenacious critic who, among other things, has said that Amazon is a monopoly that needs to be broken up. Contrary to the notion of a homogeneous flock of bros, these men are jealous rivals vying for each other’s market shares. And suddenly a new Chinese AI model comes along that threatens all their inflated valuations.

So, the tech moguls aren't flattering Trump because they’re power-drunk, but because they’re scared. Bezos doesn’t humiliate himself with an ingratiating Amazon Prime documentary about Melania Trump because he can do whatever he wants, but because he can't.

The sad spectacle of the past few weeks has many calling for a mightier state to put the plutocrats in their place. On the contrary, I feel an urgent need for a few more independent billionaires who aren’t subject to such political arbitrariness that they constantly anxiously follow political trends.

* * * * 

Johan Norberg is a Swedish author and historian of ideas, devoted to promoting human progress, economic globalisation and classical liberal ideas.

This post is translated from Blacksmith, where it first appeared.

Still a fast-track to cronysim

"To deal with the proliferation of regulation & red-tape in NZ, which means you can barely go to the bathroom without getting permission, National's Chris Bishop & NZ First's Shane Jones told us they would 'fast track' a bunch of selected projects. ... So its a shame to see that on the fast-tracking issue, Bishop and Jones went and took a good idea and stuffed it up. They sadly politicised the whole thing by wanting to give Ministers the power to make decisions about which projects would be accepted. ...
    "They couldn't help themselves. They wanted to be big men, holding big power, deciding who got what. Now in an embarrassing back-down, they've reversed themselves. ... changing the Fast-track Approvals Bill so 'Final decisions on projects will not sit with Ministers but with an expert panel.' This is the same as the previous Labour government’s 'fast-track' process.
    "But they've got it wrong again. Why revert to yet another layer of bureaucracy ... staffed with the usual assortment of [cronies,] in-bred Wellington nobodies, or dubious Kiwi 'business leaders' with political connections? ...
    "What should they have done instead? [Ed: Well, obviously they should get rid of the proliferation of regulation & red-tape. But in the meantime ...] the 384 projects should simply be referred to the NZ Treasury / Infrastructure Commission for evaluation, & ranked highest to lowest in terms of benefit-to-cost ratios. Those institutions should send their ranking / recommendations to Cabinet for ultimate sign off. The rankings should be publicly available. Should Cabinet accept a project low on Treasury's rankings, then we'd know it was because they wanted their mates to get the job, unless some very good reason otherwise was presented.
    "For National to adopt Labour's same fast-track process with an expert panel of nobodies tells us one thing. Both National & Labour have failed to deliver for NZ and they still don't know how."

~ Robert MacCulloch, from his post 'Fast Track Approvals Bill: Chris Bishop & Shane Jones Took a Good Idea & Turned it into a Dog's Breakfast.' To which Labour's David Parker replied here.