A couple of days ago, I wrote about the importance of the incoming Trump administration resuming the impressive deregulatory effort seen in the president-elect’s first term, something that candidate Trump has said that it will do. In that connection, I mentioned the deregulatory drive underway in Argentina under that country’s new(ish) deregulation minister, Federico Sturzenegger.
So it was interesting to read in today’s La Nacion (Argentina’s leading newspaper) that, in a speech to the country’s chamber of commerce, Milei said that he had spoken to Elon Musk after Trump’s election victory, and that Musk is “in contact with” Sturzenegger about “copying his model” (“para replicar su modelo”). That’s good if so. Of course, Milei is not a man for understatement. He added that Argentina was exporting the chainsaw (la motosierra) “to the whole world.” Has anyone told Brussels?
The U.S. is (obviously!) not Argentina, and we don’t know what role, if any, Musk will be playing in or alongside the new administration. He would not, I imagine, want to sell or otherwise walk away from his positions in SpaceX, Tesla, X, and all the rest.
This may help explain why Trump has referred to Musk heading up a government efficiency commission, which might (I’d guess) be something like President Reagan’s Grace Commission or, to put it more formally, the President’s Private Sector Survey on Cost Control in the Federal Government (it was headed by Peter Grace, the head of W.R. Grace & Company). Reagan established the commission by executive order in June 1982, after announcing a few months earlier that (to quote the Reagan Library) “he would form a group of ‘outstanding experts from the private sector’ that would conduct an in-depth review of the entire Executive Branch, and make recommendations for eliminating waste and inefficiency.”
Writing in the Daily Telegraph, Fraser Nelson:
There are reasons to take Musk seriously, as well as literally. The car company he created is now worth more than its ten biggest rivals put together. He has put more satellites in space than the US government. Once a Trump critic, he now sees himself as a fellow disruptor and fellow target of the American Left. Elizabeth Warren, a (now re-elected) Democratic senator, once accused him of dodging tax. He replied that he pays more tax than any American in history ($11 billion). “Don’t spend it all at once,” he told her in a Tweet. “Oh wait, you did already.” This is what he plans to remedy now.
He has his ways. While Steve Jobs took little interest in how Apple products were made, Musk is obsessed with process. The story of SpaceX and Tesla is the story of his redefining what was possible by marching around factories on a never-ending war against waste. He asks managers to compile an “idiot index” of what a part costs to buy, relative to the cost of its basic materials. “If the ratio is too high,” says Musk, “you’re an idiot.” He’ll ask factory workers why four bolts were being put in a panel rather than two, then order a change. Such micro-management has led to achievements previously regarded as impossible.
Might the same work for government? Musk has a formula — he calls it his “algorithm” — aimed at dissolving bureaucracy. The idea is to empower and trust workers, telling them to regard every rule as stupid unless proven otherwise. They are asked to simplify, innovate and “delete” as many requirements as they can, adding them back later if need be. “If you do not end up adding back at least 10 per cent,” he tells staff, “you did not delete enough.”
But, as Nelson points out, the nature of the administrative state, and the legal structures in which it is embedded, would make it very difficult for such an approach to be applied to it. We’ll have to see, but deregulation (and associated cost-cutting) is the sort of supply-side reform that is not only good in its own right, but will be essential as a debt crunch grows closer. Unfortunately, Nelson concludes that Musk might find it easier to colonize Mars.
Speaking of wait and see, in his speech, Milei also said that Argentina’s recession was over and that the economy had begun to grow. Argentines were “leaving the desert” (“estamos saliendo del desierto”). If this turns out to be the case, it will be a remarkable achievement, although Milei’s comment that the “interval of pain” (“el intervalo de dolor”) was over would still be premature. Even if Argentina has turned the corner (and there are some indications that it has), a long, hard, and doubtless uneven road still lies ahead. With so many Argentines still (due mainly to the terrible shape of the country when Milei took office) living in poverty, life will remain extraordinarily tough — something he acknowledged a little later in the speech.
The question remains whether enough Argentines will be encouraged enough by an improvement in the economy’s direction to bolster Milei, who has a very weak position in Congress, in next October’s midterms.
