The Davos Talk Everyone Is Talking About: Collectivism v. Capitalism
Javier Milei was both profound and profoundly wrong
Before we get to the Davos talk everyone is talking about, here’s my most-liked tweet from the week.
I don’t say that lightly. It was in response to a disturbing story written by Steve Schmidt, former campaign manager for John McCain. In that story, Schmidt described how Sean Strickland has become the face of MAGA.
Strickland is a UFC fighter and a “former” neo-Nazi who claims those days are behind him. But that hasn’t stopped his hateful and bigoted rage that’s watched by many young men on the far right.
“All across America, young men, alone, angry and isolated, stare at their phones and watch Strickland’s rage spew forth. They mistake his idiocy for bravery, his venom for wisdom and his bigotry for liberty. What they see is a loser who looks like a winner on the small screen, which delivers a peculiar poison, personally targeted by algorithms that ensure most all of our young people are living in a version of the prisoner’s dilemma.
This is Trumpism, and this is very real. Watch it. Don’t turn away. This is American politics in 2024.” - Steve Schmidt
Some have compared the new Argentinian President, Javier Milei, to Donald Trump. Some even call him the Argentinian Trump. I made a short video countering that viewpoint:
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Comparisons aside, President Milei delivered a groundbreaking speech at Davos this past week during the World Economic Forum. Something I have described as the World “Inequality” Forum in the past.
Milei warned that the Western world was facing a major threat of “collectivism.” That collectivism was threatening to destroy capitalism, meritocracy, and freedom.
Note: by “collectivism”, Milei means socialism, or where the government controls not only the means of production but all freedoms in society (opposite of a free market).
As with most things — and something I am trying to convey better in my writing — the truth is probably not at one of the poles or extremes. It’s usually somewhere in between.
So let’s critique what Milei had to say from the profound to the profoundly wrong.
Watch President Javier Milei’s speech translated by artificial intelligence
Perhaps the most fascinating aspect of the speech - apart from the content itself - was the fact a company called HeyGen used artificial intelligence to directly translate Milei’s speech.
It’s insane. Give the entire thing a watch here.
HeyGen’s AI video generator directly translated Milei’s Spanish seamlessly into English, while maintaining his accent and adjusting his mouth to make it appear he’s speaking the English words.
Jaw-dropping. This is the future. And it’s also terrifying as it should be a reminder to all of us that what we watch online may not be real.
What Milei got right
Milei is mostly right about the danger and threat posed by collectivism in the West. For too long, meritocracy has taken a backseat to social justice, affirmative action, and other efforts to rebalance the scales.
Some of that rebalancing is justified. There’s plenty of systemic racism, for example, that requires correcting.
But much of what collectivism demands directly counters the aims of capitalism and meritocracy.
It often seeks equality of outcomes, not simply equality of opportunities.
No society can thrive or function long-term if people are constantly afforded handouts they did not earn through their actions, but through some attribute or quality they possess.
Milei cites the case study of his own country — Argentina — to help illustrate the point. He uses Argentina’s history as a warning of what can happen to prosperity once collectivism takes over. He explained how Argentina was one of the formidable economic powers a century ago, but now has some of the worst inflation in the world.
Milei was an economics professor in a prior life. This speech felt like he was lecturing in a university auditorium.
In particular, Milei highlighted entrepreneurs, calling them “heroes.” He noted that we are experiencing the most favorable period in human history, and he’s right. As I wrote not too long ago, America and the Western world have never been stronger economically, despite what many of its detractors would have you believe.
Far too often, as Milei explained, the state crushes entrepreneurs. State coercion kills their ability to create, and therefore destroys their freedom, according to him.
There’s a lot of truth there. Anyone who has even attempted to start a business knows that in even the most unregulated industries, simply navigating the process of forming an LLC and obtaining a federal tax ID number can be cumbersome. Let’s not even address taxes themselves. And that’s before we get into the specifics of the industry an entrepreneur is operating in, and all the laws, rules, and regulations that come with it.
America and the Western world could certainly be more business-friendly. But Milei took it too far.
What Milei got wrong
Milei railed on anything and everything with even a hint of socialism. He even made this profoundly incorrect statement:
“Socialism has failed in all countries where it was attempted.”
Perhaps there was an issue with the translation. Or perhaps he means only societies that were 100% socialist. And it seems he’s conflating socialism and communism, despite their critical differences.
If that was his intention — where the state controls ALL means of production — then I would agree. But that’s not exactly what he said.
Some socialism is good, even in a capitalist society like America. The New Deal, for example, was a major boon for the U.S. economy and helped the country escape a devastating depression.
Not many Americans today would want to forgo Social Security, Medicare, and Medicaid. All are “socialist” programs.
Society needs safety nets. If we’ve learned anything from financial calamity and crashes, it’s that we need to be prepared to help those who lose.
“Collectivist experiments are never a solution to the problems that afflict the citizens of the world, but rather, they are their cause.” - Javier Milei
In capitalism, there are winners, losers, and those somewhere in between. Many of the losers have suffered through no fault of their own. Perhaps they were dealt a bad hand in life or started the Monopoly game with only $1 compared to someone else who grew up on Boardwalk and Park Place.
Those people deserve equality of opportunity. They deserve support, provided they’re willing to make a good faith effort at working hard to right their ship.
Anyone who has read The Jungle by Upton Sinclair can likely empathize with this position. That book in particular changed my worldview from one that was hardcore capitalist (like Javier Milei) to one that accepted the need for some social safety nets.
Another view of Milei’s that I was completely at odds with was his contention that it was “impossible for such thing as market failure.” It’s his view that the only market failures are state-caused through coercion.
How would he describe the great stock market crash of 1929 in America? Or the financial crisis that afflicted the global economy in 2008? Or even the recent banking crisis we faced in the last year where multiple bank runs occurred?
From my perspective, those all resulted from market failures. Perhaps his definition is very wedded to specific theories in economics, but it seems myopic to argue that market failures only come from state coercion.
That would exclude market failures based on fraud and greed (1929 and 2008 financial crises) and those based on mismanagement and contagion (2023 bank runs).
When the financial system is not regulated properly, stakeholders are incentivized to act in any way that will generate profit. These incentives create a host of bad outcomes and can ruin many lives along the way.
Think Ponzi Schemes and Bernie Madoff.
Beyond finance, imagine if there was no “state coercion” for basic safety features in products like seat belts in cars.
Milei makes it seem like all state intervention is bad when the truth is far more nuanced and not at either extreme (Milei’s extreme or a fully collectivist extreme).
We must be more nuanced and critical in our thinking
While I enjoyed much of what Milei had to say, I fear it also sent the wrong message to many impressionable listeners. Many people are fed up with what they perceive as an overtly socialist agenda in Western society.
DEI - Diversity, Equity, and Inclusion
ESG - Environment, Sustainability, and Governance
“The Deep State” that operates within the alphabet soup of government agencies, as if they’re bringing to life Ayn Rand’s Atlas Shrugged.
Many view these initiatives and the laws that stem from them as oppressive. Freedom killers.
Milei himself even said as much in the conclusion of his speech:
“Thank you very much and long live freedom, damnit.”
We must find balance. We must find a way for the collectivists of society to speak with the capitalists and vice-versa.
The happy medium between the two poles is arguably the freest place to be — a capitalist system that has checks, balances, and a social safety net.
Reasonable and limited regulation.
But that doesn’t mean no regulation, President Milei. I’m sure even he wants to permit fraud and the concentration of economic power in the hands of a few elites in society.
What this means is that we must be more nuanced and critical in our thinking. Freedom should be our north star, but too much freedom could lead to immoral outcomes that significantly hurt progress and stability.
It’s our mission here at PolisPandit to explore ways we can strike the right balance. While improving our critical thinking skills and learning from many others along the way.
We hope you’ll join us.