South Africa should focus on defending the right to life, liberty, and property

Argentinian President Javier Milei demonstrated that strong capitalist principles and a small state can lead to increased economic growth, reduced inflation, and a booming stock market.

This is a lesson for South Africa, which is currently in a downward spiral marked by low economic growth, increasing debt, rising unemployment, and high government spending.

These problems are largely self-inflicted, with business-unfriendly policies and collapsing state institutions chasing capital out of the country.

Good examples of these poor policies are black economic empowerment (BEE) and expropriation with compensation, which make the country unattractive to foreign investors.

Top economists have urged the South African government to remove these barriers to investment, aiming to drive economic growth and increase employment.

However, President Cyril Ramaphosa doubled down on BEE, arguing it is an investment in the economy which helps it grow.

Many top economists and political experts have criticised Ramaphosa’s claims, saying he is misguided and shows a lack of economic understanding.

Political analyst Frans Cronje said it is essential for South Africa to reconsider its black empowerment policies to attract international investments.

He said the only way for South Africa to achieve significant economic growth is to lift its fixed investment rate from the current 15% to 25%.

This will boost economic growth to 4%, which, in turn, will drive job creation at a rate that will reduce unemployment to 10% over the next 20 years.

Efficient Group chief economist Dawie Roodt said President Cyril Ramaphosa’s message to the world is that South Africa is not an investor-friendly country.

Roodt added that the idea that increasing wealth by redistributing it through BEE is entirely misguided.

“Clearly, our president does not understand the importance and essence of a modern economy,” he said.

Roodt said Ramaphosa’s message to the world was that he does not have a clue how an economy operates.

“We have been implementing the wrong macroeconomic policies for years. We are going to do more of that and double down on it,” he said.

“This is because Ramaphosa believes that if we implement more of the wrong macroeconomic policies, suddenly it will start looking better.”

The lessons from Argentinian President Javier Milei

Before Javier Milei was elected as Argentina’s president in December 2023, the country had severe economic challenges.

These challenges include hyperinflation and a currency crisis, a severe recession, weak output, rising public debt, and increasing poverty.

Milei promised to fix the country based on fundamental and conservative capitalist principles and create a much smaller state.

He advocated for the abolishment of the state, replaced by an individualist society, built on strong private property rights and a free market economy.

Milei campaigned on “the unrestricted respect for the life project of others based on the principle of non-aggression and in defence of the right to life, liberty, and property.”

He explained that a society with no central government would be his ideal world. However, due to many real-life restrictions, this is not possible.

This is why he is a minarchist in practice, advocating for a minimum state size. Milei has spoken aggressively against political elites and government inefficiencies.

At Davos, in a speech directed to businesspeople, he said, “Do not be intimidated either by the political class or by parasites who live off the state.”

“Do not surrender to a political class that only wants to stay in power and retain its privilege. If you make money, it is because you offer a better product at a better price.”

What Javier Milei achieved in Argentina

Milei implemented what he promised when he was elected president. He started by significantly cutting the size of the government.

He reduced the number of Argentina’s ministries from 18 to 9, and cut the number of secretariats, like deputy ministers in South Africa, from 106 to 54.

He cut the ministries of Transport, Public Works, Science, Territorial Development and Habitat, Culture, Environment, Tourism, Livestock and Agriculture, and Women’s Affairs.

Within his first 18 months in office, he laid off 50,000 government employees who drained the country’s budget.

He also imposed a plan in Argentina not to renew any government contracts unless they were essential.

This resulted in a 50% reduction in government leadership positions and a 34% decrease in political positions.

By implementing these actions, Milei transformed the country from having a 15% budget deficit to a balanced budget within his first month as president.

According to the Centre for Argentine Political Economy, Milei cut Argentina’s spending by 30% in his first ten months of presidency.

The cuts enabled Argentina to service its debt without relying on additional external debt and excessive money printing.

These changes helped Argentina significantly lower inflation. When Milei took office, Argentina reported an annual inflation rate of 211%.

After implementing his cuts, Argentina’s annual inflation rate dropped to 44% in the latest report.

These positive developments were also felt in other parts of the economy. After GDP contractions in early 2024, the economy rebounded with 3.9% growth in Q4 2024.

Argentina’s economy grew at 5.8% in Q1 2025, with quarter-on-quarter growth of 0.8%, driven by rising consumption, stronger real wages, and investment.

The Argentine peso appreciated roughly 44% against the US dollar after Milei liberalised exchange controls, allowing the peso to float within a controlled band.

The charts below show the positive effects of Milei’s policies since he took office in Argentina.