Can Visionaries Like Musk And Milei Prevail?

As an economist, one of the simple principles I rely on to analyze policies is that incentives matter. Over the past century, as the size and scope of government have expanded, so has the power of the bureaucracy—the unelected officials who administer state affairs. Their incentives and another core principle, self-interest, help explain how and why this growth continues.

I witnessed firsthand the rise and corrosive impact of an expanding state in my native Argentina. After moving to the United States four decades ago, I observed similar dynamics here: entrenched bureaucrats gaining immense power, with strong incentives to protect and preserve their influence. Viewed objectively—through the lens of incentives and self-interest—the system seemed rigged. Over time, bureaucracy appeared destined to prevail over elected leadership.

Then, during these last years, came a surprise: two highly unconventional figures—Javier Milei, the newly elected president of Argentina, and Elon Musk, one of the most transformative entrepreneurs of our time—burst onto the political and economic scene. Steve Forbes often jokes about forecasts, “The only thing we know about the future is that it will be different.” While we can forecast economic trends with some confidence, it is impossible to forecast the appearance of a Javier Milei or an Elon Musk on the political scene. Both men share traits of exceptional intelligence, intense focus, and a propensity to challenge traditional social norms. Yet each has earned his way into the center of some of the world’s most consequential debates and decisions.

The challenges they are facing, and my doubts about their chances for success, brought to my memory the first Mont Pelerin Society meeting I attended. It was convened under the title “Constraints on Government” and held in September 1980 at the Hoover Institution. Ronald Reagan’s election was still uncertain at the time, and most of the speakers had doubts that he could even defeat Jimmy Carter, let alone reduce the power of the bureaucracy. The conference was filled with intellectual giants—Milton Friedman, Thomas Sowell, Murray Rothbard, and others. F.A. Hayek was scheduled to attend but had to cancel at the last minute.

William E. Simon (1927-2000), former U.S. Secretary of the Treasury, presented a paper with a striking critique: “Throughout the last century, the commitment of business and labor leaders to the free enterprise system that has provided them with so many benefits has weakened dramatically. Much of the coercive regulation we now have has actually been invited by the private sector to avoid the risks of competitive markets.”

Simon’s point was echoed by many speakers who emphasized the formidable, often hidden, power of the bureaucracy. Pascal Salin, a respected French economist, reinforced this view: “The problem is not only of ideology, but of privilege and vested interests. To diminish the role of the state, one must confront organized and resistant civil servants who are always ready to fight against the ‘destruction of the civil service.’”

Similarly, Michael Walker, who grew Canada’s Fraser Institute into a leading world think tank and still sits on its board, observed that senior civil servants ensured continuity of policy regardless of which party was in power. Their institutional knowledge and alliances with special interest groups posed a significant obstacle to reform.

The view from the southern hemisphere was no more optimistic. Malcolm R. Fisher, writing about Australia, described the bureaucrats’ resilience: “The power of the bureaucrats is exceptionally strong—political change need not disturb the quiet, efficient ones—and their mastery of detail could hold at bay all but the most active Ministers.”

Fisher also described how bureaucrats often use delay, indecision, and inertia to neutralize political leaders who threaten their domains. One of his most sobering conclusions was that conservative governments, at best, only soften the regulatory state. Rarely do they dismantle it. Thus the machinery of control remains, ready to be reignited by the next administration eager for intervention.

Ezra Sadan, then Director General of Israel’s Ministry of Finance, warned that the bureaucracy’s reach extended beyond its clerks, encompassing countless government-supported agencies. These workers, he noted, often believe they understand not only how to achieve their organization’s goals, but also what those goals should be. Ironically, he concluded, the only force capable of restraining big government might be government itself.

I had doubts about this. Creating a bureaucracy to fight a bureaucracy?. Soon after my college graduation, decades before ChatGPT, I helped a businessman write a Ph.D. thesis by compiling published research on how to weaken the power of the bureaucracy. I did not have a hand in the thesis’s final recommendation, which went against my libertarian bias: the doctoral candidate proposed the creation of a new government department, a bureaucracy, to reduce bureaucracy and regulations. To my surprise, the person in question was influential enough that some years afterwards, the Argentine government created such an agency and appointed him minister! It didn’t accomplish much, however.

Almost four decades later, President Javier Milei created a Ministry of Deregulation and State Transformation (Ministerio de Desregulación y Transformación del Estado) in Argentina to do a similar job. Its mission is to “increase economic freedom, reduce public spending, and improve government efficiency.” He appointed one of the most accomplished academic economists in the Americas, Federico Sturzenegger, head of the department. Sturzenegger had been in public service before as head of the Central Bank (2015-2018), but then-president Mauricio Macri did not dare confront the bureaucracy. President Milei, on the other hand, empowered him to go for broke. Late last year, at a small private meeting with a top world economist, Sturzenegger said that he felt as though he were in Toyland, able to put into practice all the best economic lessons. He recognized that it was a significant boost to his efforts when President Milei publicly endorsed his work, especially against powerful entrenched interests, “but I have to tiptoe carefully so as not to deviate from our free economy goals.”

And this brings us to Elon Musk, who earned President Trump’s trust and promoted the creation of DOGE, the Department of Government Efficiency. It will take time make a final tally of Musk’s contributions. This may be an overgeneralization, but many of us old-guard students of fiscal policy and theory of bureaucratic decision-making never thought we would witness such efforts to cut bureaucratic costs and waste.

Bureaucratic rule, which seems to have replaced the rule of law, had never before been challenged as it has in recent months, first in Argentina and then at home in the world’s largest economy. In my analysis at the beginning of the year, I stated that I thought it would be easier for Javier Milei than for Trump to implement drastic cuts, as the Argentine bureaucracy offers almost no service efficiently and has few honest supporters. In the United States, however, bureaucratic agencies tend to be more efficient than in Argentina. The results so far show that during its first fifteen months Milei’s administration has cut over 45,000 government jobs and eliminated one-third of upper-level government positions. Estimates for the U.S. range between cuts of 220,000 to 280,000 jobs in just 4 months. The US population is seven times larger than Argentina’s, and its economy is forty times bigger, so the efforts are comparable.

DOGE targeted several agencies and organizations, including the Social Security Administration, the Internal Revenue Service, the U.S. Institute of Peace, USAID, and others, to cut waste and fraud. But several federal district judges blocked or reversed the actions, making the future of the reforms uncertain. Congress, so far, has also failed to support all of the cuts. With Elon Musk soon leaving town, the success of his effort is up in the air.

During his recent interview at the Qatar Economic Forum, Elon Musk was asked why DOGE only achieved a reduction of $170 billion instead of the $2 trillion he estimated. Musk, who thinks that the total impact should be assessed over time, answered: “The ability of DOGE to operate is a function of whether the government, and this includes the Congress, is willing to take our advice. We are not the dictators of the government, we are the advisors . . . the magnitude of the savings is proportionate to the support we get from Congress and from the executive branch and government in general.”

As the quotes from leading economists I listed above show, many of us were expecting that, independent of the importance of DOGE’s goals for the economy, those affected would fight hard to block the reforms. Lord Peter Bauer (1915-2002), considered one of the best development economists of all time, stressed in one of his books: “People often refuse to abandon attitudes and mores which obstruct economic performance. They are not prepared to give up their established ways for greater prosperity. This is a preference which is neither unjustified nor reprehensible.”

Did rule by bureaucracy defeat Elon Musk? I still do not count him out, but it will take many other courageous individuals, in and out of government, to continue the fight he led during the yet-to-be-finished first semester of this administration.