2-26-25 *INTERVIEW* Mike Munger of Duke University on Argentina's President Javier Milei

Episode Transcript

Speaker 1 (00:00):
I'm so pleased to welcome back to the show one
of my favorite people, one of my favorite writers and
thinkers and podcasters, and a guy who either makes me
wish I was back in college, although that's probably not
quite right, because sometimes I still have nightmares about being
in college, like I have a final exam coming up
and I haven't.

Speaker 2 (00:18):
Studied for it.

Speaker 1 (00:19):
But a guy who makes me wish I had professors
like him in college, Mike Monger of Duke University. He
teaches what I will call the intersection of politics and economics,
and he has been a professor of each. But I
don't know that he talks about himself this way, but
I'll call him a professor of political economy, among other things.

Speaker 2 (00:40):
Mike, it's so good to see you here.

Speaker 1 (00:43):
And just for the heck of it, for a second,
let's just let people in on the conversation we were
having about why there is a giant unicorn head behind
you in your office.

Speaker 3 (00:54):
I have a giant unicorn head that you can see
on zoom, and the reason is that I find that
many people, when they talk about the state, are thinking
about an imaginary creature that can do things for them
and wants to so I have something I call the
Monger test. If they say I think the state should
do X, I say, all right, let's go back, take

(01:15):
out the word state and put in Donald Trump or
Nancy Pelosi. I'm not trying to make a partisan point.
The point is they're imagining a unicorn, which is that
there's a government that will do the things that they
want instead of actual people Donald Trump, Nancy Pelosi, bureaucracies.
The government is made up of people that have their

(01:35):
own interests, and so Joran Lonberg other people that talk
about the environment. They imagine that we can do all
of these things that will achieve a green economy and
save money. But it's imaginary. The problem is you can say, wait,
unicorns don't exist.

Speaker 4 (01:54):
They do.

Speaker 3 (01:55):
If you close your eyes and imagine a unicorn and
I do the same thing. We have the same imaginary construct.
Everybody has unicorns. The problem is they don't exist in
the world that can accomplish things. But in imaginary terms,
that's what everybody, and I think almost everybody when they
say the state, they have a favorite imaginary thing that

(02:15):
the state's going to do.

Speaker 1 (02:18):
My favorite imaginary thing that the state's gonna do is
leave me the hell alone.

Speaker 2 (02:23):
And I know it's imaginary though that.

Speaker 4 (02:26):
Is so imaginary, that's not even a unicorn. That doesn't
even exist.

Speaker 1 (02:30):
Right right, And folks, I will also let you know
two other things about about Mike. He has run for
office more than once as a libertarian, and he hosts
a fabulous and somewhat nerdy podcast that I love called
The Answer Is Transaction Costs TAIITC.

Speaker 2 (02:50):
The answer is transaction costs.

Speaker 1 (02:51):
So if you like economics even a little bit, go
wherever you listen to your podcasts and subscribe to the
Answer is Transaction Costs. It's a very valuable podcast, and
yet it is free, which post its own economic questions,
which we're not going to ask right now.

Speaker 2 (03:07):
All right, let me let me do a little tangent.

Speaker 1 (03:10):
That I wasn't gonna even ask you about, but I
want to as long as I have you here. The
first one, feel free to say, I'd rather not talk
about that. But there's been a massive tone change at
the level of the federal government when it comes to
DEI and things like that.

Speaker 2 (03:26):
And you work at a major university, and there's.

Speaker 1 (03:29):
A lot of stories here in Colorado about how some
universities seem to be taking it really seriously, like changing
some things they're doing, and some universities are saying, no,
we're going to keep doing things and we'll fight it
out if.

Speaker 2 (03:39):
We have to.

Speaker 1 (03:40):
And so I'm not asking you really about specific Duke policies,
but I'm wondering, as an important professor at an important university,
do you feel any kind of vibe change within the
administration or your department or departments there.

Speaker 3 (04:00):
By the administration and departments at Duke are mostly concerned
about the cutbacks that are coming as a result of
the freeze from dose from many of the contracts that
are being paid by the federal government. So I think
there's a lot of cutbacks in DEI. I don't know
that is, you know, the Deputy Assistant Provost of DEI things.

(04:26):
It's never clear what they did, and so we have
gotten rid of a number of those. But I think
that you could attribute that just to budget problems. Universities depend,
particularly elite universities, whatever that means, depend to an extent
that most people don't understand on payments from the federal
government for what's called overhead, and Duke is getting hammered.

Speaker 4 (04:46):
Now, you know, some people may like that, some may not.

Speaker 3 (04:49):
The universities are funded by payments from the federal government.
Having that frozen, I think has shown a spotlight on
the extent to which this was sort of a corre
to bargain where private universities Stanford was notorious for this
would use government overhead for almost everything. So I think
many people who have not been fans necessarily of what

(05:14):
Elon Musk and Doge have been doing would approve of
looking at what has happened by shining this spotlight on
university funding. But that has dwarfed the sort of pushback
against DEI is just straight up dollars.

Speaker 1 (05:30):
Okay, that's a great answer. And I'm guessing that as
a libertarian, separate from the specifics of impact on where
you work, I'm guessing that as a libertarian you feel
much as I do, which is the best disinfectant is sunlight?
And holy crap, do we need a lot of disinfectant

(05:51):
right now?

Speaker 4 (05:54):
Well, and there we are getting a lot of sunlight.

Speaker 3 (05:56):
I do have a concern, and that is that Doze
and Elon Musk and the people who are working in
that area are concerned about government efficiency. Governments are inherently inefficient,
if you want smaller government, you have to get rid
of entire bureaucracies.

Speaker 4 (06:13):
As long as.

Speaker 3 (06:13):
You're diddling at the edges about bureaucracies, then you're going
to be wasting money. If you want to cut spending,
I am not seeing real cuts in spending. What I'm
seeing is a lot of inconvenience. So I've had some
argue of court, because of course I had I've had
arguments on Twitter about this, where people said, well, it's
really good if we get rid of some public employees,

(06:34):
we haven't gotten rid of the government monopolies that those
employees are supposed to be operating. It took me forty
five minutes to get through tsa PreCheck at Atlanta. There
were two people working. The reason is that all of
the probationary workers had been fired, but there's still a
government monopoly to get through security at the airport. The
Post Office is laying people off, the IRS is laying

(06:57):
people off. It means that people can't pay their taxes
or get their questions answered.

Speaker 4 (07:02):
I pay somebody to do my taxes, But.

Speaker 3 (07:05):
If you're a regular guy, you've got to figure out
what the heck all of these complicated tax rules mean.
So if you want to simplify the tax code and
then get rid of the irs, okay, but you can't
start out by getting rid of government employees. So I
would say I am halfway in favor. We're doing this
the wrong way. Yeah, we're approaching it from the wrong side.

(07:28):
I'm basically on that same page with you.

Speaker 1 (07:30):
And I'll add one other thing that I think is
worth mentioning. Dose fired an immense number of asm call
them and then, as they are called in the law,
probationary employees, And it means folks who have not been
on the job very long and therefore have not acquired
basically union protections. And I just want to just think

(07:52):
about this for a second. Let's imagine that your kid
is at a school and you've got some teacher who
have been there for forty years, and some of them
are great, but some of them really don't care anymore.
They're collecting the paycheck and well they don't worry, and
they're there for the big pension and it it'll work
that hard, and they're not very good teachers. And then

(08:13):
you've got some you know, awesome new teacher, you know,
straight out of whatever, super enthusiastic loves kids, knows all
the newest stuff, just a wonderful teacher. And you would
much rather have the younger teacher than the older teacher
for your kid. But something happens and the school's smaller,

(08:33):
and they need to get rid of somebody, and they
get rid of the young one only because she's newer
and doesn't have the union protections. That's worse for everybody.
The older teacher is worse and more expensive, but protected.
So Dose is going through firing people just because they can,

(08:56):
who might not be the people who.

Speaker 2 (08:58):
Really should be fired. Mike, do you want to add
any to that.

Speaker 3 (09:02):
Or it isn't even union production. It's called tenure. So
it takes me a while at a university to get tenure.
You get tenure after one year if you're a public teacher,
or if you work for the federal bureaucracy. And so
what you said is exactly right. They're firing these people
because they can. Those are not the people you would
want to get rid of. These are newly trained people.

(09:23):
In fact, we've spent months and months training these people.
The only way we're going to be able to get
enough people to reopen tsa PreCheck is to hire new
people and start retraining them on day one.

Speaker 4 (09:35):
So it's even worse.

Speaker 3 (09:37):
Than you said, because we're getting rid of the most
productive people and the people who were paid least while
keeping the least productive, most expensive people. So if you
want to get rid of the bureaucracy, I'll help you.
If you want to fire the cheapest, most productive people,
I don't know what the heck you're doing.

Speaker 1 (09:55):
We're talking with Mike Munger from Duke University. One other
question before we get to what I I told you
we were going to talk about. Have you seen any
vibe shift to use an overused kind.

Speaker 2 (10:07):
Of term these days among your students.

Speaker 1 (10:11):
Do you have students who are more openly pro capitalism,
pro free market, not leftists by default? I mean you
probably already get just because of who you are, more
students that are in that direction, But do you feel
any tone change among the student body.

Speaker 4 (10:29):
There's an enormous change.

Speaker 3 (10:31):
So many young people are not left but they're not
pro market either.

Speaker 4 (10:36):
They're national conservatives.

Speaker 3 (10:38):
So these are Trump people, and what they actually want
is to restore American greatness. I'm a fan of American greatness,
but their idea is we need tariffs and we need
government management of the economy to prevent the things that
the left has done. So I'm a little scared of

(10:58):
the extent to which the classical liberal libertarian the boring things,
you have to work hard, you have to get a job.
What they want to do is to have a giant
takeover by a strong man. And so they not surprisingly
admire Malay in Argentina, they admire the Poland or Hungary.

(11:20):
So they want a strong man, and any of them
also want a religious move where the United States restores
Christianity to a place of primacy. So there is a
big change, but it's kind of not the one that
I expected, which was opposition to the traditional left on
economic grounds. It is more a move towards real European

(11:42):
style conservatism.

Speaker 1 (11:44):
Wow, all right, well you mentioned Malay, let's talk about
let's talk about him, and you wrote a piece for
the Dailyeconomy dot org.

Speaker 4 (11:54):
And just.

Speaker 2 (11:57):
I don't want to say I'm challenging you.

Speaker 1 (11:59):
I think I maybe would just ask you to clarify
because I think you and I are already on the
same page. Uh, Malay and Orban are not the same.
And yeah, and you kind of put him in the
same sentence like talking about strong men. I don't really
think of Malay that way, and I don't think Trump,
who seems to admire strong men, would think of Malay

(12:21):
that way. But let's let's talk about Malay who you
know what. This is as close to a political unicorn
as I've seen in a heck of a long time.
So can you just tell my listeners it can't be happening.
So tell my listeners what he's doing, and and also
tell them how it's working.

Speaker 2 (12:38):
Out compared to how we were told it would work out.

Speaker 4 (12:43):
Well. So I'm a fan boy.

Speaker 3 (12:45):
Oh my gosh, I've got I've got Malay bobblehead with
a his Moto Sierra and his his saying that's a change,
and then he he says something really bad.

Speaker 4 (12:58):
Darn it.

Speaker 3 (12:59):
So I have T shirts, I have other things. That's
all I'm going to say. That's all I can show.
So Malay is a strong man who happens to have
the views that I share, which is that he thinks
that government should be smaller. So the reason that I
put him in is that he is a strong man.

(13:19):
It's just that he is different from the other strongman
because he wants to do the things that I want.
But he's cut the number of cabinet departments from eighteen
to eight. All public works have been suspended except for
absolute essentials. They have held down the rate of increase
of pensions budget surpluses, which is actually hard to imagine

(13:43):
because the new Republican budget under Trump is going to
make the US deficit skyrocket. But Malay has actually cut
spending substantial reductions in regulations, has cut public spending by
more than thirty percent. The reason that he could do
that is that Argentina has a unitary government, whereas the

(14:06):
United States has a system where the president and Congress
are different. The president cannot rule in the United States
by executive order, so the attempts that they've made to
cut spending won't work unless the US Congress goes along.
And the problem is that nobody in the US Congress
actually wants to reduce spending, so they're depending on Doge

(14:27):
to make all of the headlines and incur all of
the wrath. But there's not actually any significant increase in
decrease in spending because the US Congress is not going along.
Malay doesn't need the Congress. He is able to impose
these unilaterally. So having a strong man I agree with,
that's a great idea. I'm worried that we'll have a

(14:49):
strong man I don't agree with him, so I'm opposed
to strong men generally.

Speaker 4 (14:53):
So if we had one I agreed with, that would
be awesome.

Speaker 1 (14:57):
Just briefly, what has Malay gotten done regarding inflation in Argentina.

Speaker 3 (15:04):
The rate of inflation has gone down from higher than
you can measure to something like thirty percent per year.
Now thirty percent per year sounds pretty bad, but you
can actually plan for that. And the nice thing about
that is it means that he has restored the ability
of the government to borrow because if you have a

(15:24):
rate of inflation you can work with, you can actually
borrow money, which means that now you can run the government.
So they're at a corner. They have a recession, there's
a lot of unemployment. But what's amazing is that the
rank and file working people of Argentina support Malay because
inflation was the main problem.

Speaker 2 (15:44):
Yeah, and I will I will note that.

Speaker 1 (15:48):
This thirty percent a year kind of thing that Argentina
has right now in terms of inflation and still on.

Speaker 2 (15:55):
The way down.

Speaker 1 (15:57):
It was it was not that far from maybe thirty
percent a month before before Mala was elected, right somewhere
in that area, and accelerating and accelerating, right, So okay.

Speaker 4 (16:12):
Let's cat it.

Speaker 1 (16:14):
I wish there was like we could talk for two
hours over a bourbon and maybe we will one day.
But I want you to just add anything you want
to add about the Republican budget. We hear all this
stuff about dose you mentioned it. We're cutting this, we're
cutting that, and Democrats are going to demagogue everything, but
we're not even going in the same direction as Argentina,

(16:36):
much less the same scale in that direction.

Speaker 4 (16:40):
I'll try to be brief. There's three problems.

Speaker 3 (16:42):
One is that you can win votes with spending, you
can win votes with cutting taxes. We have a corrupt bargain,
which is the Democrats by votes with spending, the Republicans
by votes with tax cuts. And what that means is

(17:02):
if you do those two things, you're going to have deficits.
The US deficit now is at one hundred and thirty
percent of GDP. We have a big GDP. We're a
big strong country. But the deficit, the total debt, forgive
me the total death, the accumulated deficits is one hundred
and thirty percent.

Speaker 4 (17:21):
This is worth a level where Greece went bankrupt.

Speaker 3 (17:24):
Now the US can probably still borrow money, but interest
on the debt is going to be thirty forty to
fifty percent of the entire federal budget. And we're going
in the wrong direction. The Republicans are going to actually
add to the deficit and therefore the debt this year.
So unless we cut spending by something like twenty percent,
tax increases won't do it. We have to cut spending.

(17:47):
There is no will to cut spending because everything I
count as a cost, and you count as a cost,
somebody else counts as a benefit, and no member of
Congress has the courage to do this.

Speaker 4 (17:59):
I have to give time. Thomas Massy credit.

Speaker 3 (18:01):
Thomas Massey of Kentucky came out publicly and said the
Republican budget will increase the deficit.

Speaker 4 (18:08):
So he's not a team player. He's telling the truth.

Speaker 3 (18:11):
All of the other people are lining up like Toady's
and lying saying, oh, we're in favor of cutting spending.

Speaker 2 (18:18):
Right, It's always true.

Speaker 1 (18:19):
And it'll be very interesting this time on the more
political side rather than the economic side, to see if
Republicans can put together anything that they can pass without
any Democratic votes. And I'm not saying that a bill
like that will be great, but it will be much
better than a bill that they would pass if they
need Democratic votes to pass it. So we'll see whether

(18:42):
the Chip Roys of the world on the conservative right
and the Mike Lawlers of the world sort of the
conservatives from New York and districts the Democrats win, whether
they can actually agree on something if they need to
ask Democrats for even a single vote to get this
thing passed, you are going to see a budget busting
thing that makes the current thing look like a good idea.

Speaker 2 (19:04):
I'll give you the last.

Speaker 1 (19:05):
Nineteen seconds to say anything you want because I like
prime numbers.

Speaker 3 (19:09):
Well, the nice thing about what you just said is
that remember malaise at thirty percent inflation.

Speaker 4 (19:15):
That's not good, but you could live with it.

Speaker 3 (19:17):
The US, if we could get a budget we could
live with, just make progress that would help bond markets
and bring interest rates down because people would say we're serious.

Speaker 4 (19:27):
Right now, We're not serious.

Speaker 1 (19:29):
Mike Munger teaches i'll call it political economy at Duke University.
His fantastic podcast is called The answer is transaction costs.
Everybody goes subscribe to it, and maybe if you listen
carefully enough, we'll all hear a unicorn or see one
one day.

Speaker 2 (19:49):
Mike, thanks so much for doing this. Is always such
a pleasure to have you on the show.

Speaker 4 (19:52):
Appreciate it.