Argentinian Reform: Subsoil Privatization (Javier Milei, meet Guillermo Yeatts)

By Robert Bradley Jr. -- November 30, 2023

“The case of Guillermo Yeatts for subsoil privatization should eclipse ‘climate change’ as the number one policy initiative of the 21st century. This friend of private property, free markets, the rule of law, and civil society, a successful entrepreneur in his own right, a thinker and doer, has set up an excellent opportunity for a new political era in his beloved Argentina.”

Give me liberty, not corruption and poverty! The recent election of Javier Milei of La Libertad Avanza (Liberty Advances) in Argentina was a resounding vote for freedom and prosperity. And don’t let the mainstream media marginalize him (“frequent conservative provocateur” … “far-right libertarian rants” ….). He has a grand opportunity to enact a national “social justice” that could be a model for many other nations in Latin and South America and in other regions of the world.

Background

Milton Friedman, while warning against “a tyranny of the status quo,” noted:

Only a crisis – actual or perceived – produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes the politically inevitable.

And Argentinian voters have responded with a libertarian of promise. As Wiki describes the country’s new leader:

… Milei gained notability as an economist, as the author of multiple books on economics and politics, and for his distinct political philosophy as a vocal proponent of the Austrian School. He critiqued the fiscal policies of various Argentine administrations and advocates reduced government spending.

As a university professor, he taught courses in macroeconomics, economic growth, microeconomics, and mathematics for economists.^[1] Milei also authored numerous books and hosted radio programs…. As a national deputy, he … critiqu[ed] what he calls Argentina’s political elite and its propensity for high government spending. Milei has pledged not to raise taxes…. He defeated economy minister Sergio Massa … on a platform that held the ideological dominance of Peronism responsible for the ongoing Argentine economic crisis.

Javier Milei, Meet G. Yeatts

Javier Milei has an opportunity to channel a great, late Argentinian, Guillermo Yeatts (1937–2018), champion of privatizing the subsoil. I have written “Mineral Privatization for the Masses: Remembering Guillermo Yeatts (1937–2018) in regard to his primer, Subsurface Wealth: The Struggle for Privatization in Argentina (Foundation for Economic Education: 1997), a translation of El Robo del Subsuelo (Theft of the Subsoil).

Here are some quotations from Yeatts’ book (pp. 161, 167, 168, 171–2).

“The history of oil production in Argentina has been characterized by a continuing tug-of-war between the state as owner of the subsurface and private producers in the pursuit of profitable production of the resource. Private participation in the industry was limited to brief periods of time and restricted to specific phases of oil production.”

“The effectively monopolistic position of the federal oil corporation displaced the private sector to certain segments (such as refining) or to participation in peripheral activities …. In the strictly oil activities of exploration and production, YPF remained the sole and monopolistic player.”

“In Argentina, public ownership of the subsurface has been the foundation of a model of forced redistribution of rent in the oil industry. [Government] institutions are the royalties system, public oil production, and the establishment of reserves, quotas, regulations, registries, permits, etc. They have also caused stagnation in the industry and relegated the country’s oil resources to oblivion.”

“Privatization … is the institutional change required to reduce risk and allow internalization of externalities through private, voluntary, and mutually beneficial agreements. Privatization of the subsurface will complete the deregulation of the market, and, more importantly, encourage innovation among surface owners and oil prospectors.”

“The new oil market … only presents individuals with the incentives to embark on efforts to bring about growth and increased productivity. This change is about unobstructing minds and freeing them from restrictions. It appeals to the initiative of thousands of surface owners who will discover new business opportunities and new means to obtain profits.”

I summarized Yeatts’s major theme in my guest preface to this book (pp. xv–xvi):

[There is] a general economic maxim: public [government] resources are really private, owned and exploited by a political elite, while private resources are really public, owned and managed by a multitude. Government-owned resources do not ‘belong to all of the people’ and allow ‘self determination;’ they belong to none or a very few.”

Conclusion

The case of Guillermo Yeatts for subsoil privatization should eclipse “climate change” as the number one policy initiative of the 21st century. This friend of private property, free markets, the rule of law, and civil society, a successful entrepreneur in his own right, a thinker and doer, has set up an excellent opportunity for a new political era in his beloved Argentina.

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Guillermo M. Yeatts (1937–2018) died five years ago, just short of his 81st birthday.