--- title: "Javier Milei's Radical Plan to Save Argentina: Economic Shock Therapy and the Fight Against Peronism" description: "You may have heard of Argentina in the news quite a lot recently. From stories of great economic peril to bitter street protests, and to the firebrand President currently at the centre of all the furore, it is clear that something mega is taking place in Argentina.\n\nSo what gives?\n\nWell first, it's important to get a background to the economic landscape in Argentina, which — for many years — has oscillated between 'okay' and terrible.\n\nArgentina has — for some time now — been an economy noteworthy for its high volatility. While it was at some point one of the world's fastest-growing economies, it has also experienced dramatic economic decline and stagnation which left its economy artificially propped up by its government.\n\nAnd all this has led to a vicious sequence of recessions and instability, which Javier Milei, an economist and university professor-turned President, is now seeking to undo.\n\nLet's explore.\n\n## An Economic History of Argentina\n\nIn the late 1800s, Argentina was described as a poor, agrarian society lacking amenities such as electricity and road infrastructure. But this changed as the 20th century progressed.\n\nIn the early part of the century, a phenomenon known as the Great European Immigration Wave occurred in Argentina. Migrants, many of them from Spain and Italy but also other European countries, began arriving and settling in Argentina. They were joined by smaller streams of migrants from other parts of the globe, including many Syrians and Lebanese. This would change much for Argentina, not least by causing it to become incredibly diverse. Soon, large numbers of Argentinians claimed German and Middle-Eastern origin, with Argentina also having one of the largest Jewish populations in the world, something which remains true to this day.\n\nThe jump in population, combined with the expertise brought by the immigrant populations, helped revolutionise Argentina's economy and its day-to-day standard of living. Suddenly Argentina became an exporter of meat as well as grain and other agricultural products. These became exported across the world and helped Argentina's economy to grow at pace. With a skilled workforce, a bountiful and fertile agricultural landscape, and with plenty of countries who'd ruined themselves with war in the early twentieth century being in need of food imports, Argentina became one of the fastest-growing economies in the world.\n\nBut the happy evolution hit a wall with the Great Depression in 1929.\n\nThough Argentinian exports were thriving, this was largely dependent on people having the money in importing countries to buy their products. When the Great Depression levelled peoples' livelihoods, many no longer had the money to afford their homes, let alone Argentinian steaks and other produce. Exports dried up, as did imports from countries whose economic systems had been devastated by the shock. So Argentina began to wither too.\n\nThe economy did recover, and new waves of migration helped Argentina to grow once more, doing so successively over several further decades. But the shock of the Great Depression brought into play political currents which would come to have a lasting effect on Argentina's development.\n\nOne year after the Depression hit, Argentina's liberal government was ousted by a right-wing coup d'état. This led to what became known as La Concordancia, when no less than three Presidents exchanged power for more than a decade. The period, remembered in Argentina as the Infamous Decade, saw much corruption and mismanagement, as well as an increased presence in Argentinian politics of the military. This culminated in 1946 with the election (as President) of Juan Domingo Perón.\n\n## Peronism\n\nPerón was known for combining elements of both socialism and fascism, and favouring an economic system focused on domestic self-sufficiency rather than reliance on exports — something known as 'autarky'. He led Argentina for nine years, and again for a year shortly before his death in the 1970s. Perón was the leader of the so-called Justicialist Party from 1946 for the rest of his life, and his political and economic outlook came to be known as Peronism.\n\nPeronism was a bit of a chaotic ideology, but nonetheless remained a potent force in Argentina for decades even after Juan Perón's death. Its policies included notions of social justice, economic nationalism, as well as international non‐alignment.\n\nThe ideology is important in order to understand the relative disarray that the Argentinian economy later fell into. Argentinian Economist Emilio Ocampo has described Peronism as 'chameleonic populism'. According to him, while left-wing populism promoted class conflict and right-wing populism promoted xenophobia, Peronism simply alternated between both.\n\nAfter Perón's death, Argentina underwent a colourful changing of hands in the 1970s and 1980s — first a brutal military dictatorship, and later a centrist government under a liberal party, the Radical Civic Union. But by May 1989, Peronism was back under new President Carlos Menem — though his economic programme, including the privatisation of state‐owned industries to foreign buyers, quickly betrayed many Peronist principles. After a brief interlude between 1999 and 2001, when the Radical Civic Union returned to power, the Peronists returned to the fore with Néstor Kirchner, who was succeeded in 2007 by his wife, Cristina Fernández de Kirchner. The Peronist streak was broken again in 2015 with the election for a single term of President Mauricio Macri of the right-leaning Republican Proposal or 'PRO', but by then the Justicialist Party had a huge presence in Argentina's Congress, and continued to dominate Argentinian politics right up until the election of Javier Milei.\n\nIn short, by the 2020s, Argentina had been led by Peronists for twenty-four of the previous thirty years.\n\nAnd while Peronism — especially under the Kirchners in the 21st century — changed its colours many times, the programme has remained relatively steadfast on at least some policy areas. As described by Ocampo, the Peronist programme has consistently included:\n\n- high tax rates\n- high government spending on construction, public education, healthcare and social programs\n- increased trade union membership and labour regulation\n- significant business regulation and state intervention in economic activity\n- protectionism and restrictions on capital inflows and outflows\n- universal health coverage\n- national rent controls\n\nPractically all of these are things that Javier Milei would — in his own words — would seek to take a chainsaw to when he came into power.\n\nBut more on that in a bit.\n\n## A Political Muddle\n\nNow, before we get into Javier Milei and his bombastic notions on revamping Argentina, it is important to understand just why the Peronist platform — at least, in the current context — is seen by some as a spent ideology.\n\nAnd to do that, it is best to describe just what the recent economic history of Argentina has been like.\n\nFor one thing, while Argentina and all of South America escaped the economic and infrastructural destruction of the First and Second World Wars, that did not mean that conflict escaped them — at least, not entirely.\n\nMuch of Latin America became embroiled in political strife of various kinds during the mid and late-twentieth century. This typically involved revolutionary forces and leftist organisations battling it out with right-wing governments and militant factions. Argentina largely escaped this, but it meant that economic relations with surrounding countries were often thrown into the air according to which government was in place in either country at any given time — and many of these governments shapeshifted routinely throughout the late twentieth century.\n\nAnd then there was the fact that Argentina had its own — brief — war in 1982, when it occupied the British-owned Falkland Islands.\n\nThe lead-up to the war had been marked by the declining performance of Argentina's economy. Like with many authoritarian governments, the Argentinian government of the time — a military junta — decided the best way to distract everyone would be to bring the long standing Falklands dispute back to the fore. But the occupation of the islands by Argentinian troops was met with a heavy-handed response by the UK government under Margaret Thatcher, and Argentina ultimately accomplished neither control over the islands nor military success of any kind. They lost over six hundred soldiers in the two-month conflict, and suffered a national trauma when the warship General Belgrano was scuttled by a British submarine, resulting in 323 deaths.\n\nThis spelled the end of the junta, and started a new period in Argentina's political history.\n\nThe following years led to soul-searching that ultimately brought the Peronists back into power, with the party having changed tack in the intervening period from its fascist origins to a more left-leaning platform. As the years advanced, the government doubled the size of the public sector and introduced expensive subsidies and tight regulation upon the economy.\n\nIn general, Argentina's economy under the Justicialist Party became somewhat artificial, with the tight controls allowing favouritism, stagnant productivity and poor economic growth.\n\nAnd Argentina's staggered growth made it one of the most risky countries for speculators to invest in: when the good times roll, returns on investment are fantastic. When they don't; they are lethal. And at times, the weaknesses in Argentina's economy were not visible to the naked eye.\n\nTake the following case-in-point: on paper, in 2023, Argentina was a relative economic success story. At 632 billion dollars, its GDP was the highest in Latin America after Mexico and Brazil — both of which have population sizes many times larger than Argentina.\n\nBut Argentina also has a very high rate of poverty, and has suffered cyclical recessions in recent years, alternating between growth and vicious decline. A lot of the comforts enjoyed by its citizens came from support provided by the state, all of which has become unsustainable as the years have progressed and inflation rose.\n\nIt also didn't help the Peronist Justicialist Party that as the 21st-century advanced, ideological divisions in the party became apparent. Under the Kirchners — first Néstor and then his wife Christina — a new strain of Peronism emerged. Known as Kirchnerism, it took on an even more left-leaning guise, being described by some as left-wing populism. Naturally, this represented a rather huge departure from the fascist-infused positions of Juan Perón himself, and also didn't sit particularly comfortably with conservative Peronists, leading to the rise of so-called Federal Peronism in response.\n\nAll this led to a confusing sequence of Peronist alliances at the national level, starting with the Front for Victory in 2003 when Nestor took power. This became Citizen's Unity in 2017, which in turn became Frente de Todos in 2019, and finally the Union for the Homeland was formed ahead of the 2023 election which the Peronists lost to Milei. Amidst all this, Covid-19 had flattened world trade and the Argentinian economy was floundering, limping from recession to recession.\n\nBy 2024, Argentina had surged to an inflation rate of over 250 percent, a poverty level impacting half the population, and practically everyone agreed that something needed to be done to account for its post-Covid downturn.\n\nThat's when a leather-busting, sideburn-rocking Economics professor rose to prominence.\n\n## Javier Milei — the Rockstar Economist\n\nMilei identifies as an anarcho-capitalist, minarchist, and Classical Liberal.\n\nThose are all rather fanciful terms, so rather than delving into what they mean — or at least, what they mean to Milei — it is perhaps easier to understand what those terms reject.\n\n### Anti-Keynesianism\n\nKeynesian economic theory owes its name to John Maynard Keynes, a famous British economist from the early 20th century.\n\nThe theory is important to understand, as it has become a dominant school of thought in macroeconomics, and a common framework used by countries' governments to keep themselves afloat amid market fluctuation.\n\nOne of the primary objects of Keynesianism is that governments — in times of economic difficulty — should spend more in order to provide as much boost to the economy as possible.\n\nWhile this seems somewhat logical, it went completely against the previous wisdom of reducing spending, as was (and is) commonly the case for a cash-strapped government. It also went against the tactic of doing nothing, one of the principle benchmarks of laissez-faire capitalism.\n\nJavier Milei rejects Keynes' theory entirely. In fact, he describes it as evil, and an enemy in disguise of economic prosperity.\n\nThis is perhaps surprising. Keynesianism is, after all, one of the dominant schools of thought within capitalism, and Milei's enthusiasm for capitalism is not questioned. He loudly rejects communism and socialism, ruling out any cooperation with states subscribed to either one, and has referred to China — with which Argentina established close economic ties under Christina Fernández de Kirchner — as an \"assassin\" country.\n\nBut Milei instead subscribes to a different branch of economic thought, the so-called Austrian School, a sort of counterpart theory to Keynesianism.\n\nThe Austrian School focuses heavily on so-called marginal utility, believing that excess produce is harmful to an individual or economy only if the item does not have tangible use. This contrasts starkly with laissez-faire capitalism, which supports the production of as much of a given product as a country feels like and letting the market decide what is to be done with the excess, and also with Keynes' positions, which — in theory — favours high taxes on productive exporters, at least in times of prosperity. It seems to be this which Milei is trying to overturn, in line with Austrian theory, instead favouring less restrictions upon exporters.\n\nIn essence, Milei wants to do away with state restrictions on economic activity as much as possible, and to provide as much freedom as possible to Argentina's industries to produce, sell and return the country to prosperity in an organic sort of way.\n\n### Anti-Statism\n\nAmongst his many bullish statements while on the campaign trail, Milei made it clear that in addition to slashing taxes and government protections, he would seek to remove any barriers to entrepreneurship and production that he believed represented an overstep by the government into the personal freedoms of the people.\n\nIn an interview with *The Economist* one month before the Presidential election, Milei declared:\n\n> \"Liberalism is the unrestricted respect for the life project of others, based on the principle of non-aggression and defence of the right to life, liberty and property\".\n\nPart of this statement made reference to Milei's opposition to abortion, a central theme in his social policy. The rest related to his planned economic overhaul, characterised by privatisation and anti-statism, or the desire to limit the intervention of the state in all that concerned citizens' economic freedoms, including state-funded economic supports.\n\nIn the same interview, Milei declared that he did not believe the state to be a force of economic good for its citizens, and was instead something more like an insurer: one which would prevent its citizens from disaster, but was not a force which could or should allow them to accomplish prosperity without personal endeavour.\n\nMilei has gone so far as to label the state as 'a criminal organisation that lives off a coercive source of income called taxes'.\n\nHe conceded that his model of economics, prioritising political and economic freedom at the cost of the welfare state, is not a model currently followed by any government that he could think of. But he remained resolved in his conviction that governments in general — and the Argentinian government in particular — had failed in their self-declared duty to free the citizens from hardship, and that his vision of an economically liberal state with few protections for the citizens would ultimately result in a greater prosperity for all.\n\nIn his own words, Milei described the current system in Argentina as one giving the population fish, and his proposed vision would be one intended to teach them how to fish.\n\nHe would soon get his chance.\n\n## A Shock to the System\n\nWith austerity hanging in the air, on October 23rd 2023, Argentinians went to the polls.\n\nThe results turned out a decisive victory for Milei, winning 55.7 percent of the vote and triumphing over the Peronist government and their candidate, economy minister Sergio Massa.\n\nHis Presidency secured, Milei went to work — and began to introduce the dramatic changes which he described as 'economic shock therapy'.\n\nWhen he took office in December, inflation for the month spiked to a record high of 25%. However, this was likely something of a false flag, attenuated because he abolished the price controls of the previous government, which masked the high levels of inflation which were otherwise occurring.\n\nOne of his first moves was to devalue the ailing Argentinian peso by half. Due to Argentina's runaway inflation, the currency had already devalued from around 60 to the US dollar in 2020, to 330 by the time Milei was elected. As a result, black market trading of dollars had become a common occurrence in Argentina, and the cost of everyday items was soaring. Milei's devaluation caused the peso to immediately rocket to around 800 to the US dollar, and it is expected to hit 1000 by December 2024, although his ultimate intention is to slow the inflation down.\n\nNow, before we move on, a side note.\n\nIt's important to note that Milei, while popular, does not — by any means — enjoy much support in the Argentinian political sphere, and it is unlikely he will have complete freedom to overhaul Argentina without some help.\n\nHis party — La Libertad Avanza — was founded as a standalone party just one month before the election, and has little standing in either the Senate or Chamber of Deputies, the houses of the Argentinian Congress: where it holds just seven percent and fifteen percent of seats respectively.\n\nThe Parliament remains largely dominated by figures from rival factions — including the Peronist Union for the Homeland, which alone holds almost half of all seats in the Senate, and 40 percent in the Chamber of Deputies. In order to pass new laws, Milei needs Congress to sign off on them — which, given that his government does not hold a majority of seats, is largely dependent on the consent of the opposition, especially the Union for the Homeland.\n\nBut for Milei, a lack of partners in Argentina's Upper and Lower Chambers is not a problem. Prior to his election, he had mentioned he was willing to work with any faction which would favour the ideas of freedom, specifically referring by name to the Republican Proposal party under former President Mauricio Macri, with whom he now sits in a minority government.\n\nHe also indicated he would be content to work with the opposition — in practice, the Peronists — although his presidency has so far been punctuated by a poor relationship with them. In general, Milei has enthusiastically pursued a bad relationship with the left, both domestically and internationally. Six months after assuming office, Milei visited Spain — but rather than first meeting with the King or government as would be the norm, he spoke at a rally organised by the right wing Vox party in Madrid, on the eve of the June 2024 European Parliament elections.\n\nAnd domestically, while Milei may need the Congress to sign off on new laws, he does have the power to issue Presidential decrees through existing laws.\n\nAnd he has used this power with reckless abandon.\n\n## Milei Fires Up the Chainsaw\n\nArmed with his powers as Head of Government, Milei flung himself into action.\n\nAside from devaluing the peso and cutting public spending, Milei set his sights on undoing other features of the Peronist system and state structures he deemed unnecessary.\n\nHe had promised to reduce the number of ministries of the state to eight, keeping the Ministries of Economy, Infrastructure, Foreign Affairs, Human Capital, Security, Justice, Defense and the Interior — but doing away with all sixteen others.\n\nAs promised, he began doing just that, dissolving the Ministries of Transport, Culture, Education, Tourism, Science and others, and converting them into Secretariats overseen by the eight remaining Ministries. He also cut back subsidies on oil, gas, water and public transport, which the socialist government that preceded him had put into place and which lowered costs for the citizens — but which were likely unsustainable. The dissolution of Ministries and spending cuts resulted in a sudden halt to many infrastructure projects, including schools, hospitals, highways, and administrative buildings. Thousands of construction workers were laid off.\n\nBut Milei didn't stop there.\n\nHe also sought to undo Kirchnerist policies as much as possible, especially where it resulted in the creation of unnecessary jobs. Perhaps the biggest casualty of this was Télam, a state-run media agency founded in 1945 by Juan Perón, and accused by Milei of spreading Kirchnerist propaganda. He also announced that the agency had accumulated a deficit of over 20 million US dollars, and Télam was dissolved in July 2024 at a cost of 770 jobs. A new news agency was established in its place, run by the Chief of the Cabinet of Ministers directly.\n\nMilei also promised that he would privatise public companies. So he set that plan in motion too.\n\nIn September 2024, Milei announced plans to privatise the national airline — Aerolineas Argentinas — by Presidential decree. Two months before, he declared the same plans for Argentina's football clubs, declaring he would open them to investment from external entities. This is something common in Europe, but not in Argentina — where clubs operate effectively as charities, allowing them to be owned by civil associations representing the fans. In Milei's own words, \"anything that could be privatised, would be privatised\". He even announced plans to raise 800 million dollars by auctioning off more than 400 state properties across Argentina.\n\nOne such property is the former headquarters of the dissolved Ministry of Women, Genders and Diversity, which was located in the Buenos Aires neighbourhood of San Telmo in a building valued at around 12.5 million US dollars.\n\nAnd the same month, Milei memorably presented his much-anticipated new budget to the Argentinian Congress. With his back turned to the Economy Minister, he doubled down on his acrimonious relationship with the Congress by calling lawmakers 'miserable rats who bet against the country'. In his plans, he moved assertively ahead with his plans for further cuts to public spending, targeting a primary surplus of 1.3% of GDP, a GDP growth rate of 5% for 2025, and an annual reduced to 18% — down from more than one hundred percent consistently in the past years.\n\nThe plans are nothing short of ambitious. And as predicted — not least by Milei himself — his furious policies have resulted in a steep cost to the everyday Argentinian.\n\nThe cuts to subsidies have resulted in the price of everyday goods having risen drastically. In practice, whatever was bought at a grocery store for 200 dollars previously would now be bought for 400 dollars. *Al Jazeera* added that the biggest distinction was felt by the lower-middle class, who saw their ability to pursue leisure activities reduced, and the bite was also felt by pensioners, who saw the purchasing power of their pensions reduced, as Milei vetoed a Peronist push to increase pensions in response to the cuts.\n\nMoreover, Milei's reforms have resulted in tens of thousands of redundancies, especially in the public sector. It remains rather unclear how many public sector employees he actually intends to lay off, but it is generally expected that at least 70,000 jobs are at risk, especially those on temporary contracts issued by the government.\n\nBy October 2024, according to *El País*, around 24,000 public sector workers had been laid off.\n\n## Will it Work?\n\nDespite his flurry of activity, Milei will require at least some cooperation from Parliament and Argentina's courts to push through some of his reforms.\n\nAs an example, his contentious move to privatise Argentina's football clubs was blocked by a Buenos Aires court, and some of his bills — including his budget — need to be approved by the opposition-dominated Congress, the same ones he'd infamously called 'miserable rats'. The Congress already rejected a law to increase the intelligence services budget by 100 million dollars, and Milei can probably expect similar opprobrium on other proposed laws.\n\nWith that said, Milei can counter by wielding his power to veto the opposition's own bills, such as those designed to reduce the pinch of austerity measures. That is exactly what he has done for practically all of them.\n\nNevertheless, Milei may have to dial down some of his sharpest policy commitments, something he seems to be already doing in his promise to limit cooperation with China.\n\nGiven its vast economic power, China may — if only for pragmatic reasons — have to be an outlier in Milei's tough talk on socialist states. Despite labelling it an assassin country, China is Argentina's single greatest trading partner, buying 27% of the country's exports in 2022. It is also the largest investor in Argentina's growing lithium-mining sector, and even prints large amounts of Argentina's currency, the peso. This is likely to continue, as Milei has set his sights on reducing the size of the highly-unionised and — according to him — inefficient national mint, the Casa de Moneda.\n\nWith that said, Milei seems otherwise determined to follow through on his hard line on socialist countries. In October, he fired Argentina's Foreign Minister Diana Mondion after she voted in favour of lifting the US economic embargo on Cuba at the UN.\n\nCompromise also seems unlikely on other elements of his bullish agenda, and the cuts, redundancies, and restructuring seem likely to continue. In January 2024, Milei stated in an interview with the *Wall Street Journal* that his programme would continue for at least two years — therefore, to at least the end of 2025, before Argentina would see tangible benefit.\n\nDespite all this, Argentina's voters have mostly stuck with Milei.\n\nA survey by consultancy firm Aresco showed the approval rating of Milei's government was at 52.5% roughly one year after his election, practically the same percentage as the vote count he received in the election. It is as if the years of false promises have caused them to accept the reforms even when they must be hurting many of his electorate.\n\nAnd with all else said, despite the dramatic numbers of lay-offs and the climate of uncertainty generated for many Argentinians, there is justifiability to at least some of Milei's blunt cuts.\n\nIn 2024, World Population Review ranked the number of public sector employees in Argentina at 19.3% of the total workforce — by no means the highest, but a high figure nonetheless. Some 3.5 million people are employed in the public sector, and the sector grew by around 34% in the 10 years before Milei took office. In particular, Milei has made it clear that he seeks to unmask so-called 'gnocchi' — people employed on government contracts largely through political connections, who have little tangible purpose in the organs of the state, and who supposedly attend office only on the final day of each month to collect their salaries. The government has also introduced a bill to ban 'hereditary' hires in the civil service — in other words, the hiring of a family relation of a deceased employee — something which had been discontinued during Mauricio Macri's Presidency but reinstated by the Peronists shortly after.\n\nIn general, Argentina's current difficulties — especially for the working class — are consistent with the austere predictions made by Milei before he took office.\n\nAnd there have been some signs that Argentina's economy has begun to slowly rebound. In August, the government reported that economic activity rose against the previous year by 2.3%, despite being predicted to decline. Inflation, which reached a high of 25% in Milei's first month in office, has also fallen — to a monthly 3.5% one year on. And while unemployment and poverty levels have both increased, the disparity between the official dollar-peso exchange rate and same rate on the black market has narrowed, and investor confidence in Argentina has risen slightly, according to the *Financial Times*.\n\nWith that said, Argentina has also been rocked by multiple protests against Milei and his reforms — this has included trade union groups, pensioners, and students, all of whom have been affected in some way or other by his reforms. The rise in prices and slowed economic activity have also contributed to aforementioned high poverty rates, in turn contributing to the protests, which have by now remained consistent throughout Milei's presidency.\n\n## The Austrian School… to the Argentinian School?\n\nIn all likelihood, it will be impossible to make an accurate assessment of the success of Milei's rampaging project to overhaul Argentina until further along in his Presidency.\n\nIf he can succeed in meeting his declared objectives for 2025, this may provide a tangible insight as to whether his project has merit, or if it was just a load of bluster, providing all the difficulty he promised for little gain. Argentina's economy — already failing — will, in the case that Milei is unsuccessful…fail harder. And according to Milei himself: there is no Plan B.\n\nBut if he can pull it off, righting the ruinous economic course Argentina has been mired in for some time, his economic and political worldview may be inherited by other countries suffering similar difficulties, and become an economic framework of its own to rival those commonly pursued by free-market countries across the world.\n\nIn this case, Milei-ism may become a studied economic framework in its own right. Or perhaps Milei may be seen in the same guise as Nayib Bukele, whose brutal putdown of the gangs in El Salvador gained him infamy but also acclaim — and whose unapologetic blueprint has since been copied by other Latin American leaders in an effort to deal with their own gang problems.\n\nSo could it be that Javier Milei will become the economic equivalent of Nayib Bukele, or leave his own mark on Argentinian political history like Juan Perón once did — what do you think?\n\n## Key Takeaways\n\n- Argentina's economy has long been volatile, with periods of rapid growth followed by severe recessions.\n- Peronism, a mix of socialism and fascism, has dominated Argentine politics for decades, promoting high taxes and state intervention.\n- President Javier Milei, an anarcho-capitalist, aims to drastically reduce state involvement in the economy, slashing ministries and subsidies.\n- Milei's reforms have led to significant job losses and price increases, causing widespread protests but also some economic improvements.\n- The success of Milei's economic overhaul remains uncertain, with potential long-term benefits or further economic decline.\n\n## Frequently Asked Questions\n\n### What is the economic history of Argentina?\n\nArgentina's economic history is marked by high volatility. In the late 1800s, it was a poor, agrarian society. The Great European Immigration Wave in the early 20th century brought skilled workers who revolutionized the economy, making Argentina one of the fastest-growing economies. However, the Great Depression in 1929 led to economic decline, followed by periods of recovery and stagnation.\n\n### Who is Javier Milei and what are his economic beliefs?\n\nJavier Milei is an economist and former university professor who became the President of Argentina. He identifies as an anarcho-capitalist, minarchist, and Classical Liberal. He rejects Keynesian economic theory and favors the Austrian School of economics, which emphasizes marginal utility and minimal state intervention.\n\n### What is Peronism and how has it influenced Argentina's economy?\n\nPeronism is a political and economic ideology named after Juan Domingo Perón, who led Argentina from 1946 to 1955 and again briefly in the 1970s. It combines elements of socialism and fascism, favoring domestic self-sufficiency and state intervention. Peronism has been a dominant force in Argentina, influencing policies such as high tax rates, government spending, and protectionism.\n\n### What are some of the key economic challenges facing Argentina?\n\nArgentina faces high inflation, poverty, and economic instability. In 2024, the inflation rate surged to over 250 percent, and nearly half the population lived in poverty. The economy has been propped up by government support, which has become unsustainable.\n\n### What are Javier Milei's proposed economic reforms?\n\nMilei's reforms include devaluing the peso, cutting public spending, reducing the number of ministries, privatizing state-owned companies, and eliminating subsidies. He aims to reduce state intervention and promote economic freedom, believing this will lead to greater prosperity.\n\n### How has the public reacted to Javier Milei's reforms?\n\nThe public reaction has been mixed. While Milei's approval rating remains high, there have been consistent protests against his reforms, including from trade union groups, pensioners, and students. The cuts to subsidies and public spending have led to increased prices and economic hardship for many.\n\n### What is the political landscape in Argentina under Milei's presidency?\n\nMilei's party, La Libertad Avanza, holds a minority of seats in Congress. He needs the support of opposition parties to pass new laws, but he has used his power to issue Presidential decrees and veto opposition bills. His relationship with the opposition, particularly the Peronists, has been contentious.\n\n### What is the Austrian School of economics and how does it differ from Keynesianism?\n\nThe Austrian School focuses on marginal utility and believes in minimal state intervention. It contrasts with Keynesianism, which advocates for government spending to boost the economy during difficult times. Milei rejects Keynesianism, describing it as an enemy of economic prosperity.\n\n### What are some of the specific actions Milei has taken since becoming President?\n\nMilei has devalued the peso, cut public spending, dissolved several ministries, privatized state-owned companies, and eliminated subsidies. He has also introduced a new budget aiming for a primary surplus and reduced inflation, although these reforms have led to significant economic hardship for many Argentinians.\n\n### What is the impact of Milei's reforms on the Argentinian economy?\n\nMilei's reforms have led to a steep cost for everyday Argentinians, with prices of goods rising drastically and tens of thousands of redundancies in the public sector. However, there are signs of economic rebound, with economic activity rising and inflation falling slightly. Investor confidence has also risen, but poverty and unemployment levels remain high.\n\n## Sources\n\n- [Original MegaProjects video: Javier Milei's Radical Plan to Save Argentina](https://www.youtube.com/watch?v=GFeoigI_8vU)\n- [https://www.ft.com/content/38f718d3-0289-4b12-8faf-245c19d65cb0](https://www.ft.com/content/38f718d3-0289-4b12-8faf-245c19d65cb0)\n- [https://www.econstor.eu/bitstream/10419/238357/1/732.pdf](https://www.econstor.eu/bitstream/10419/238357/1/732.pdf)\n- [https://www.economist.com/news/2023/09/07/an-interview-with-javier-milei](https://www.economist.com/news/2023/09/07/an-interview-with-javier-milei)\n- [https://dialogue.earth/en/business/384031-what-do-argentinas-elections-mean-for-relations-with-china/](https://dialogue.earth/en/business/384031-what-do-argentinas-elections-mean-for-relations-with-china/)\n- [https://www.reuters.com/business/aerospace-defense/argentinas-milei-plans-privatize-state-airline-by-decree-2024-09-27/](https://www.reuters.com/business/aerospace-defense/argentinas-milei-plans-privatize-state-airline-by-decree-2024-09-27/)\n- [https://english.elpais.com/international/2024-04-02/president-javier-milei-fires-24000-government-workers-in-argentina-no-one-knows-who-will-be-next.html](https://english.elpais.com/international/2024-04-02/president-javier-milei-fires-24000-government-workers-in-argentina-no-one-knows-who-will-be-next.html)\n- [https://worldpopulationreview.com/country-rankings/public-sector-size-by-country](https://worldpopulationreview.com/country-rankings/public-sector-size-by-country)\n- [https://www.bbc.com/mundo/articles/cerw93vj7v8o](https://www.bbc.com/mundo/articles/cerw93vj7v8o)\n- [https://tradingeconomics.com/country-list/gdp?continent=america](https://tradingeconomics.com/country-list/gdp?continent=america)\n- [https://www.indec.gob.ar/uploads/informesdeprensa/i_argent_02_23EC82BFFB1E.pdf](https://www.indec.gob.ar/uploads/informesdeprensa/i_argent_02_23EC82BFFB1E.pdf)\n- [https://english.elpais.com/international/2024-10-30/argentina-halts-banknote-printing-as-milei-turns-to-chinese-suppliers.html](https://english.elpais.com/international/2024-10-30/argentina-halts-banknote-printing-as-milei-turns-to-chinese-suppliers.html)\n- [https://noticias.ufm.edu/2023/12/javier-milei-en-la-ufm-el-keynesianismo-es-el-enemigo-enmascarado/](https://noticias.ufm.edu/2023/12/javier-milei-en-la-ufm-el-keynesianismo-es-el-enemigo-enmascarado/)\n- [https://www.bloomberg.com/news/articles/2024-07-18/argentina-economy-posts-best-month-under-milei-despite-austerity?embedded-checkout=true](https://www.bloomberg.com/news/articles/2024-07-18/argentina-economy-posts-best-month-under-milei-despite-austerity?embedded-checkout=true)\n- [https://www.dw.com/en/argentina-court-blocks-milei-move-to-privatize-football/a-70122667](https://www.dw.com/en/argentina-court-blocks-milei-move-to-privatize-football/a-70122667)\n- [https://kbindependent.org/2024/09/16/argentinas-milei-presents-austerity-budget-calls-lawmakers-miserable-rats/](https://kbindependent.org/2024/09/16/argentinas-milei-presents-austerity-budget-calls-lawmakers-miserable-rats/)\n- [https://www.batimes.com.ar/news/argentina/milei-government-to-auction-off-more-than-400-state-properties-across-argentina.phtml](https://www.batimes.com.ar/news/argentina/milei-government-to-auction-off-more-than-400-state-properties-across-argentina.phtml)\n- [https://www.aljazeera.com/news/2024/8/23/argentinas-milei-to-veto-pension-reform-to-push-through-austerity-measures](https://www.aljazeera.com/news/2024/8/23/argentinas-milei-to-veto-pension-reform-to-push-through-austerity-measures)\n- [https://www.reuters.com/world/americas/an-argentine-railway-builder-suffers-shadow-mileis-cuts-2024-05-22/](https://www.reuters.com/world/americas/an-argentine-railway-builder-suffers-shadow-mileis-cuts-2024-05-22/)\n- [https://www.ft.com/content/dfd94c80-47d2-4b34-a382-e6fe2c244361](https://www.ft.com/content/dfd94c80-47d2-4b34-a382-e6fe2c244361)\n- [https://www.voanews.com/a/milei-s-popularity-rebounds-as-argentina-s-markets-hit-record-highs/7842577.html](https://www.voanews.com/a/milei-s-popularity-rebounds-as-argentina-s-markets-hit-record-highs/7842577.html)\n- [https://www.reuters.com/world/europe/spains-far-right-vox-holds-mass-rally-with-argentinas-milei-foreign-allies-2024-05-19/](https://www.reuters.com/world/europe/spains-far-right-vox-holds-mass-rally-with-argentinas-milei-foreign-allies-2024-05-19/)\n- [https://www.bbc.com/news/articles/cgl4y6w2r33o](https://www.bbc.com/news/articles/cgl4y6w2r33o)\n- [https://www.batimes.com.ar/news/economy/report-public-employment-up-34-in-argentina-since-2011-private-up-only-3.phtml](https://www.batimes.com.ar/news/economy/report-public-employment-up-34-in-argentina-since-2011-private-up-only-3.phtml)\n- [Hero image source](https://upload.wikimedia.org/wikipedia/commons/d/dc/Marcha_contra_los_transfemicidios_y_travesticidios_en_el_Encuentro_Plurinacional_en_Jujuy%2C_Argentina_2024_crop.jpg?utm_source=commons.wikimedia.org&utm_campaign=imageinfo&utm_content=original) by Luis Fernando Flores (WJUY) / openverse, by-sa.\n\n## Related Coverage" url: https://megaprojects.pub/article/javier-milei-radical-plan-save-argentina.md canonical: https://megaprojects.pub/article/javier-milei-radical-plan-save-argentina datePublished: 2026-07-02 dateModified: 2026-07-02 author: - name: Simon Whistler url: https://megaprojects.pub/author/simon-whistler publisher: MegaProjects image: "https://media.megaprojects.pub/cdn-cgi/image/width=600,height=338,fit=cover,quality=80,format=auto/articles/GFeoigI_8vU/hero.jpg" type: NewsArticle contentHash: f080d790570ba324ce726646cb729fe75e7f5f8c15c70a8b9290c2e55347bc83 tokens: 10118 summaryUrl: https://megaprojects.pub/article/javier-milei-radical-plan-save-argentina.md.summary.md --- You may have heard of Argentina in the news quite a lot recently. From stories of great economic peril to bitter street protests, and to the firebrand President currently at the centre of all the furore, it is clear that something mega is taking place in Argentina. So what gives? Well first, it's important to get a background to the economic landscape in Argentina, which — for many years — has oscillated between 'okay' and terrible. Argentina has — for some time now — been an economy noteworthy for its high volatility. While it was at some point one of the world's fastest-growing economies, it has also experienced dramatic economic decline and stagnation which left its economy artificially propped up by its government. And all this has led to a vicious sequence of recessions and instability, which Javier Milei, an economist and university professor-turned President, is now seeking to undo. Let's explore. ## An Economic History of Argentina In the late 1800s, Argentina was described as a poor, agrarian society lacking amenities such as electricity and road infrastructure. But this changed as the 20th century progressed. In the early part of the century, a phenomenon known as the Great European Immigration Wave occurred in Argentina. Migrants, many of them from Spain and Italy but also other European countries, began arriving and settling in Argentina. They were joined by smaller streams of migrants from other parts of the globe, including many Syrians and Lebanese. This would change much for Argentina, not least by causing it to become incredibly diverse. Soon, large numbers of Argentinians claimed German and Middle-Eastern origin, with Argentina also having one of the largest Jewish populations in the world, something which remains true to this day. The jump in population, combined with the expertise brought by the immigrant populations, helped revolutionise Argentina's economy and its day-to-day standard of living. Suddenly Argentina became an exporter of meat as well as grain and other agricultural products. These became exported across the world and helped Argentina's economy to grow at pace. With a skilled workforce, a bountiful and fertile agricultural landscape, and with plenty of countries who'd ruined themselves with war in the early twentieth century being in need of food imports, Argentina became one of the fastest-growing economies in the world. But the happy evolution hit a wall with the Great Depression in 1929. Though Argentinian exports were thriving, this was largely dependent on people having the money in importing countries to buy their products. When the Great Depression levelled peoples' livelihoods, many no longer had the money to afford their homes, let alone Argentinian steaks and other produce. Exports dried up, as did imports from countries whose economic systems had been devastated by the shock. So Argentina began to wither too. The economy did recover, and new waves of migration helped Argentina to grow once more, doing so successively over several further decades. But the shock of the Great Depression brought into play political currents which would come to have a lasting effect on Argentina's development. One year after the Depression hit, Argentina's liberal government was ousted by a right-wing coup d'état. This led to what became known as La Concordancia, when no less than three Presidents exchanged power for more than a decade. The period, remembered in Argentina as the Infamous Decade, saw much corruption and mismanagement, as well as an increased presence in Argentinian politics of the military. This culminated in 1946 with the election (as President) of Juan Domingo Perón. ## Peronism Perón was known for combining elements of both socialism and fascism, and favouring an economic system focused on domestic self-sufficiency rather than reliance on exports — something known as 'autarky'. He led Argentina for nine years, and again for a year shortly before his death in the 1970s. Perón was the leader of the so-called Justicialist Party from 1946 for the rest of his life, and his political and economic outlook came to be known as Peronism. Peronism was a bit of a chaotic ideology, but nonetheless remained a potent force in Argentina for decades even after Juan Perón's death. Its policies included notions of social justice, economic nationalism, as well as international non‐alignment. The ideology is important in order to understand the relative disarray that the Argentinian economy later fell into. Argentinian Economist Emilio Ocampo has described Peronism as 'chameleonic populism'. According to him, while left-wing populism promoted class conflict and right-wing populism promoted xenophobia, Peronism simply alternated between both. After Perón's death, Argentina underwent a colourful changing of hands in the 1970s and 1980s — first a brutal military dictatorship, and later a centrist government under a liberal party, the Radical Civic Union. But by May 1989, Peronism was back under new President Carlos Menem — though his economic programme, including the privatisation of state‐owned industries to foreign buyers, quickly betrayed many Peronist principles. After a brief interlude between 1999 and 2001, when the Radical Civic Union returned to power, the Peronists returned to the fore with Néstor Kirchner, who was succeeded in 2007 by his wife, Cristina Fernández de Kirchner. The Peronist streak was broken again in 2015 with the election for a single term of President Mauricio Macri of the right-leaning Republican Proposal or 'PRO', but by then the Justicialist Party had a huge presence in Argentina's Congress, and continued to dominate Argentinian politics right up until the election of Javier Milei. In short, by the 2020s, Argentina had been led by Peronists for twenty-four of the previous thirty years. And while Peronism — especially under the Kirchners in the 21st century — changed its colours many times, the programme has remained relatively steadfast on at least some policy areas. As described by Ocampo, the Peronist programme has consistently included: - high tax rates - high government spending on construction, public education, healthcare and social programs - increased trade union membership and labour regulation - significant business regulation and state intervention in economic activity - protectionism and restrictions on capital inflows and outflows - universal health coverage - national rent controls Practically all of these are things that Javier Milei would — in his own words — would seek to take a chainsaw to when he came into power. But more on that in a bit. ## A Political Muddle Now, before we get into Javier Milei and his bombastic notions on revamping Argentina, it is important to understand just why the Peronist platform — at least, in the current context — is seen by some as a spent ideology. And to do that, it is best to describe just what the recent economic history of Argentina has been like. For one thing, while Argentina and all of South America escaped the economic and infrastructural destruction of the First and Second World Wars, that did not mean that conflict escaped them — at least, not entirely. Much of Latin America became embroiled in political strife of various kinds during the mid and late-twentieth century. This typically involved revolutionary forces and leftist organisations battling it out with right-wing governments and militant factions. Argentina largely escaped this, but it meant that economic relations with surrounding countries were often thrown into the air according to which government was in place in either country at any given time — and many of these governments shapeshifted routinely throughout the late twentieth century. And then there was the fact that Argentina had its own — brief — war in 1982, when it occupied the British-owned Falkland Islands. The lead-up to the war had been marked by the declining performance of Argentina's economy. Like with many authoritarian governments, the Argentinian government of the time — a military junta — decided the best way to distract everyone would be to bring the long standing Falklands dispute back to the fore. But the occupation of the islands by Argentinian troops was met with a heavy-handed response by the UK government under Margaret Thatcher, and Argentina ultimately accomplished neither control over the islands nor military success of any kind. They lost over six hundred soldiers in the two-month conflict, and suffered a national trauma when the warship General Belgrano was scuttled by a British submarine, resulting in 323 deaths. This spelled the end of the junta, and started a new period in Argentina's political history. The following years led to soul-searching that ultimately brought the Peronists back into power, with the party having changed tack in the intervening period from its fascist origins to a more left-leaning platform. As the years advanced, the government doubled the size of the public sector and introduced expensive subsidies and tight regulation upon the economy. In general, Argentina's economy under the Justicialist Party became somewhat artificial, with the tight controls allowing favouritism, stagnant productivity and poor economic growth. And Argentina's staggered growth made it one of the most risky countries for speculators to invest in: when the good times roll, returns on investment are fantastic. When they don't; they are lethal. And at times, the weaknesses in Argentina's economy were not visible to the naked eye. Take the following case-in-point: on paper, in 2023, Argentina was a relative economic success story. At 632 billion dollars, its GDP was the highest in Latin America after Mexico and Brazil — both of which have population sizes many times larger than Argentina. But Argentina also has a very high rate of poverty, and has suffered cyclical recessions in recent years, alternating between growth and vicious decline. A lot of the comforts enjoyed by its citizens came from support provided by the state, all of which has become unsustainable as the years have progressed and inflation rose. It also didn't help the Peronist Justicialist Party that as the 21st-century advanced, ideological divisions in the party became apparent. Under the Kirchners — first Néstor and then his wife Christina — a new strain of Peronism emerged. Known as Kirchnerism, it took on an even more left-leaning guise, being described by some as left-wing populism. Naturally, this represented a rather huge departure from the fascist-infused positions of Juan Perón himself, and also didn't sit particularly comfortably with conservative Peronists, leading to the rise of so-called Federal Peronism in response. All this led to a confusing sequence of Peronist alliances at the national level, starting with the Front for Victory in 2003 when Nestor took power. This became Citizen's Unity in 2017, which in turn became Frente de Todos in 2019, and finally the Union for the Homeland was formed ahead of the 2023 election which the Peronists lost to Milei. Amidst all this, Covid-19 had flattened world trade and the Argentinian economy was floundering, limping from recession to recession. By 2024, Argentina had surged to an inflation rate of over 250 percent, a poverty level impacting half the population, and practically everyone agreed that something needed to be done to account for its post-Covid downturn. That's when a leather-busting, sideburn-rocking Economics professor rose to prominence. ## Javier Milei — the Rockstar Economist Milei identifies as an anarcho-capitalist, minarchist, and Classical Liberal. Those are all rather fanciful terms, so rather than delving into what they mean — or at least, what they mean to Milei — it is perhaps easier to understand what those terms reject. ### Anti-Keynesianism Keynesian economic theory owes its name to John Maynard Keynes, a famous British economist from the early 20th century. The theory is important to understand, as it has become a dominant school of thought in macroeconomics, and a common framework used by countries' governments to keep themselves afloat amid market fluctuation. One of the primary objects of Keynesianism is that governments — in times of economic difficulty — should spend more in order to provide as much boost to the economy as possible. While this seems somewhat logical, it went completely against the previous wisdom of reducing spending, as was (and is) commonly the case for a cash-strapped government. It also went against the tactic of doing nothing, one of the principle benchmarks of laissez-faire capitalism. Javier Milei rejects Keynes' theory entirely. In fact, he describes it as evil, and an enemy in disguise of economic prosperity. This is perhaps surprising. Keynesianism is, after all, one of the dominant schools of thought within capitalism, and Milei's enthusiasm for capitalism is not questioned. He loudly rejects communism and socialism, ruling out any cooperation with states subscribed to either one, and has referred to China — with which Argentina established close economic ties under Christina Fernández de Kirchner — as an "assassin" country. But Milei instead subscribes to a different branch of economic thought, the so-called Austrian School, a sort of counterpart theory to Keynesianism. The Austrian School focuses heavily on so-called marginal utility, believing that excess produce is harmful to an individual or economy only if the item does not have tangible use. This contrasts starkly with laissez-faire capitalism, which supports the production of as much of a given product as a country feels like and letting the market decide what is to be done with the excess, and also with Keynes' positions, which — in theory — favours high taxes on productive exporters, at least in times of prosperity. It seems to be this which Milei is trying to overturn, in line with Austrian theory, instead favouring less restrictions upon exporters. In essence, Milei wants to do away with state restrictions on economic activity as much as possible, and to provide as much freedom as possible to Argentina's industries to produce, sell and return the country to prosperity in an organic sort of way. ### Anti-Statism Amongst his many bullish statements while on the campaign trail, Milei made it clear that in addition to slashing taxes and government protections, he would seek to remove any barriers to entrepreneurship and production that he believed represented an overstep by the government into the personal freedoms of the people. In an interview with *The Economist* one month before the Presidential election, Milei declared: > "Liberalism is the unrestricted respect for the life project of others, based on the principle of non-aggression and defence of the right to life, liberty and property". Part of this statement made reference to Milei's opposition to abortion, a central theme in his social policy. The rest related to his planned economic overhaul, characterised by privatisation and anti-statism, or the desire to limit the intervention of the state in all that concerned citizens' economic freedoms, including state-funded economic supports. In the same interview, Milei declared that he did not believe the state to be a force of economic good for its citizens, and was instead something more like an insurer: one which would prevent its citizens from disaster, but was not a force which could or should allow them to accomplish prosperity without personal endeavour. Milei has gone so far as to label the state as 'a criminal organisation that lives off a coercive source of income called taxes'. He conceded that his model of economics, prioritising political and economic freedom at the cost of the welfare state, is not a model currently followed by any government that he could think of. But he remained resolved in his conviction that governments in general — and the Argentinian government in particular — had failed in their self-declared duty to free the citizens from hardship, and that his vision of an economically liberal state with few protections for the citizens would ultimately result in a greater prosperity for all. In his own words, Milei described the current system in Argentina as one giving the population fish, and his proposed vision would be one intended to teach them how to fish. He would soon get his chance. ## A Shock to the System With austerity hanging in the air, on October 23rd 2023, Argentinians went to the polls. The results turned out a decisive victory for Milei, winning 55.7 percent of the vote and triumphing over the Peronist government and their candidate, economy minister Sergio Massa. His Presidency secured, Milei went to work — and began to introduce the dramatic changes which he described as 'economic shock therapy'. When he took office in December, inflation for the month spiked to a record high of 25%. However, this was likely something of a false flag, attenuated because he abolished the price controls of the previous government, which masked the high levels of inflation which were otherwise occurring. One of his first moves was to devalue the ailing Argentinian peso by half. Due to Argentina's runaway inflation, the currency had already devalued from around 60 to the US dollar in 2020, to 330 by the time Milei was elected. As a result, black market trading of dollars had become a common occurrence in Argentina, and the cost of everyday items was soaring. Milei's devaluation caused the peso to immediately rocket to around 800 to the US dollar, and it is expected to hit 1000 by December 2024, although his ultimate intention is to slow the inflation down. Now, before we move on, a side note. It's important to note that Milei, while popular, does not — by any means — enjoy much support in the Argentinian political sphere, and it is unlikely he will have complete freedom to overhaul Argentina without some help. His party — La Libertad Avanza — was founded as a standalone party just one month before the election, and has little standing in either the Senate or Chamber of Deputies, the houses of the Argentinian Congress: where it holds just seven percent and fifteen percent of seats respectively. The Parliament remains largely dominated by figures from rival factions — including the Peronist Union for the Homeland, which alone holds almost half of all seats in the Senate, and 40 percent in the Chamber of Deputies. In order to pass new laws, Milei needs Congress to sign off on them — which, given that his government does not hold a majority of seats, is largely dependent on the consent of the opposition, especially the Union for the Homeland. But for Milei, a lack of partners in Argentina's Upper and Lower Chambers is not a problem. Prior to his election, he had mentioned he was willing to work with any faction which would favour the ideas of freedom, specifically referring by name to the Republican Proposal party under former President Mauricio Macri, with whom he now sits in a minority government. He also indicated he would be content to work with the opposition — in practice, the Peronists — although his presidency has so far been punctuated by a poor relationship with them. In general, Milei has enthusiastically pursued a bad relationship with the left, both domestically and internationally. Six months after assuming office, Milei visited Spain — but rather than first meeting with the King or government as would be the norm, he spoke at a rally organised by the right wing Vox party in Madrid, on the eve of the June 2024 European Parliament elections. And domestically, while Milei may need the Congress to sign off on new laws, he does have the power to issue Presidential decrees through existing laws. And he has used this power with reckless abandon. ## Milei Fires Up the Chainsaw Armed with his powers as Head of Government, Milei flung himself into action. Aside from devaluing the peso and cutting public spending, Milei set his sights on undoing other features of the Peronist system and state structures he deemed unnecessary. He had promised to reduce the number of ministries of the state to eight, keeping the Ministries of Economy, Infrastructure, Foreign Affairs, Human Capital, Security, Justice, Defense and the Interior — but doing away with all sixteen others. As promised, he began doing just that, dissolving the Ministries of Transport, Culture, Education, Tourism, Science and others, and converting them into Secretariats overseen by the eight remaining Ministries. He also cut back subsidies on oil, gas, water and public transport, which the socialist government that preceded him had put into place and which lowered costs for the citizens — but which were likely unsustainable. The dissolution of Ministries and spending cuts resulted in a sudden halt to many infrastructure projects, including schools, hospitals, highways, and administrative buildings. Thousands of construction workers were laid off. But Milei didn't stop there. He also sought to undo Kirchnerist policies as much as possible, especially where it resulted in the creation of unnecessary jobs. Perhaps the biggest casualty of this was Télam, a state-run media agency founded in 1945 by Juan Perón, and accused by Milei of spreading Kirchnerist propaganda. He also announced that the agency had accumulated a deficit of over 20 million US dollars, and Télam was dissolved in July 2024 at a cost of 770 jobs. A new news agency was established in its place, run by the Chief of the Cabinet of Ministers directly. Milei also promised that he would privatise public companies. So he set that plan in motion too. In September 2024, Milei announced plans to privatise the national airline — Aerolineas Argentinas — by Presidential decree. Two months before, he declared the same plans for Argentina's football clubs, declaring he would open them to investment from external entities. This is something common in Europe, but not in Argentina — where clubs operate effectively as charities, allowing them to be owned by civil associations representing the fans. In Milei's own words, "anything that could be privatised, would be privatised". He even announced plans to raise 800 million dollars by auctioning off more than 400 state properties across Argentina. One such property is the former headquarters of the dissolved Ministry of Women, Genders and Diversity, which was located in the Buenos Aires neighbourhood of San Telmo in a building valued at around 12.5 million US dollars. And the same month, Milei memorably presented his much-anticipated new budget to the Argentinian Congress. With his back turned to the Economy Minister, he doubled down on his acrimonious relationship with the Congress by calling lawmakers 'miserable rats who bet against the country'. In his plans, he moved assertively ahead with his plans for further cuts to public spending, targeting a primary surplus of 1.3% of GDP, a GDP growth rate of 5% for 2025, and an annual reduced to 18% — down from more than one hundred percent consistently in the past years. The plans are nothing short of ambitious. And as predicted — not least by Milei himself — his furious policies have resulted in a steep cost to the everyday Argentinian. The cuts to subsidies have resulted in the price of everyday goods having risen drastically. In practice, whatever was bought at a grocery store for 200 dollars previously would now be bought for 400 dollars. *Al Jazeera* added that the biggest distinction was felt by the lower-middle class, who saw their ability to pursue leisure activities reduced, and the bite was also felt by pensioners, who saw the purchasing power of their pensions reduced, as Milei vetoed a Peronist push to increase pensions in response to the cuts. Moreover, Milei's reforms have resulted in tens of thousands of redundancies, especially in the public sector. It remains rather unclear how many public sector employees he actually intends to lay off, but it is generally expected that at least 70,000 jobs are at risk, especially those on temporary contracts issued by the government. By October 2024, according to *El País*, around 24,000 public sector workers had been laid off. ## Will it Work? Despite his flurry of activity, Milei will require at least some cooperation from Parliament and Argentina's courts to push through some of his reforms. As an example, his contentious move to privatise Argentina's football clubs was blocked by a Buenos Aires court, and some of his bills — including his budget — need to be approved by the opposition-dominated Congress, the same ones he'd infamously called 'miserable rats'. The Congress already rejected a law to increase the intelligence services budget by 100 million dollars, and Milei can probably expect similar opprobrium on other proposed laws. With that said, Milei can counter by wielding his power to veto the opposition's own bills, such as those designed to reduce the pinch of austerity measures. That is exactly what he has done for practically all of them. Nevertheless, Milei may have to dial down some of his sharpest policy commitments, something he seems to be already doing in his promise to limit cooperation with China. Given its vast economic power, China may — if only for pragmatic reasons — have to be an outlier in Milei's tough talk on socialist states. Despite labelling it an assassin country, China is Argentina's single greatest trading partner, buying 27% of the country's exports in 2022. It is also the largest investor in Argentina's growing lithium-mining sector, and even prints large amounts of Argentina's currency, the peso. This is likely to continue, as Milei has set his sights on reducing the size of the highly-unionised and — according to him — inefficient national mint, the Casa de Moneda. With that said, Milei seems otherwise determined to follow through on his hard line on socialist countries. In October, he fired Argentina's Foreign Minister Diana Mondion after she voted in favour of lifting the US economic embargo on Cuba at the UN. Compromise also seems unlikely on other elements of his bullish agenda, and the cuts, redundancies, and restructuring seem likely to continue. In January 2024, Milei stated in an interview with the *Wall Street Journal* that his programme would continue for at least two years — therefore, to at least the end of 2025, before Argentina would see tangible benefit. Despite all this, Argentina's voters have mostly stuck with Milei. A survey by consultancy firm Aresco showed the approval rating of Milei's government was at 52.5% roughly one year after his election, practically the same percentage as the vote count he received in the election. It is as if the years of false promises have caused them to accept the reforms even when they must be hurting many of his electorate. And with all else said, despite the dramatic numbers of lay-offs and the climate of uncertainty generated for many Argentinians, there is justifiability to at least some of Milei's blunt cuts. In 2024, World Population Review ranked the number of public sector employees in Argentina at 19.3% of the total workforce — by no means the highest, but a high figure nonetheless. Some 3.5 million people are employed in the public sector, and the sector grew by around 34% in the 10 years before Milei took office. In particular, Milei has made it clear that he seeks to unmask so-called 'gnocchi' — people employed on government contracts largely through political connections, who have little tangible purpose in the organs of the state, and who supposedly attend office only on the final day of each month to collect their salaries. The government has also introduced a bill to ban 'hereditary' hires in the civil service — in other words, the hiring of a family relation of a deceased employee — something which had been discontinued during Mauricio Macri's Presidency but reinstated by the Peronists shortly after. In general, Argentina's current difficulties — especially for the working class — are consistent with the austere predictions made by Milei before he took office. And there have been some signs that Argentina's economy has begun to slowly rebound. In August, the government reported that economic activity rose against the previous year by 2.3%, despite being predicted to decline. Inflation, which reached a high of 25% in Milei's first month in office, has also fallen — to a monthly 3.5% one year on. And while unemployment and poverty levels have both increased, the disparity between the official dollar-peso exchange rate and same rate on the black market has narrowed, and investor confidence in Argentina has risen slightly, according to the *Financial Times*. With that said, Argentina has also been rocked by multiple protests against Milei and his reforms — this has included trade union groups, pensioners, and students, all of whom have been affected in some way or other by his reforms. The rise in prices and slowed economic activity have also contributed to aforementioned high poverty rates, in turn contributing to the protests, which have by now remained consistent throughout Milei's presidency. ## The Austrian School… to the Argentinian School? In all likelihood, it will be impossible to make an accurate assessment of the success of Milei's rampaging project to overhaul Argentina until further along in his Presidency. If he can succeed in meeting his declared objectives for 2025, this may provide a tangible insight as to whether his project has merit, or if it was just a load of bluster, providing all the difficulty he promised for little gain. Argentina's economy — already failing — will, in the case that Milei is unsuccessful…fail harder. And according to Milei himself: there is no Plan B. But if he can pull it off, righting the ruinous economic course Argentina has been mired in for some time, his economic and political worldview may be inherited by other countries suffering similar difficulties, and become an economic framework of its own to rival those commonly pursued by free-market countries across the world. In this case, Milei-ism may become a studied economic framework in its own right. Or perhaps Milei may be seen in the same guise as Nayib Bukele, whose brutal putdown of the gangs in El Salvador gained him infamy but also acclaim — and whose unapologetic blueprint has since been copied by other Latin American leaders in an effort to deal with their own gang problems. So could it be that Javier Milei will become the economic equivalent of Nayib Bukele, or leave his own mark on Argentinian political history like Juan Perón once did — what do you think? ## Key Takeaways - Argentina's economy has long been volatile, with periods of rapid growth followed by severe recessions. - Peronism, a mix of socialism and fascism, has dominated Argentine politics for decades, promoting high taxes and state intervention. - President Javier Milei, an anarcho-capitalist, aims to drastically reduce state involvement in the economy, slashing ministries and subsidies. - Milei's reforms have led to significant job losses and price increases, causing widespread protests but also some economic improvements. - The success of Milei's economic overhaul remains uncertain, with potential long-term benefits or further economic decline. ## Frequently Asked Questions ### What is the economic history of Argentina? Argentina's economic history is marked by high volatility. In the late 1800s, it was a poor, agrarian society. The Great European Immigration Wave in the early 20th century brought skilled workers who revolutionized the economy, making Argentina one of the fastest-growing economies. However, the Great Depression in 1929 led to economic decline, followed by periods of recovery and stagnation. ### Who is Javier Milei and what are his economic beliefs? Javier Milei is an economist and former university professor who became the President of Argentina. He identifies as an anarcho-capitalist, minarchist, and Classical Liberal. He rejects Keynesian economic theory and favors the Austrian School of economics, which emphasizes marginal utility and minimal state intervention. ### What is Peronism and how has it influenced Argentina's economy? Peronism is a political and economic ideology named after Juan Domingo Perón, who led Argentina from 1946 to 1955 and again briefly in the 1970s. It combines elements of socialism and fascism, favoring domestic self-sufficiency and state intervention. Peronism has been a dominant force in Argentina, influencing policies such as high tax rates, government spending, and protectionism. ### What are some of the key economic challenges facing Argentina? Argentina faces high inflation, poverty, and economic instability. In 2024, the inflation rate surged to over 250 percent, and nearly half the population lived in poverty. The economy has been propped up by government support, which has become unsustainable. ### What are Javier Milei's proposed economic reforms? Milei's reforms include devaluing the peso, cutting public spending, reducing the number of ministries, privatizing state-owned companies, and eliminating subsidies. He aims to reduce state intervention and promote economic freedom, believing this will lead to greater prosperity. ### How has the public reacted to Javier Milei's reforms? The public reaction has been mixed. While Milei's approval rating remains high, there have been consistent protests against his reforms, including from trade union groups, pensioners, and students. The cuts to subsidies and public spending have led to increased prices and economic hardship for many. ### What is the political landscape in Argentina under Milei's presidency? Milei's party, La Libertad Avanza, holds a minority of seats in Congress. He needs the support of opposition parties to pass new laws, but he has used his power to issue Presidential decrees and veto opposition bills. His relationship with the opposition, particularly the Peronists, has been contentious. ### What is the Austrian School of economics and how does it differ from Keynesianism? The Austrian School focuses on marginal utility and believes in minimal state intervention. It contrasts with Keynesianism, which advocates for government spending to boost the economy during difficult times. Milei rejects Keynesianism, describing it as an enemy of economic prosperity. ### What are some of the specific actions Milei has taken since becoming President? Milei has devalued the peso, cut public spending, dissolved several ministries, privatized state-owned companies, and eliminated subsidies. He has also introduced a new budget aiming for a primary surplus and reduced inflation, although these reforms have led to significant economic hardship for many Argentinians. ### What is the impact of Milei's reforms on the Argentinian economy? Milei's reforms have led to a steep cost for everyday Argentinians, with prices of goods rising drastically and tens of thousands of redundancies in the public sector. However, there are signs of economic rebound, with economic activity rising and inflation falling slightly. Investor confidence has also risen, but poverty and unemployment levels remain high. ## Sources - [Original MegaProjects video: Javier Milei's Radical Plan to Save Argentina](https://www.youtube.com/watch?v=GFeoigI_8vU) - [https://www.ft.com/content/38f718d3-0289-4b12-8faf-245c19d65cb0](https://www.ft.com/content/38f718d3-0289-4b12-8faf-245c19d65cb0) - [https://www.econstor.eu/bitstream/10419/238357/1/732.pdf](https://www.econstor.eu/bitstream/10419/238357/1/732.pdf) - [https://www.economist.com/news/2023/09/07/an-interview-with-javier-milei](https://www.economist.com/news/2023/09/07/an-interview-with-javier-milei) - [https://dialogue.earth/en/business/384031-what-do-argentinas-elections-mean-for-relations-with-china/](https://dialogue.earth/en/business/384031-what-do-argentinas-elections-mean-for-relations-with-china/) - [https://www.reuters.com/business/aerospace-defense/argentinas-milei-plans-privatize-state-airline-by-decree-2024-09-27/](https://www.reuters.com/business/aerospace-defense/argentinas-milei-plans-privatize-state-airline-by-decree-2024-09-27/) - 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[https://www.bbc.com/news/articles/cgl4y6w2r33o](https://www.bbc.com/news/articles/cgl4y6w2r33o) - [https://www.batimes.com.ar/news/economy/report-public-employment-up-34-in-argentina-since-2011-private-up-only-3.phtml](https://www.batimes.com.ar/news/economy/report-public-employment-up-34-in-argentina-since-2011-private-up-only-3.phtml) - [Hero image source](https://upload.wikimedia.org/wikipedia/commons/d/dc/Marcha_contra_los_transfemicidios_y_travesticidios_en_el_Encuentro_Plurinacional_en_Jujuy%2C_Argentina_2024_crop.jpg?utm_source=commons.wikimedia.org&utm_campaign=imageinfo&utm_content=original) by Luis Fernando Flores (WJUY) / openverse, by-sa. ## Related Coverage