IN October 2023, a shaggy-haired economist-slash-rock star named Milei won the Presidential election in Argentina. Self-professed economics experts around the world were quick to declare that his supposedly radical policies would spell doom for his country.
This forecast from the ‘experts’ came after over a century of Peronism – a grab bag of failed leftist economic policies. Peronism commonly involved printing vast quantities of money, resulted in currency hyperinflation of up to 100s per cent per year. Centralisation of power within the state resulted in vast numbers of unproductive jobs and absurd regulations designed to stifle competition and favour special-interest groups. Overall, Peronism resulted in the near ruination of what had once been one of the most financially successful nations in the world.
Fast forward two years and what has changed? Well, the ‘experts’ are still playing the same lament for Argentina’s economy, announcing that everything is over, while Argentines have just voted in favour of Milei’s agenda once again in a midterm elections landslide.
And the economy? Booming, with the lowest inflation in living memory, the first surplus for decades, and a wild post-election surge of investor confidence in the direction of travel. This is made all the more remarkable by the fact that Milei had to face off against a co-ordinated and sophisticated global propaganda effort to paint him as a fascist who was going to ruin Argentina with crazy radical economic ideas.
The narrative was so powerful that in recent weeks it even seemed to convince Milei himself, who was rather circumspect about his electoral chances following a setback in September. Bond markets freaked, the media went wild with talk of catastrophe, and a run on the peso forced Donald Trump to step in with a ginormous loan to stabilise things.
Bear in mind, this came about in no small part because leftist alliances in the Argentine electoral system made huge efforts to block every part of Milei’s agenda. With inflation flatlining and investment into the economy flourishing ever since 2023, the supposed ‘economic catastrophe’ was mainly just investors worried that Argentina would not re-elect Milei.
In other words, fiscal terror that leftist policies would come back to destroy Argentina once more. After all, it has happened before. The PRO group, led by former president Macri, had a stab at economic deregulation a few election cycles ago and had some success before being booted out again. Thankfully, this time, it seems that the change of direction will last longer and be far more drastic.
As the dust settles on Milei’s striking victory, we can look forward to ever more proof that low-tax free-market capitalism is a powerful engine for improving people’s lives. No system is without its flaws, but the end of hyperinflation alone will bring Argentina into a new era of being investable once again. Indeed, bank stocks in the country have soared by over 50 per cent since the day of the vote, signalling a rush of investor confidence from around the world. The fruits of this investment will take time to grow, but when they do it will be transformative.
The real test for Milei will be what he does with the opportunity. We in the West know all too well that unbridled global free markets have severe downsides, with the hunt for cheap labour in search of profit margins having a corrosive effect on cultural stability. However, Argentina alongside the USA indicates that this threat may just be on the cusp of abating. A trend away from globalisation and towards internal free markets appears to be taking shape across the world.
China has had key elements of what I describe for decades, becoming unthinkably rich and powerful without a drop of mass immigration and whilst keeping an iron grip on its strategic sectors. What it does not have, however, is freedom.
We in the West not need to adopt the Chinese model of authoritarianism as we pivot away from globalisation. Instead, we can pursue the economic and strategic common sense of ensuring we protect the interests of our citizens, our culture, and key strategic sectors whilst having more individual freedom than ever before. Indeed, economic liberalism is the foundation of Western civilisation. We would do well to remember it.
