Javier Milei's Win in Argentina

Argentine President Javier Milei speaks at a closing rally for his party, La Libertad Avanza, before the October 26 midterm elections.

Latin America’s history with leaders who propose austerity measures is generally bleak. At first, these individuals are elected with a goal of cleaning up a nation’s finances, but after the first years of reduced government outreach and higher taxes, voters give up. Interestingly, Argentinian President Javier Milei has bucked the trend, as his coalition has outperformed expectations in a parliamentary election that experts are calling a mandate for the continuation of his hard-hitting reforms. This win sends a message to other Latin American nations and the world: common-sense spending reforms can win. It also sends the message that Argentine voters are fed up. 

For decades in Argentina, the dominant political force was the Peronists, a left-leaning party founded by Juan and Eva Peron in the 1940s. The core principles of this party, known as the “three flags,” are social justice, economic independence, and political sovereignty. Translated into economic form, these ideas manifested themselves through the nationalization of private industry, vast social spending, and wealth redistribution. Since the establishment of the Peronists (or the Justicialist Party) as the dominant force in the Argentine political sphere, Argentina has fallen from one of the richest countries in the world (a phrase “rich like an Argentine” existed in the 1920s and 1930s) to a country whose name is synonymous with debt crises and runaway inflation. After years under these ineffective policies, even large swaths of the working class—who would hypothetically stand to benefit from broader social spending—voted for Milei’s coalition. The relatively poor suburbs of Buenos Aires, an area that was staunchly Peronist for decades, flipped, giving President Milei’s coalition enough seats in Parliament to pass legislation unhindered. While some consider this rejection of Peronism unexpected, it can be argued that Milei has benefited the working class throughout his term. The poverty rate has fallen 10% since he took office. The GDP, while it contracted in the first couple of years of Milei’s term due to anti-inflation measures, has bounced back with the IMF predicting a growth rate of 5%, one of the highest in the region. Inflation, which reduces citizens’ spending power, has dropped from 300% yearly to just 30%. This pro-capitalist swing has echoed across the Andes. In Bolivia, a presidential election has signaled an abrupt change.

After almost 20 years of rule by the Movement Towards Socialism party, and during Bolivia’s worst economic crisis in decades, the nation has elected a centrist senator, Rodrigo Paz, who has pledged to bring down inflation and steer Bolivia towards a free market economy. The pivots by both Argentina and Bolivia have been seen as positive by the Trump administration, which, at least in the case of Argentina, has pledged greater economic assistance at the news of Milei’s victory. The administrations and administrations-to-be of both Argentina and Bolivia are intent on good relations with the United States. President-Elect Paz has some more work to do than Milei, though, as the former ruling party of Bolivia expelled both the DEA and the American ambassador from the country in the late 2000s.

Overall, this regional trend towards a freer market is a good one. With aging populations worldwide, efficient economies and fiscal responsibility are going to be crucial for maintaining growth and prosperity.