Argentina's Cautionary Tale for America

Are Americans adapting, like Argentinians did, to long-term suffering punctuated by short-lived signs of relief?

AI visualization of a Peronist rally

You may have heard that Argentina has a new libertarian president, Javier Milei. Milei, who has studied economists such as F. A. Hayek, Milton Friedman, Ludwig von Mises, and Murray Rothbard instituted radical free-market reforms to combat 250% a year inflation rate and a poverty level of over 40%.

Peter St Onge recently explored how fast Milei is turning things around:

Argentina’s Javier Milei is racking up some solid wins, with the fiscal basketcase seeing its first monthly budget surplus in 12 years.

Apparently it took Milei just 9 and a half weeks to balance a budget that was projected at 5% of GDP under the previous government. In US terms, he turned a 1.2 trillion dollar annual deficit into a 400 billion surplus. In 9 and a half weeks.

How did he do it? Easy: he cut a host of central government agency budgets by 50% while slashing crony contracts and activist handouts.

For perspective, if you cut the entirety of Washington's budget by 50% you'd save a fast 3 trillion dollars and start paying off the national debt.

It turns out it can be done and the world doesn't actually collapse into chaos.

Javier Milei Ended a DC-Sized Deficit in... 9 weeks

Here is the part of the story you may not know. In 1900, Argentina was the 12^th wealthiest country in the world as measured by per capita GDP. They were just a whisker behind Canada and France and ahead of Sweden and Ireland. The United States ranked third.

In 1950, Argentina held its position as the 12^th wealthiest country, and the United States had climbed to be the wealthiest nation.

By 2012, Argentina had fallen to the 74^th wealthiest country. The United States fell from the first to the 18th.

Peronism is Argentina’s brand of authoritarian collectivism. Under primarily Peronist governments, the standard of living in Argentina took a precipitous fall that has lasted for almost 75 years.

Argentinians went along with collectivists, who told them over and over if they stayed the course, collectivist policies would finally succeed. It took 75 years of suffering for Argentinians to consider that there had to be a better way than collectivism.

Which brings us to the United States. Could what Milei did in Argentina happen in the United States?  What would bureaucrats likely do if the administrative state were subject to huge budget cuts? Would they cut what little service they deliver and not their own bloat? For instance, if the Department of Agriculture's budget were slashed by 50%, might bureaucrats prioritize cutting food stamp programs by 80%?

Are Americans adapting, like Argentinians did, to long-term suffering punctuated by short-lived signs of relief? Do we have 75 years of suffering ahead?

It seems almost impossible that the dollar can survive another 75 years of large budget deficits. Yet, for many, real reform is still unthinkable in the United States today.

I wish I could end on an optimistic note. Still, too few understand the conditions that promote humanity's flourishing— moral traditions, property rights, the even-handed rule of law that prevents special privileges, and respect for a social and economic order that cannot be designed but arises from individual actions and voluntary cooperation.

Resisting “the call of the tribe” is another necessary condition. Today, many are sowing the seeds of division and hatred rather than cultivating their ability to appreciate the humanity in all.

When the next major recession arrives, we will be told we must double down on failed policies. America’s wannabe Juan Perons will emerge. Many will cheer out of ignorance and fear, and we’ll move further down the road to serfdom. Destruction comes easier and faster than the construction of civil society.

In Shakespeare’s Julius Caesar, Brutus famously said:

There is a tide in the affairs of men.
Which, taken at the flood, leads on to fortune;
Omitted, all the voyage of their life
Is bound in shallows and in miseries.
On such a full sea are we now afloat,
And we must take the current when it serves,
Or lose our ventures.

Today, using Brutus’s words, “the enem[ies] [of civilization] increaseth every day" and "We, at the height, are ready to decline."

Thankfully, we are not called to physical battle. We are called to deepen our understanding of the conditions that promote humanity's flourishing. We are called to end our silence today before it is harder to speak out tomorrow.