major agricultural exports , a significant source of revenue .
SHOCK THERAPY
Part of Milei ’ s shock therapy to address the crisis has been to devalue the peso from nearly 400 to 800 pesos to one US dollar to try and close the gap between the official and black-market exchange rates in Argentina — the ‘ Dollar Blue .’
Milei ’ s broad attack on state expenditure essentially means raising spending by less than inflation and thus delivering real terms cuts . This approach has been most damaging in pensions which dropped by 40 % in real terms year-onyear . Wages also suffered real-term cuts , losing 21.3 % in the public sector while minimum wages depreciated by 28.8 % between November 2023 and May 2024 .
While pushing Argentina into a deep recession , these austerity measures have cooled the level of inflation , which fell to 4.6 % in June 2024 . They have also allowed the government to post fiscal surpluses , with more tax receipts than money spent since April 2024 . All of this has been much vaunted by financial markets and the IMF .
Such policies , meanwhile , have brought significant hardship to the lives of Argentines . The devaluation of the peso and the removal of energy and transport subsidies have all contributed to an 80 % rise in the cost of living . According to the Universidad Católica de Argentina , poverty in the country reached 57 % by February , while homelessness in Buenos Aires alone was up 14 % in May year-on-year .
Even the consumption of Argentina ’ s world-famous beef is beyond the reach of many citizens . Recent reports predict that the beef consumption in 2024 will be the lowest since records began in 1914 with consumption in the first quarter down 18.5 % on the same period in 2023 . Thus , whilst tourists and wealthier Argentines might feel little concerned by the crisis , it is the growing length of queues outside the
The eyes of the libertarian world are looking towards Argentina in what has been termed a ‘ Libertarian Laboratory
38,000 Argentine soup kitchens that may come to define Milei ’ s legacy .
REALITY CRASH-TEST
The eyes of the libertarian world are looking towards Argentina in what has been termed a ‘ Libertarian Laboratory .’ And whilst it is too early to say whether the medium- and longer-term economic impacts will be any vindication of the doctrine , what has already become clear is that the most radical policies sought by Milei have faltered when they have intersected with political realities .
Milei submitted a major package of reform bills aimed at eviscerating the state whilst bestowing upon himself emergency powers to enact major fiscal adjustment policies . The Ley de Bases contained over 600 articles when first submitted to the Chamber of Deputies but was withdrawn by the government in February 2024 when members of Congress lower house heavily amended it .
A much-reduced package of 238 articles aimed at deregulation and liberalisation of the economy passed in June 2024 — with votes lent from a centre-right coalition — but without the privatisation of major state owned entities earlier earmarked by Milei : Radio y
WORLD ECONOMIC JOURNAL
Televisión Argentina ( RTA ), Aerolíneas Argentinas and the Argentine post office . Also removed was a major pension reform that would have jettisoned some state liabilities for pension provision to millions of informal sector workers .
The package that ultimately passed was watered-down significantly and did not include the more radical policies with the level of fiscal adjustment advocated by the anarcho-capitalist during the election campaign , showing an early failure in Milei ’ s strategy .
Moreover , a growing conflict over one policy — the removal of bus subsidies in Buenos Aires — is pitting Milei against some of the very same centre-right politicians who lent their vote to pass his legislation , fuelling political opposition that could threaten his ability to pass legislation and to govern .
Social resistance could also prove to be a problem . Unsurprisingly , the programme of austerity has led to mass mobilisations and general strikes in protest at the brutal austerity cuts . And whilst Argentina is no stranger to mass mobilisations , they are unprecedented insofar as they are occurring so early in a presidential term .
As Milei has remained inflexible , there are early signs that what he is cutting — especially free public higher education — will undermine the sustainability of his libertarian programme as a part of his own voters have already joined the protest movement .
Congressional intervention has so far led to a libertarianism reality-check . The policies passed by Congress are less radically right-libertarian and more closely aligned with the laissez-faire neoliberal policies of deregulation , privatisation and market-led policies , last seen in Argentina on this level under Carlos Menem in the 1990s .
However , that neoliberal experiment pushed Argentina to the brink by 2001 , and again a little over two decades later . Argentines have not forgotten the financial crisis and social unrest ; neither should Milei .
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