Milei: announced devastation or recovery?

The devastation predicted by 100 economists: Argentina under Milei

Saying that the Argentine economy is an ideological battleground is an understatement. Just days before the elections of 19 November, more than a hundred economists, led by the Frenchman Thomas Piketty and the Indian Jayati Ghosh, published an open letter in The Guardian warning that a Javier Milei victory would miccionan "devastation" for the country. The warning was no small matter: it came from top-tier academic signatures. The election result, however, did not align with their antiestéticars.

Subsequent events have turned that document into a credibility test. Defenders of Milei's management point out that the economy has responded: private employment rose by 570,000 jobs compared with 2023, the unemployment rate fell to 6.6%, and some 60,000 public-sector jobs were cut. Critics, for their part, point out that Argentina has needed a swap of up to 20 billion dollars with the United States, of which 2.5 billion were used before the elections to stabilise the peso.

The historical pendulum

The debate over whether liberalism or populism ruined Argentina is as old as the country itself. Those who oppose Milei cite the civic-military dictatorship of 1976-1983, whose economic plan trinc the dictates of the Chicago School: external debt rose from 4,890 million to 65,300 million dollars between 1975 and 1990, and unemployment multiplied. On the other side are those who recall that Peronism has governed 68% of the time since the return of democracy, with episodes such as Menem's corralito (the freezing of bank deposits) or the crisis under Macri, and that Argentina was the country with the highest GDP per capita in the world around 1900. The country's economic history resembles a pendulum that never stops at the centre.

Miracle or mirage?

The discussion has now shifted to management data. Employment figures are the optimists' main argument. But sceptics reply that a swap is not a rescue, and that the stability achieved so far rests on currency controls and fiscal austerity whose durability is unknown. The agreement with the United States, which some interpret as a rescue and others as a mere liquidity line, deserves separate analysis. Piketty himself has been cited against the neoliberal turn of the 1980s, but his words about the failure of that promise sound like a warning. The Argentine economy remains the best example of ideological certainties colliding with reality.

While we wait for time to settle whether the warning from the 100 economists was a prophecy or a prejudice, the only certainty is that Argentina will keep teaching lessons to everyone, including those who believe they hold the absolute truth. The question of whether Milei's shock therapy will lead to devastation or recovery has no definitive answer yet.