A critical assessment of his economic policy – and why Argentina stands at the edge of collapse
1. Context: Argentina Unhinged
For decades, Argentina has been a textbook example of economic instability: high inflation, massive budget deficits, weak fiscal balance, poorly regulated labor and financial markets, an inflated public sector, and a pervasive sense of political frustration and disillusionment. Javier Milei managed to harness that anger with a radical message: “The State is the problem” — and he promised to “cut it down with a chainsaw.”
Indeed, his economic approach is extreme. Milei blends libertarian and populist positions. He denounces the Banco Central de la República Argentina (BCRA), seeks to abolish it or replace it with a dollarized parallel system, and aggressively pursues deregulation, tax cuts, and reductions in public spending.
At the same time, Argentina operates in a tense geopolitical environment: massive debt, dependency on exports, on the raw materials and agricultural sectors, on subsidies, and on international credit and aid.
His electoral victory was not a normal political rotation — it was a mandate for a radical rupture, the overthrow of the established order. But with deep reform zeal comes equally deep risk.
2. The Popularized Concepts Behind His Policy
A closer look at the core elements reveals what mechanisms Milei promotes — and why they are often idealized or misunderstood.
a) Minimal State, Sepnding Cuts, Deregulation
Milei announced massive reductions in government spending, the merging or elimination of ministries, layoffs, and the removal of legal and regulatory constraints. The idea: a smaller state means greater efficiency, less corruption, more growth. Abroad, this was widely celebrated as a modern reform model.
b) „Shock Therapy“ Against Inflation
Argentina suffered from chronic inflation. Milei applied a “shock” strategy: rapid devaluation of the peso, abolition of subsidies (for energy, transport, etc.), and drastic cuts. Many hailed this radicalism as a necessary reset — the last resort to escape a downward spiral.
c) Market Liberalization and Privatization
He preached a return to market principles: opening the country to investors, privatizing state-owned enterprises (energy, infrastructure, etc.), and removing trade barriers and bureaucracy. This was seen as a path back to Argentina’s former wealth during its early 20th-century golden age.
d) Dollarization and the Abolition of the Central Bank
One of his most radical ideas: replacing the peso entirely with the U.S. dollar and dissolving the Central Bank. This was presented as the ultimate solution to inflation.
e) Ideologocal Reorientation and U.S. Alignment
Milei is steering Argentina away from Peronism and left-wing populism toward open-market capitalism and strategic alignment with the United States — particularly with Donald Trump’s conservative-populist movement.
These concepts earned him immense support. Many saw him as the “anti-system” figure — the radical who would take the chainsaw to the old order. But, as always with radical ideas, the devil hides in the details.
3. Reality Check: One Year of Milei in Practice (as of October 2025)
A year after Javier Milei took office, the picture has turned grim. While international observers initially spoke of a “market-liberal liberation strike,” it is now clear that reality has caught up with ideology. Many of his loudly announced reforms have not only caused massive social dislocation but have deepened Argentina’s structural crisis.
3.1 Economic Results – Shock Without Recovery
Inflation and Prices
Despite sweeping cuts and “shock measures,” inflation remains high. It has fallen from over 250 % to around 120 %, but at the price of a collapse in domestic demand.
Prices for basic foodstuffs have risen by as much as 180 % year-on-year, while real wages have fallen by more than 30 %.
Over 60 % of Argentines now live below the poverty line — the highest rate in the nation’s modern history.
Industry and Domestic Market
The one-sided focus on exports and foreign investors has hollowed out the domestic market. Thousands of small and medium-sized businesses have closed, unable to cope with the abrupt end of subsidies for energy, transport, and raw materials.
De-industrialization is accelerating — and foreign investors hesitate amid political instability and weak purchasing power.
Public Finances
Milei has nominally reduced the fiscal deficit — but not sustainably.
He did so through brutal cuts to pensions, education, and infrastructure, not through structural growth.
The state has “balanced its books” by impoverishing its people.
A country with crumbling infrastructure, underfunded schools, and overstretched hospitals cannot attract long-term investors.
3.2 Social Consequences – Destitution in the Name of Efficiency
Mass Poverty and Hunger
The gradual abolition of energy and food subsidies has driven millions into poverty. In Buenos Aires and Rosario, scenes long unseen have returned: soup kitchens, hunger protests, lines of waste pickers.
International aid organizations report that child poverty now exceeds 70 %.
Unemployment and Social Unrest
The massive downsizing of the public sector — over 250,000 layoffs in less than a year — has destabilized the labor market.
Private companies followed suit as demand and investment collapsed.
The result: strikes, mass protests, and road blockades.
The government responded with police violence and emergency decrees, drawing international criticism.
Loss of Social Stability
Argentina is fragmenting dangerously:
- A small, globalized elite profits from capital liberalization.
- A shrinking middle class fights for survival.
- A growing majority lives in precarity.
The country is breaking apart — economically, socially, and morally.
3.3 Political Reality – Between Isolation and Authoritarianism
Milei continues to portray himself as leading a “revolution against the establishment,” but his governing style increasingly mirrors authoritarian regimes.
The infamous “Megadecreto 70/2023”, which nullified hundreds of laws without parliamentary approval, remains in force — despite repeated warnings from the Supreme Court.
Opposition media and unions report rising repression.
Critical journalists lose licenses; NGOs face punitive tax audits; demonstrations are banned.
The political discourse has turned toxic: Milei uses social media to insult critics as “parasites,” “state criminals,” or “socialist rats.”
The language of division has replaced the language of reason.
3.4 Foreign Dependence – The Price of “Trumpization”
Argentina now occupies an uncomfortable position abroad.
Its realignment toward the U.S. — especially Trump-aligned conservatives — has alienated other key partners:
- The planned BRICS membership was canceled.
- China has frozen several credit programs.
- Brazil, traditionally Argentina’s top trading partner, has become increasingly distant.
While U.S. loans and funds worth billions are flowing in, they come with strings attached — creating political dependency.
Washington effectively dictates Buenos Aires’ economic course.
Even parts of Argentina’s own right-wing camp now speak openly of a “colonial relationship.”
3.5 Collapse of Public Trust – The Death of the Center
Polarization has reached dangerous levels.
On one side stands a fanatical core of Milei followers who worship him as a savior.
On the other, a growing majority feels betrayed.
Polls show: only 32 % of Argentines still find Milei credible, while 58 % want new elections or a transitional government.
Public debate has coarsened.
Social media is rife with conspiracy theories, hate campaigns, and calls for violence.
A country once seen as South America’s intellectual hub is losing its democratic culture.
3.6 The Myth of “Necessary Hardship”
Supporters argue Milei’s program is painful but necessary — a “bitter medicine.”
But this analogy misleads: medicine heals; it does not kill.
What is happening in Argentina is not a temporary detox — it is an economic amputation without rehabilitation.
Even if inflation eventually stabilizes, poverty, unemployment, emigration, and institutional distrust will scar the nation for generations.
3.7 International Assessment – From Experiment to Warning
Neoliberal think tanks once hailed Milei as a visionary. The mood has changed.
Even the traditionally market-friendly Financial Times now calls his policy “an act of economic self-harm in the name of free markets.”
The IMF warns of “social implosion,” and investors are pulling out due to “political volatility.”
Argentina risks becoming a cautionary tale: how ideological shock reforms can destabilize a nation in record time.
4. Why the Glorification of Milei’s Concepts Is Misleading
The reform ideas have been widely praised as bold and necessary — but this overlooks key realities:
- Reforms cannot work in isolation within a deeply fragile system.
- Abrupt measures without social safeguards inflict deep pain and erode legitimacy.
- Deregulation and austerity do not automatically yield growth — not amid high inflation and low trust.
- Radical dollarization eliminates monetary sovereignty, leaving no crisis-response tools.
- External dependency (U.S., IMF) may help short-term but undermines autonomy long-term.
- Populist symbolism (the chainsaw) creates illusions of instant success that reality cannot deliver.
The danger is clear: even necessary reforms can collapse under their own weight — and spark unrest when results fail to appear.
5. The Price of the Experiment
One year of Milei has proven:
- The “chainsaw,” meant as a symbol of liberation, has instead severed the social backbone of an entire nation.
- The “new capitalism” has brought not prosperity, but impoverishment.
- Dependence on Trump and the U.S. has weakened Argentina’s sovereignty.
- Democracy remains in form, but not in substance.
Milei’s political experiment is less an economic reform plan than an ideological laboratory — a risky, profoundly dehumanizing trial in which the Argentine people pay the price.
6. Conclusion: A Reform Mandate with Explosive Potential
Javier Milei’s victory marked a historic break in Argentine politics — a clear mandate for change.
Yet that mandate is also a heavy burden: a nation in crisis attempting renewal through extreme means.
The core ideas — small government, deregulation, market opening, dollarization — may be theoretically coherent, but the risks have only multiplied: social tension, economic dependency, political instability, institutional erosion.
Argentina now stands at a crossroads.
If the reforms can somehow be implemented with balance, stability, and fairness, the country could find renewal.
If not, it faces a deeper crisis — marked by social backlash, loss of trust, and foreign subordination.
Argentina’s tragedy under Milei is not that it reformed — but that it surrendered itself to an ideology that forgot the people it claimed to serve.