The first foreign leader to meet Donald Trump after his victory last November was Argentina’s president, Javier Milei. The affinity is obvious: both are political outsiders united by extreme-right rhetoric and a penchant for anarchic capitalism. Mr Milei promised a war on bureaucrats, brutal public spending cuts and sweeping deregulation of South America’s second-largest economy. Predictably, the outcome has been devastating: a recession plunged more than half the country into poverty within the first six months of 2024.
Mr Milei did not so much win the last election as the previous government lost it. When voters went to the polls in October 2023, monthly inflation stood at around 8%, fuelling frustration with the established parties and anxiety about the future – sentiments Mr Milei skilfully exploited. After his victory, monthly inflation soared to 25% before dropping back to under 3% in November. As a devotee of Milton Friedman, Mr Milei might claim his public sector cuts were painful but necessary. This is far from the truth. The reality, as the economist Matías Vernengo notes, is that Mr Milei devalued the peso, triggering a spike in domestic prices while using currency controls to keep a lid on further inflationary pressures.
