The Man with the Chainsaw
Let us begin with an admission. When Javier Milei won the Argentine presidency in November 2023, your skepticism was rational. The man carried a chainsaw at rallies. He proposed dollarizing the economy. He called his own central bank “the worst garbage there is.” He was a television personality with wild hair and stranger ideas, and the political class that had ruined Argentina over decades suddenly could not stop losing to him.
The smart take in late 2023 was that Milei would fail. Maybe he would burn the country down. Maybe the Peronist machine would eat him alive. Maybe the IMF would pull the plug. The smart take was that Argentina had been broken for so long that no single person, however radical, could fix it.
It seems that the smart take may have been wrong.
Not about the difficulty. Anyone who knows Argentina’s history understands that the place has been a case study in monetary dysfunction for decades. The inflation tax, the default cycle, the capital controls, the black markets, the surreal experience of watching prices change before your eyes on the walk from your apartment to the corner store. Argentina has had seventeen separate currency regimes since 1945. It has defaulted on its debt nine times. It has been through hyperinflation so severe that people learned to buy their monthly groceries in the first three days of the month, because by day twenty the peso had lost half its value.
The smart take was wrong about what happens when you actually stop doing the things that caused the crisis.
The Data
Let us look at the numbers, because the numbers are the least controversial part of this story.
Inflation. When Milei took office in December 2023, Argentina’s annual inflation rate was 211%. By the end of 2024, monthly inflation had reduced from over 25% to 2.4%. The full-year 2025 rate came in at 31.5% - the lowest in eight years. International forecasters now project 2026 inflation around 20%, with some models going lower. From 211% to ~30% in two years. That is not a tweak. That is a regime change.
Country risk. Argentina’s sovereign bond spread - the JPMorgan EMBI, which measures the premium investors demand to hold Argentine debt over US Treasuries - stood at over 2,000 basis points at the end of 2023. It fell below 500 basis points in January 2026 for the first time in seven years. That is a country that was priced for default, now accessing international markets again.
Fiscal discipline. Argentina ran a budget surplus in 2024 for the first time in fourteen years. The primary surplus hit about $8 billion USD. In 2025, the overall fiscal surplus reached 1.4% of GDP. Milei cut 15,000 state jobs in his first year. He eliminated the ministries of Women, Environment, and Culture. He slashed energy and transport subsidies that had been bleeding the treasury for decades. He stopped the central bank from printing money to cover the deficit. The mechanism that had been driving inflation for years - the printing press - was shut off.
Credit rating. In June 2026, S&P Global raised Argentina’s sovereign credit rating to B- from CCC+, with a stable outlook. B- is not investment grade. Argentina is still a risky bet. But CCC+ is the rating of a country in active distress. B- is the rating of a country that has stabilized and is starting to look like a normal emerging market. The upgrade followed a similar move by Fitch in May.
These are not cherry-picked numbers. They are the headline macroeconomic indicators that every economist looks at first. And every one of them moved in the same direction at the same time, which is exactly what the textbooks say should happen when a government stops inflating, stops borrowing, and starts letting the economy breathe.
The Objection: Poverty Went Up
The most common critique of Milei’s program is also the most emotionally powerful. Poverty rose sharply in the first months of his presidency, from about 40% in late 2023 to a peak of 52.9% in the first half of 2024. Some estimates put the January 2024 peak even higher, near 57%.
This is true. It is also the predictable consequence of what Milei did, and it is the part of the story that his critics either do not understand or choose not to explain.
Stopping the printing press does not just lower inflation. It also removes the anesthetic that was temporarily numbing the economy. For years, the Argentine government had been printing money to pay its bills, which meant that the real value of wages, pensions, and savings was being destroyed silently, every day, through inflation. The printing press was not a policy. It was a hidden tax that fell hardest on the poor and the old, who could not protect their savings by moving money into dollars or real estate.
When Milei turned off the printing press, the hidden tax stopped. But the adjustment was brutal. Prices that had been held down by price controls jumped. Subsidized utilities tripled in cost. Public-sector jobs disappeared. The economy contracted by nearly 4% in 2024.
Poverty rose because the economy was being restructured from one that ran on inflation to one that runs on stable money. The pain was front-loaded, visible, and devastating for the people who lived through it.
Here is what the critics do not tell you. By the second half of 2024, poverty had already fallen to 38.1%. By the first half of 2025, it was down to 31.6%, according to INDEC, Argentina’s official statistics bureau. That is lower than the rate when Milei took office. As of mid-2026, it continues to fall.
Poverty rose because inflation was the only thing keeping nominal incomes afloat, and the destruction of the currency was the real disaster. Stopping the destruction was always going to hurt first. The question is whether you are willing to walk through the pain to reach the other side.
The Deeper Principle: Why Politicians Almost Never Do This
If the path is so clear - stop printing money, cut spending, deregulate, watch the economy recover - why does almost no politician take it?
The answer is Public Choice Theory, and it is the most important lens through which to understand Argentina’s story.
A politician who stops the printing press creates an immediate, visible cost for millions of people. Prices adjust upward before wages do. Subsidies disappear. Public-sector jobs vanish. The people who lose their subsidies, their jobs, and their purchasing power know exactly who to blame, and they vote accordingly.
The benefits of the reform, by contrast, take time to materialize and are diffuse. Lower inflation shows up gradually. Investment returns over years. The entrepreneur who opens a factory because she can finally plan in a stable currency is not going to send the politician a thank-you note that arrives before the next election.
The political process rewards short-term fixes and punishes long-term ones. This is not a bug. It is the equilibrium that Buchanan and Tullock described. The politician who prints money gets to spend, hand out benefits, and delay the day of reckoning past the next election. The politician who stops printing money gets blamed for the recession that follows, even though the recession is the cure, not the disease.
Milei was able to do what he did because the crisis was so severe that the usual political calculation broke down. When inflation hits 211%, the short-term fix has already failed. The printing press has already done its damage. The population is desperate enough to accept the chainsaw because they have lived through the alternative. Milei’s mandate was not a mandate for his ideology. It was a mandate for anyone who promised to make the pain stop.
That is the rare window. Most of the time, the crisis is bad enough to hurt but not bad enough to break the political equilibrium. The result is the slow, grinding decline that characterizes so many developing economies: high inflation, low growth, persistent poverty, and a political class that benefits from each of these conditions because it can blame the previous administration.
Argentina’s recovery is a case study in why this pattern is so hard to break. The incentives are aligned against reform. The short-term pain is concentrated and visible. The long-term gain is dispersed and delayed. Only a crisis severe enough to shatter the normal calculus can open the door.
What Argentina Proves, and What It Does Not
Argentina is not a model that every country should copy. Milei’s specific policies - the currency devaluation, the subsidy cuts, the aggressive deregulation through decrees - were tailored to Argentina’s specific catastrophe. A country with 5% inflation and 3% growth does not need a chainsaw. It needs a scalpel.
But Argentina is a test of something more fundamental. It tests whether the basic principles of monetary and fiscal discipline still work when applied at maximum dosage. And the answer, so far, is yes.
Inflation falls when you stop printing money. Deficits shrink when you stop spending what you do not have. Growth returns when you remove the barriers that were blocking it. None of this is complicated. None of it is mysterious. It is the textbook. It is what generations of economists have been saying, in different languages and different frameworks, since before any of us were born.
The reason it is rare is not that it does not work. It is that it is hard. And the people who are supposed to do it are rewarded for not doing it.
The Lesson from Argentina
Argentina is not a miracle. It is what happens when you let reality back into the room.
For decades, Argentina’s political class had constructed an elaborate system for keeping reality at bay. Price controls, capital controls, multiple exchange rates, subsidized energy, subsidized transportation, a central bank that printed money on demand, and a welfare state that consumed an ever-larger share of GDP while delivering ever-less to the people it was supposed to help. Every element of this system was rational from the perspective of the politician who wanted to stay in power. Every element of it was devastating over time for the Argentine people, whose savings evaporated, whose wages lost purchasing power, and whose country defaulted nine times.
Milei did not discover a secret formula. He simply stopped doing the things that were making the country poorer. He stopped lying about the value of the currency. He stopped borrowing to pay for current consumption. He stopped pretending that printing money was free.
The result is not paradise. Argentina’s inflation is still above 30%. Its poverty rate, while falling, is still too high. Its capital controls remain in place, though Milei has promised to lift them. B- is not a trophy rating. The country has a long way to go.
But the direction is unmistakable. The people who said it could not be done were wrong. The people who said the pain would never be worth it were wrong. The people who said Argentina was structurally incapable of reform were wrong. Many of those people are still saying the same things, trying to talk down the obvious progress.
What Argentina lacked was not capacity. It was the willingness to endure the short-term cost of doing the necessary thing.
Next time a politician tells you there is no alternative to the slow decline, ask yourself: is this true, or is this the equilibrium talking? The politician faces incentives that reward inaction. The question is whether the crisis is bad enough to break those incentives, or whether the slow decline will continue until it is.
This article is part of the Public Choice Theory series, examining how political incentives shape economic outcomes.