In November 2023, a few days before the runoff, during lunch, a well-known economist points to a door about 10 meters from the table and tells me: “You see that door, if I grab a gun and shoot the lock, I have to be very lucky to get it through the hole. Well, those are the chances that Milei will do well.”
The Milei model: if it works out well
If it goes well, it means that the government will have won the cultural battle and the liberal economic model will not only be accepted, but also demanded by a large part of society. Along with the lowering of the inflation The government would obtain a resounding victory in the 2025 legislative elections, after which it would deepen the process of deregulation of the economy, reduction of the state and lower taxes.
In a few years, supermarkets would be full of products from all over the world, inflation would be a bad memory of the past and we would use the dollar as currency for everyday transactions, we would see a sharp rise in the purchasing power of salaries, cars could be bought cheaper and through the leasing system, the middle class would buy homes with a 30-year mortgage loan, air tickets, computers and cell phones would cost the same as in Europe.
Investment would be a record, as would exports. There would be an unprecedented investment in infrastructure financed by private parties. Taxes would be significantly reduced, poverty would drop to 15% by 2030, and the economy would grow at 5% annually for many years.
As in any deep transformation there will be winners and losers. Many companies will open and many others will close, others will transform. Hundreds of thousands of jobs will be lost in the public sector, which will be replaced by greater demand in private employment. Many will need to update their skills and retrain. There will be greater movement within the country of people who move for job opportunities as happens in the United States and economies with greater dynamism in the labor market. The process will be dynamic, dizzying, at times difficult, but overall, the majority of Argentines will live in a much more prosperous country.
The Milei model: if it goes wrong
If it goes wrong, a significant part of society would resist the structural reforms, the opposition would try to destroy the fiscal surplus through Congress and the judiciary. The dollar would rise and corporations would try to overthrow the government. The government would lose the legislative elections of 2025 and the President would not be re-elected in 2027. The governors would seek to place in the presidency a consensus figure who would propose a corporatist solution, as Duhalde did in 2002.
The economic crisis would deepen and the exodus of young people abroad would accelerate, at the same time that the discourse that “Argentina is an unviable country.” Social conflict would increase, we would see a new debt default, inflation would return to levels above 100%, the economy would stagnate and poverty would consolidate at levels close to 50%. We would enter a political crisis due to lack of representation, at the same time that part of society would resist returning to the past.
The Milei model: if it doesn’t go wrong or right
A third option is that it turns out neither bad nor good, but more or less. In this scenario, the government maintains fiscal balance, manages to lower inflation, but does not approve important economic reforms. The deregulation of the economy is blocked by Congress and justice. National tax reductions are offset by new provincial taxes and municipal fees. Society supports, but many lose enthusiasm. Inflation drops to single-digit annual levels, the economy grows, albeit slowly, and unemployment increases.
The scenario generated would be similar to that of the second half of the 1990s, when the reforms promoted by the Ménem government were left halfway. Some workers would lose their jobs, but many more would be much better paid and would fervently defend the model. Just as in the 1990s, for many within the system it would be the best government in history and for others the worst, given that people usually evaluate governments based on their personal economy.
Since the structural reforms have not been completed, the country and the continuity of the model would be vulnerable to an external shock, such as a sharp drop in commodity prices or a rate increase in the United States that cuts off financing. In the long term, Argentina could move forward, but the path would be more costly.
Of the three, the first scenario is moving from the probable to the feasible category: Everything indicates that the bullet passed through the lock. The country has two consecutive quarters of growth and on firm bases: rreduction of spending, inflation, normalization of relative prices, deregulation, fiscal, commercial, current account surplus and recovery of real wages.
There is a long way to go, and many Argentines still do not feel the improvement, but the foundations of change are solid and there are many factors that make me think that there is no turning back.
Source: Ambito
David William is a talented author who has made a name for himself in the world of writing. He is a professional author who writes on a wide range of topics, from general interest to opinion news. David is currently working as a writer at 24 hours worlds where he brings his unique perspective and in-depth research to his articles, making them both informative and engaging.
