The triumph of Javier Milei in 2023 will be studied for many years in the books of Argentine History, not only as an unprecedented process of cultural change and the establishment of a new economic model in Argentina, but also as the closure of a statist phase of very low effectiveness, which manifested as a sectarian movement within Peronism known as Kirchnerism. This movement locked Argentines behind a wall for almost twenty years, isolating us from the world in a bubble of inequities and arbitrariness, and it ended with the advent of a new way of navigating politics and direct communication with the people embodied by La Libertad Avanza.
The process bears some similarities to the fall of the Berlin Wall in the '90s and the countries under the orbit of the old Soviet Union, as well as with the dynamics observed thereafter in the economies of those countries.
Embracing market policies implies: clarifying economic variables; drastically reducing inflation, preventing the proliferation of varied exchange rates, the coexistence of giant gaps with the official dollar, and the systematic shortage of key inputs due to the much-questioned "administration" of foreign trade, both for exports and imports.
Kirchnerism evolved into a kind of light chavismo that was maturing enough in terms of the exhaustion of the model to quickly mutate into the chaos we have already seen installed for decades in beloved and suffering Venezuela.
Argentines (at least 57% of us) realized, fortunately not too late, that Milei could lead us to a place that avoids that abyss, that returns us to the ranks of normal countries, and that allows us to dream again of a great Argentina.
But what does a great Argentina look like? Did we get there without warning?
The legitimacy of the president's origin is both substantive and formal. He told us from day one the extent of the adjustment he intended to implement, even exemplifying it with a chainsaw that became emblematic of his proposal.
As for the forms, no one can claim a change in discourse or tone because there was no media outlet during his campaign that did not expose in all its dimensions the immensity of his anger and the intensity with which he had to overact his positions to carry out a huge cultural change entrenched in almost all institutions and corporations that resisted (and continue to resist) complying with the mandate of the ballot boxes regarding what the people wanted as the fate of the caste.
What are the classic economic stages in these radical transformation processes like that of the USSR and the local one?
In the first stage, when economic variables are clarified and public spending is adjusted in a significant way as occurred from the beginning of 2024, a period of economic depression and social uncertainty is visualized. Some sectors do not quickly find a floor from which they can project themselves while others begin to grow rapidly in an environment that facilitates the explosion of their competitive advantages.
Sectors that had grown for decades under state protection, whether through "inefficient" public spending, unsustainable tax advantages, or through the closure of imports that guaranteed them a captive market, begin to see their activity reduced and resized to their real comparative advantages. Sometimes, the lack of management capable of operating in a competitive environment makes it even harder for them to find a way to reinvent themselves.
There are other sectors that quickly find the way to grow and develop. In our country, this is the case for oil, gas, mining, lithium, agriculture, livestock, and knowledge sciences. The very dynamics of an orderly country allow them to find and unleash their potential desired by the world.
At this point, it is worth remembering that we are not a country of 200 or 500 million inhabitants with a robust internal market that allows us to operate some sectors at a competitive scale like Brazil, the USA, India, or China. In this aspect, our economy resembles Canada or Australia much more, with a huge amount of natural resources capable of being industrialized and adding value for a global market of 7 billion people and not for an internal one of 45 million.
Other activities enter a resizing dynamic according to what they have invested in technological innovation, production, and product design. Those who invested more suffer less from this process.
Meanwhile, those who enjoyed the benefits of protectionism for decades thinking it would be eternal suffer more. This is the case for industries that do not start from any differentiation in their production process, brand, or product. The most affected are linked to the textile sector, computers and cell phones, as well as household appliances and some car models. It is difficult to compete in these areas with global giants from countries that also have lower taxes and much lower wages than ours.
Argentina showed them the worst face of reality after many years of masks: we were a closed country that is now beginning to timidly open up to the world. But we also have a gigantic state that needs an expensive tax structure to sustain it.
The new model of Javier Milei leaves a pending debt for his second term in this regard: a deep tax reform and of the State in general that values a new rule of co-participation. And a system of pressure and tax burden that does not suffocate the private productive sector and returns the competitiveness that was stolen from it for decades through extremely high taxes, which were illusorily compensated with recurrent nominal devaluations.
In this dynamic of transformation processes of this magnitude, inevitably winner sectors emerge faster than the reconversion of those that prima facie appear as losers. And in that transition time, doubts, sadness, and uncertainty about the sustainability of the model arise. YOU ARE HERE TODAY.
