Why Milei Won

Argentina has been flatlining for over 40 years.

It’s hard to find a country that is worse off today than it was in 1980. But Argentina makes the list. Argentina was one of the richest countries on earth in the early 1900s. Then the socialists gained control of the government. Free markets and entrepreneurs were replaced with bureaucrats and taxes. When politicians ran out of taxes, they started printing money. The results were predictable. Capital escaped along with growth in abundance. Not only has Argentina suffered massive inflation, their ability to create wealth has also stagnated.

Measuring Abundance With Time

Economic growth can be measured with time. A time price is simply how much time it takes to earn the money to buy a product. If you are earning $20 dollars an hour and a pizza costs $20 dollars, the time price is one hour or 60 minutes. If your income goes up to $25 dollars an hour and the pizza price stays the same, the time price is now 0.8 hours or 48 minutes. For the time it took to earn one pizza you now get 1.25 pizzas. Your personal pizza abundance has increased by 25 percent. As long as hourly wages are increasing faster than prices, time prices decrease, which means personal abundance is increasing.

As we catalog in our book Superabundance, personal abundance has been increasing for most products in most countries for the last four decades. Except for Argentina.

We compared the time prices of 50 basic commodities from 1980 to 2023 for Argentina and eight other countries. The average time prices had fallen significantly in eight of the nine countries. Argentina was the exception. Time prices are actually higher in Argentina today than they were in 1980. This means that their personal abundance is decreasing. In contrast, Argentina’s neighbors Chile and Brazil have both enjoyed time price decreases, yielding significant increases in personal resource abundance.

Take a look at the annual performance for these nine countries since 1980. We recognize that the market has temporary ups and downs, but the longer term trends are all positive. Except for Argentina.

Percentage Change in Personal Resource Abundance 1980-2023

China began to escape Marxism in the early 1980s. The results were astonishing in terms of the increase in personal abundance.

Enter Javier Gerardo Milei. With the election of Milei as the new president last year, maybe Argentina now has a chance to restore its former position as an economic power. In the 12 months the Argentina stock market index (AR: SPMERVAL) has grown 366.05 percent while the U.S. Dow Jones Industrial Average (DJIA) has only increased 19.18 percent. It looks like entrepreneurs are welcome back in Buenos Aires.

A great new book on the importance of entrepreneurship is from the Chinese economics professor Weiying Zhang, Re-Understanding Entrepreneurship. This book could dramatically help Argentina reactive its entrepreneurs and innovators and inspire the world. All innovation is the product of entrepreneurship and entrepreneurs cannot exist under state control, government ownership, and bureaucracy. Entrepreneurs attempt to maximize value creation. Bureaucrats, on the other hand, maximize costs. Unlike entrepreneurs, bureaucrats bear little of the costs of making mistakes. Bureaucrats can thrive under protective governments with printing presses.

Milei understands that capitalism activates entrepreneurs. The future is really a choice between entrepreneurs and free markets versus bureaucrats and politics. Argentina once again has the opportunity to stop flatlining and choose wisely. How many Elon Musks, Steve Jobses, and Jensen Huangs in Argentina are waiting to blossom and flourish under a new birth of freedom? Milei won because he was able to articulate what had caused Argentina’s demise and a vision for how it can be revitalized. Words and chainsaws and courage. Buenos fortuna to our friends in Buenos Aires.

We explain and empirically demonstrate why more people with freedom means much more resource abundance in our new book, Superabundance, available at Amazon. You can read more at superabundance.com. There has never been a better time to create more life.

Gale Pooley is a Senior Fellow at the Discovery Institute and a board member at Human Progress.