Hope Is Not a Strategy: A Dialogue on Argentina's Economic Experiment

Argentina’s president, Javier Milei, has launched one of the most radical economic experiments in modern history. His “shock therapy” or “chainsaw plan” promises to break decades of crises. But is it a viable plan for prosperity?

What follows is a dialogue between an ANALYST who espouses the various economic successes and a SCEPTIC who questions that reality and ultimately wonders: How exactly do you stop the (fiscal) bleeding… with a chainsaw?

ANALYST: There is finally hope in Argentina! The country is tackling the root of its hyperinflation problem: a chronic fiscal deficit funded by printing money. The plan is clear: achieve a fiscal surplus, deregulate the economy, and unlock Argentina’s immense natural wealth in energy and lithium. In a few decades, we could see a stable, export-led powerhouse.

SCEPTIC: It sounds as if you mistake hope for a strategy. Selling off natural resources rarely makes nations rich or relevant on the global stage, except for their elites. Without creating good jobs for the middle class, you’ll end up with a larger brain drain. What’s the concrete plan for them?

ANALYST: The plan is not for the state to create jobs. Its task is to create the conditions for the private sector to do so. This directly addresses the core issue: nearly half of the workforce is informal or “en negro”, working off the books with no benefits, no security, and paying zero income taxes. And yet they benefit from free education, healthcare, and pensions. The plan is to bring them into the light.

SCEPTIC: And how, exactly?

ANALYST: By making it possible for businesses to hire people legally through radical labour reform proposed in the omnibus bill. You lower the crippling severance costs and legal risks that make companies terrified to hire anyone formally, and you create a system where a small business isn’t risking bankruptcy just to hire its first employee. This makes it attractive to move workers from the informal to the formal sector.

SCEPTIC: So, you want to solve the problem of insecure, informal work by making formal work more insecure too? That won’t create a larger tax base, but rather formalize low wages and poor conditions. It’s a race to the bottom, repackaged, and sold as a solution.

ANALYST: No, it is a race to reality. The current system protects a small minority of unionized, formal workers at the expense of everyone else. The plan is to create a dynamic labour market that can actually grow by unlocking Argentina’s immense natural wealth, such as the Vaca Muerta formation, which holds the world’s second-largest shale gas reserves.

SCEPTIC: You say Vaca Muerta, and I hear the “resource curse.” Nations blessed with natural resources often end up poorer and more corrupt. Look at Venezuela, after it was hit with a tidal wave of oil money.

ANALYST: Actually, Norway is the model to emulate. The Nordic nation created a sovereign wealth fund that is now worth over $1.6 trillion. It invests the oil money in other industries and uses the earnings to fund its welfare state. It avoided inflation and built generational wealth.

SCEPTIC: Ah, but the crucial difference is what those countries were before a single drop of oil was found. Norway was already a stable social democracy with strong institutions and a diversified economy. The oil did not create their success; it was managed by an already functional system.

ANALYST: That’s true, the starting points were very different.

SCEPTIC: No, the countries were fundamentally different. Venezuela was not a stable, high-trust society. And Argentina is not either. You cannot graft Norwegian policies onto a completely different culture and expect the same outcome. The oil wealth corrupted Venezuela’s weak institutions. Given Argentina’s history of endemic corruption, why would this time be different?

ANALYST: Because the severity of this crisis forces a break from the past. The fiscal discipline being imposed now is not just an economic tool; it is an attempt to forcibly create the institutional discipline that has been lacking for a century.

SCEPTIC: You don’t mean financial markets, do you? Sure, Argentina’s country risk index dropped below 600 points for the first time in seven years. Likewise, the EMBI dipped under 1000 points. Markets always applaud deep cuts, but history shows these indices can easily go up at the first sign of political trouble.

ANALYST: Those drops reflect a year of real achievements. The government sustained a fiscal surplus through all of 2024 and 2025 so far, the first time that has happened in over a decade. That’s a monumental break from the past.

SCEPTIC: And at what cost? While the markets celebrated, poverty soared and child poverty continues to rise in the north. Life is getting tougher every day.

ANALYST: We always knew it would get worse before it could get any better.

SCEPTIC: Fair enough. But does it have to be?

ANALYST: “No hay plata.”

SCEPTIC: Hmm. Is there really no money, or is it just not meant for the people?

ANALYST: It’s a tough but necessary trade-off to avoid the hyperinflation that predominantly hurts the poor.

SCEPTIC: While laying off thousands of state workers, the president spent nearly 16% of his first year and a half abroad or in transit on 30+ separate trips, many of them personal or ideological, not as the head of state. The cost runs into millions of dollars. And it’s not just travel. There was also no more money for scientists, but apparently there was plenty, $2.7 billion to be precise, for second-hand fighter jets, tanks, and submarines.

ANALYST: A nation must be able to defend itself and project strength on the world stage to attract investment. National security and international diplomacy are not frivolous expenses.

SCEPTIC: Defend itself against what? The greatest threat to Argentina is not a foreign army but social implosion. There are nation-wide protests almost every day, with at least one leading to excessive violence against pensioners.

ANALYST: Violence is not the answer, I concur. But the government must make tough choices with regard to allocating the nation’s monies.

SCEPTIC: These choices show a profound disconnect though: the government is playing to an international audience of investors and ideologues while its own people suffer. It’s the ghost of the Convertibility Plan all over again.

ANALYST: The key difference is that the current administration has already proven fiscal discipline, which all previous administrations lacked. The pain is a necessary side effect of the only real cure after decades of corruption and mismanagement: stabilizing the economic foundation.

SCEPTIC: But the foundation is the people! Your so-called cure intends to kill the patient. We are talking about university-educated professionals making less than bus drivers and some, such as healthcare workers who get paid many months late and without inflation corrections for more than half a year. Would you come into the office tomorrow knowing you would not see a single peso for at least three months and when you do inflation has turned that into only half a peso.

ANALYST: Hmm.

SCEPTIC: Of course not. But the nearly 1.6 million health and social services workers in the country do so anyway. Doctors at the country’s leading paediatric hospital do not even make enough to support a family; these doctors and their families live below the poverty line!

ANALYST: That’s indeed unfair.

SCEPTIC: That’s not just unfair, it’s economically self-destructive. If a doctor had her salary, she’d go to a restaurant, get a haircut, have the house repainted, or buy new clothes. The middle class is the tide that lifts all boats. Their spending creates real, local jobs, not abstract financial stability.

ANALYST: The administration believes that without inflation and a stable economy, the incentive for health insurers to hoard cash and delay payments disappears.

SCEPTIC: Sorry, but holding on to money will always be good business for an insurer, for security or for investment. It’s called float. Even in a stable economy, they have a profit motive to delay payments to earn returns on that cash. The only thing that stops them in functional countries is pragmatic regulation: prompt payment laws.

ANALYST: That is state interventionism. Deregulation is the path to competition!

SCEPTIC: Ah, so instead of a practical solution, we just pray at the altar of Santa Motosierra and hope for a miracle.

ANALYST: Deregulation works. Take the airline industry in the US. The Airline Deregulation Act of 1978 broke up a cozy cartel. It allowed new low-cost carriers to emerge, and consequently prices plummeted, benefiting millions.

SCEPTIC: One cherry-picked example does not change the fundamental flaw. A free-for-all market often leads to monopolies. When has that ever worked?

ANALYST: Germany’s Wirtschaftswunder (economic miracle) springs to mind. Or New Zealand in the 1980s.

SCEPTIC: And I suppose the Marshall Plan had nothing to do with post-war Germany’s success.

ANALYST: Not as much as you’d think. Most of Germany’s success came from currency reform, lifting price controls, and setting up an independent central bank.

SCEPTIC: It is one thing to remove currency controls yet quite another to get rid of all regulation that protects people from real harm. Germany enacted legislation to prevent monopolies and cartels. In the case of New Zealand’s laissez-faire liberalization, the Māori were hit hardest. Rapid deregulation can and does deepen inequality and social unrest unless it is paired with safety nets. You cannot just chip away at everything and expect a beautiful sculpture to appear. You admitted the plan requires brutal cuts and soaring poverty. Now you are using a tool of destruction to promise an act of creation. It’s a contradiction: a chainsaw is a tool to cut, not to build.

ANALYST: It’s called creative destruction. You have to clear the dead wood to let new growth flourish.

SCEPTIC: You also seem to ignore the graveyards full of catastrophic deregulation failures. The 2008 global financial crisis was a direct result of bank deregulation. The California electricity crisis was driven by Enron exploiting a deregulated market to create artificial blackouts. In fact, airline deregulation caused many carriers to go bankrupt in the 1980s with the result of even more consolidation than ever before. These examples show that an unregulated market does not lead to healthy competition; it leads to oligopolies.

ANALYST: And what exactly do you propose then: socialist freebies for all?!

SCEPTIC: That’s a false dichotomy: it’s not either failed populism or an ideological chainsaw that knows not of the difference between dead wood, as you call it, and a living tree. There is a third way, a proven path that successful nations have taken.

ANALYST: Let me guess: a return to state control? We know how that ends in Argentina!

SCEPTIC: No. The answer is not to go back. It is to look at the models that actually worked. Consider the Meiji Restoration in Japan. Or look at South Korea and Taiwan. They built developmental states, in which the state is not the sole owner, but it is not a passive bystander either. It is a strategic partner of industry.

ANALYST: Corporatism: the state picks the winners and losers, which always leads to corruption.

SCEPTIC: It is not about drawing winners randomly. A real plan starts by asking a simple question: “Where are we already world-class or nearly so?” You don’t need to invent anything. You just need to open your eyes.

ANALYST: Well, what do you see?

SCEPTIC: Argentina has several tech unicorns such as MercadoLibre, Ualá, or Globant, most of whom have a significant presence in Latin America or even globally. In biotechnology, there is Bioceres, which developed the world’s first drought-resistant wheat. In engineering, INVAP designs and exports nuclear research reactors to Europe. In medicine, the country’s legacy is staggering, from René Favaloro’s invention of the coronary bypass to the balloon-expandable stent by Julio Palmaz. Work by Nobel laureates laid the groundwork for understanding diabetes and creating monoclonal antibodies. That research culture is alive today with a recent breakthrough in cancer immunology. The Pierre Auger Observatory is the place to study ultra-high-energy cosmic rays. Examples like these abound, from cosmology to applied sciences, high-tech engineering, and medicine. A developmental state would look at this incredible roster and make strategic bets. That also must include areas relevant for national security or future competitiveness.

ANALYST: Such as?

SCEPTIC: Artificial intelligence and quantum computing. Argentina has the physicists and the software talent. For quantum computing there is still time to upskill and become a relevant global player. The sooner the better. It is the ultimate enabling technology; the key that will unlock drug discovery and novel materials in the future.

ANALYST: Ha! That sounds a lot like hope as a strategy.

SCEPTIC: It is not. It is a plan. There are two kinds of hope. There is the passive hope of the lottery ticket holder, a blind faith that if you wait long enough, something good may spontaneously appear out of thin air. That is the hope your plan offers: a quick prayer at Santa Motosierra’s altar. And then there is the hope that comes from seeing a path to a better future, based on proven strategies from countries around the world. We cannot expect to copy their ideas and see immediate results. The Meiji Restoration showed it is essential to adapt the ideas of innovator nations to the local cultural idiosyncrasies. Such an active hope is that of the scientist in the lab, the engineer designing a reactor, the founder building a company, and the child in school seeing role models to look up to rather than despair at the idea of working 12-hour days in a hospital for less than minimum wage as an eminent neurosurgeon.

ANALYST: Aaand where exactly is that money going to come from?

SCEPTIC: The developmental state model is not about spending money. It is about investing the money you have with ruthless strategic focus. These Asian countries did not start off rich; they became rich by being smart.

ANALYST: Both Taiwan and South Korea received massive foreign aid. Argentina has no such setup available without a stable economy.

SCEPTIC: True. Argentina even used more than half of a recent IMF loan to pay off earlier IMF debts. That’s the equivalent of paying off one credit card bill with another credit card. Without a realistic plan, you cannot hope to break the debt cycle. More importantly, Japan showed that it is possible to develop an economy with minimal outside investment. First, you do not need new money: reallocate existing waste.

ANALYST: The chainsaw plan!

SCEPTIC: The current plan uses a chainsaw, but a developmental state uses a scalpel. Yes, Argentina must conduct a serious audit of the national budget to cut politically-driven waste, such as subsidies to favoured but unproductive businesses, ghost employees, and bloated administrative contracts. But instead of just banking that as a surplus, it has to directly channel every single peso saved into the budgets of strategic assets. It is a zero-sum transfer from the unproductive past to a productive future. Second, the state does not fund the whole enterprise: it acts as a copilot for private capital. The government offers access to cheap credit from state banks, temporary protection from foreign competition, and diplomatic support abroad.

ANALYST: Protectionism!

SCEPTIC: No, because it comes with a non-negotiable condition: export discipline. Government support, such as subsidies, tax rebates, technical assistance, and foreign-exchange allocations are tied to demonstrable export performance. This forces companies to become globally competitive, rather than complacent domestic monopolies. It is the opposite of protectionism. And third, you make education a national security issue. Even at their poorest, South Korea and Taiwan poured a huge percentage of their budget into education. They understood that a skilled workforce was their only true limitless resource. This is not a cost: it is the best investment a nation can make. So, when you ask where the money is going to come from, the answer is clear: it comes from the money that is already there but is currently squandered. It comes from steering private ambition towards national goals. Most importantly, it comes from investing in the minds of the people.

ANALYST: Sounds an awful lot like centralized planning by the state, comrade.

SCEPTIC: It is not. The state provides the direction and incentives. It is up to companies to either go in that direction and benefit from the advantageous conditions offered, or go their own way, as per usual.

ANALYST: And you believe the current surpluses are enough to fund such a vision? I am very sceptical.

SCEPTIC: Initially, yes. For instance, Japan funded most of its ambitions with reform of land taxation. Argentina has several options to increase its tax base: expand the “monotributo” or single-taxpayer regime. Along with it, open up a digital registration platform à la Brazil’s MEI portal, which consolidates business and labour registration, tax filing, and social contributions to reduce bureaucratic barriers.

ANALYST: Please! That amounts to at most a fraction of a percent of GDP!

SCEPTIC: True, but these are necessary reforms. Formalizing the shadow economy through e-invoicing and enforcement can easily raise a few percentage points of GDP in taxes. The infrastructure already exists, but it is not enforced consistently. The recent fire-and-rebrand exercise of AFIP to ARCA did not come with the expected improvements in tax compliance or any digital tools to simplify life for people. Likewise, Argentina can boost tax revenue by 1% of GDP in five years through narrowing the VAT compliance gap. Consistent property taxation could increase the contributory base, too. And of course progressive taxation, capital gains tax, with fewer exemptions, loopholes, or special regimes for both persons and (multinational) corporations, which should fit right in your idea of reducing red tape.

ANALYST: That’s socialism!

SCEPTIC: It is not. The rich and corporations need to pay their fair share. They benefit from a functional state and the infrastructure it provides to all.

ANALYST: And how much would these proposals add?

SCEPTIC: These could add up to 5% of GDP in a few years if the political will exists now and persists in the years ahead.

ANALYST: The more the government gets out of the way of people and corporations the better.

SCEPTIC: The lifting of currency controls (a.k.a. “cepo cambiario”) already benefitted mostly the rich. The idea that more money in the offshore bank accounts of the rich trickles down to the middle class and poor is a myth.

ANALYST: Is that the sound of millions of begging hands I hear?

SCEPTIC: I am not proposing free handouts or massive tax increases. Argentina must bolster the middle class, who will actually spend their extra cash in the real economy, which leads to more local jobs, preferably formal ones, provided it is easy to do so and compliance is enforced.

ANALYST: Any form of state control this administration rejects on ideological grounds. The belief is that the market must be completely free, especially from government interference.

SCEPTIC: And there it is! Your entire “plan” is pure dogma. It ignores the fact that the market does not know best at all, as it is often claimed. Beyond the cuts from the government’s golden chainsaw, there is no plan. The plan is essentially to cut and hope for growth.

ANALYST: Foreign investment will come. That is why the president is abroad so much.

SCEPTIC: And if not? Let’s assume it does come, how long before Argentinians actually see their lives improve measurably?

ANALYST: I cannot provide a timeline.

SCEPTIC: That’s the problem! If you had a concrete plan, you could point to that. No, this administration is willing to let the middle class, the true engine of the economy, grind to a halt while they wait for a theoretical equilibrium. The whole idea is based on a trickle-down fantasy. And hope, which is not a strategy.

ANALYST: We need to get the economic foundations right before we build anything on top of it. That’s just plain common sense, don’t you agree?

SCEPTIC: I do, but you have yet to outline any blueprint for what is to be built on top of that foundation once it’s ready. And when is that exactly?

ANALYST: Impossible to say with any precision.

SCEPTIC: Until that magical moment in the distant future, it is a tale of two Argentinas: the macroeconomic one in which a strong economic recovery is touted and foreign investors are jubilant. And another in which more than half of the 47 million people live in poverty or close to it, only one misfortune away from destitution.

ANALYST: It sounds nice, but Argentina needs a reality check.

SCEPTIC: Your plan is to take a chainsaw to the budgets of the very universities, hospitals, and research institutes that are supposed to produce the future generations of innovators. The next genius is out there, but their lab may have its funding slashed and they have to work at a petrol station instead; at least the pay is stable and the job comes with decent benefits. Your chainsaw plan is nothing more than an act of demolition followed by a shrug. It is poverty with a prayer. An entire generation’s potential is to be sacrificed for a balanced sheet. The tragedy is not merely that hope is not a strategy, it is that your strategy is a complete abandonment of the very people who are the only real hope.