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Argentina Tried Democratic Socialism. Then Came the Chainsaw. · Underthrow

• 0:00
  SPEAKER_00: I don't much care for politicians.
• 0:02
  SPEAKER_00: Most of them are just the bosses of a legal mafia.
• 0:05
  SPEAKER_00: But there are a few exceptions.
• 0:06
  SPEAKER_00: My current number one is Javier Malay of Argentina.
• 0:10
  SPEAKER_00: But before we talk about Malay, let's take a trip down memory lane.
• 0:15
  SPEAKER_00: In 1913, an Argentine bricklayer earned more than a French one.
• 0:18
  SPEAKER_00: Buenos Aires had electric trams before most of Europe.
• 0:22
  SPEAKER_00: The phrase, rich is an Argentine, was something people said in Paris back then.
• 0:27
  SPEAKER_00: Then Argentina spent 70 years proving you can,
• 0:29
  SPEAKER_00: in fact,
• 0:30
  SPEAKER_00: unmake a rich country, deliberately, democratically, and with popular enthusiasm.
• 0:36
  SPEAKER_00: They had turned to democratic socialism.
• 0:39
  SPEAKER_00: But in December 2023,
• 0:41
  SPEAKER_00: a TV economist with unmanageable hair walked into the Casa Rosada holding
• 0:46
  SPEAKER_00: a chainsaw.
• 0:55
  SPEAKER_00: Paying to be poor.
• 0:58
  SPEAKER_00: Here's the thing about Argentina's decline that makes it an object lesson for us.
• 1:02
  SPEAKER_00: Nobody invaded.
• 1:03
  SPEAKER_00: There wasn't a plague.
• 1:05
  SPEAKER_00: There was no partition, nor any resource curse.
• 1:08
  SPEAKER_00: Argentina had the grain, the cattle, the ports, and the schools.
• 1:11
  SPEAKER_00: And entrepreneurs made the best of it.
• 1:13
  SPEAKER_00: What got introduced was Pyranism.
• 1:16
  SPEAKER_00: Take note here because this matters to the current zeitgeist.
• 1:19
  SPEAKER_00: Pyranism wasn't revolutionary.
• 1:22
  SPEAKER_00: There were no gulags.
• 1:23
  SPEAKER_00: They held elections.
• 1:25
  SPEAKER_00: What the Pyranists did in power was subordinate the entire productive ecosystem of
• 1:29
  SPEAKER_00: a nation to the political need to distribute favors.
• 1:33
  SPEAKER_00: Price controls to make voters feel richer,
• 1:35
  SPEAKER_00: tariffs to make a factory owner loyal, and subsidies to make a union quiet.
• 1:40
  SPEAKER_00: Then they used the printing press to pay the tab.
• 1:42
  SPEAKER_00: Tax, inflate, transfer.
• 1:45
  SPEAKER_00: Tax, inflate, transfer.
• 1:47
  SPEAKER_00: Print money to buy constituency groups,
• 1:49
  SPEAKER_00: then blame the consequences on oligarchs and neoliberals.
• 1:54
  SPEAKER_00: Sound familiar?
• 1:55
  SPEAKER_00: Repeat this for 70 years.
• 1:57
  SPEAKER_00: What nobody wants to admit is that Peronism is just democratic socialism.
• 2:02
  SPEAKER_00: And as it always does, the bill came due.
• 2:06
  SPEAKER_00: Since the rise of Pyrrhonism in the 1940s, Argentina has repeatedly defaulted.
• 2:11
  SPEAKER_00: Currency devaluations were so routine that Argentines learned to think in dollars
• 2:16
  SPEAKER_00: and treat the peso like a hot potato.
• 2:18
  SPEAKER_00: By late 2023, inflation was running north of 200% a year.
• 2:23
  SPEAKER_00: Their central bank reserves were gone,
• 2:25
  SPEAKER_00: and poverty rose above 40% in a country that used to feed the world.
• 2:31
  SPEAKER_00: The knowledge problem.
• 2:35
  SPEAKER_00: Javier Millet arrives on the scene.
• 2:37
  SPEAKER_00: And the strange thing about Millet,
• 2:39
  SPEAKER_00: the thing the international press could never quite digest,
• 2:42
  SPEAKER_00: is that he didn't just campaign on rock and roll and chainsaws.
• 2:46
  SPEAKER_00: He campaigned on Ludwig von Mises and Friedrich Hayek.
• 2:50
  SPEAKER_00: The Austrian school economic argument is well-established,
• 2:54
  SPEAKER_00: simple, and almost nobody in power has ever paid any attention to it.
• 2:58
  SPEAKER_00: Hayek's version goes like this.
• 3:00
  SPEAKER_00: Knowledge a society runs on doesn't exist in a committee or in the wisdom of a commissar.
• 3:05
  SPEAKER_00: It is scattered across millions of people.
• 3:08
  SPEAKER_00: What the guy in Rosario knows about his soil,
• 3:11
  SPEAKER_00: what the shopkeeper in Cordoba knows about our customers this week.
• 3:15
  SPEAKER_00: Prices are how that knowledge travels.
• 3:18
  SPEAKER_00: Information wrapped.
• 3:20
  SPEAKER_00: From that insight,
• 3:35
  SPEAKER_00: Millet insists on three commitments.
• 3:37
  SPEAKER_00: Let prices tell the truth,
• 3:38
  SPEAKER_00: make property and contract ensure that people will build things that outlast
• 3:43
  SPEAKER_00: an election cycle, and shrink the state.
• 3:45
  SPEAKER_00: Because deficits financed by the printing press are not a policy so much as slow suicide.
• 3:52
  SPEAKER_00: A tax on everyone too poor to hold dollars.
• 3:55
  SPEAKER_00: Millet's innovation wasn't the theory.
• 3:58
  SPEAKER_00: The theory has been sitting there since the 1920s,
• 4:00
  SPEAKER_00: when Mises articulated the socialist calculation problem.
• 4:03
  SPEAKER_00: Millet's innovation was transitioning all at once,
• 4:07
  SPEAKER_00: publicly, in a democracy, while telling voters it would hurt before it got better.
• 4:13
  SPEAKER_00: What Millet Did He closed ministries, cut subsidies, and scrapped price controls.
• 4:22
  SPEAKER_00: And that rent control regime,
• 4:23
  SPEAKER_00: the one that had stripped Buenos Aires of apartments, that was repealed outright.
• 4:29
  SPEAKER_00: Then the numbers started to move.
• 4:31
  SPEAKER_00: Consider five indicators before and after.
• 4:34
  SPEAKER_00: First, inflation.
• 4:36
  SPEAKER_00: In December 2023, prices rose 25.5% in a single month.
• 4:41
  SPEAKER_00: But by mid-2026, monthly prints had fallen below 2%.
• 4:47
  SPEAKER_00: Annual inflation plummeted from 211% down to 33%.
• 4:52
  SPEAKER_00: That is the difference between a country where restaurants reprint menus weekly
• 4:57
  SPEAKER_00: and one where a family can actually plan a year ahead.
• 5:01
  SPEAKER_00: Malay removed capital controls,
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  SPEAKER_00: rental listings flooded back into Buenos Aires,
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  SPEAKER_00: and real rent prices dropped,
• 5:09
  SPEAKER_00: which is exactly what every housing economist predicted
• 5:13
  SPEAKER_00: and what no democratic socialist anywhere wants to hear.
• 5:17
  SPEAKER_00: Second, and this is the fuel behind the first,
• 5:21
  SPEAKER_00: Argentina ran a deficit of around 3% of GDP in 2023.
• 5:26
  SPEAKER_00: After Malay, Argentina saw a primary surplus of 1.8% in 2024, followed by 1.4% in 2025.
• 5:35
  SPEAKER_00: That's right, back-to-back surpluses.
• 5:38
  SPEAKER_00: The first time that's happened since 2008, and Malay's government is on pace for a trifecta.
• 5:44
  SPEAKER_00: And get this,
• 5:45
  SPEAKER_00: the central bank stopped printing money because it no longer needed to fund
• 5:49
  SPEAKER_00: the deficit.
• 5:50
  SPEAKER_00: Third, poverty.
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  SPEAKER_00: Official figures show poverty peaked at nearly 53% during the initial shock,
• 5:58
  SPEAKER_00: and now sits at 28%, with extreme poverty dropping from 18% down to 6%.
• 6:03
  SPEAKER_00: That's breathtaking if true.
• 6:05
  SPEAKER_00: Now, let's look at a couple of asterisks.
• 6:08
  SPEAKER_00: Asterisk A is...
• 6:09
  SPEAKER_00: Market reforms hurt at first.
• 6:11
  SPEAKER_00: That 53% peak happened under Millay because of his adjustments.
• 6:17
  SPEAKER_00: And real people lost real jobs getting from there to here.
• 6:20
  SPEAKER_00: But the pain was short-lived.
• 6:22
  SPEAKER_00: Asterisk B is the poverty figures are the most contested of the set.
• 6:26
  SPEAKER_00: Researchers argue that the household survey's rising reports
• 6:30
  SPEAKER_00: of non-employment income flatter the trend.
• 6:33
  SPEAKER_00: A 25-point move is hard to deny, but Millay's critics at least deserve a hearing.
• 6:39
  SPEAKER_00: When you consider the man hasn't even been in office for three years,
• 6:42
  SPEAKER_00: these results are stunning.
• 6:45
  SPEAKER_00: Fourth, Argentina's risk.
• 6:47
  SPEAKER_00: This is the number almost nobody cites, and it might be the most revealing.
• 6:52
  SPEAKER_00: It's the premium the world charges Argentina to borrow money.
• 6:55
  SPEAKER_00: In 2023, it ran north of 2,000 basis points.
• 6:59
  SPEAKER_00: Today, it's around 600.
• 7:01
  SPEAKER_00: A two-thirds collapse.
• 7:02
  SPEAKER_00: Notice what that number is not.
• 7:05
  SPEAKER_00: It ain't produced by any government statistics agency,
• 7:08
  SPEAKER_00: or a minister, or a press office massage artist.
• 7:11
  SPEAKER_00: Strangers with money, on aggregate, have decided Argentina is far less likely to default.
• 7:17
  SPEAKER_00: You can't spin a bond spread.
• 7:20
  SPEAKER_00: It is the least sentimental opinion poll on earth,
• 7:23
  SPEAKER_00: and it's made a big move in the right direction.
• 7:25
  SPEAKER_00: Fifth, production.
• 7:28
  SPEAKER_00: Now, go stand out in Patagonia.
• 7:30
  SPEAKER_00: Vaca Muerta shale output is up over 30% year on year,
• 7:34
  SPEAKER_00: pushing national oil production past 840,000 barrels a day.
• 7:39
  SPEAKER_00: That's a record.
• 7:40
  SPEAKER_00: A country that used to import energy now exports it.
• 7:43
  SPEAKER_00: That helps swing the current account to a multi-billion dollar surplus
• 7:48
  SPEAKER_00: and drive GDP growth to 4.4%.
• 7:50
  SPEAKER_00: Why it matters.
• 7:57
  SPEAKER_00: Look, I'm not here to canonize Javier Malay.
• 8:01
  SPEAKER_00: He's a midterm politician, and history is unkind to people who declare victory too early.
• 8:06
  SPEAKER_00: What I care about is what his reforms are proving,
• 8:09
  SPEAKER_00: because the argument we always seem to be having,
• 8:12
  SPEAKER_00: the one about free markets versus state intervention,
• 8:15
  SPEAKER_00: usually happens in the subjunctive.
• 8:18
  SPEAKER_00: Everyone gets to keep their ideological priors forever because nobody ever wants
• 8:22
  SPEAKER_00: to admit the tests have already been run.
• 8:24
  SPEAKER_00: See 70s Sweden and 80s New Zealand.
• 8:27
  SPEAKER_00: But when it comes to democratic socialism,
• 8:29
  SPEAKER_00: Argentina ran the experiment and ran it long and hard.
• 8:34
  SPEAKER_00: It wasn't a city-state, island, or special economic zone.
• 8:38
  SPEAKER_00: Argentina is a large,
• 8:40
  SPEAKER_00: indebted,
• 8:41
  SPEAKER_00: and deeply politicized country with a 70-year debt-spending habit and a population
• 8:46
  SPEAKER_00: that had every reason to turn their backs on Peronism.
• 8:49
  SPEAKER_00: So two big lessons come out of Argentina's test.
• 8:53
  SPEAKER_00: The first is that Argentina's version of democratic socialism,
• 8:56
  SPEAKER_00: Peronism, failed because the system ate itself.
• 8:59
  SPEAKER_00: Promise more than the economy brings in,
• 9:02
  SPEAKER_00: cover the shortfall with printed money,
• 9:04
  SPEAKER_00: and the money devours the wages of the people you swore to protect.
• 9:08
  SPEAKER_00: Inflation is the most regressive tax ever invented.
• 9:12
  SPEAKER_00: The second big lesson is that such failure is reversible and is quickly being reversed.
• 9:18
  SPEAKER_00: That's what I hope you'll hold on to.
• 9:20
  SPEAKER_00: 70 years of accumulated damage has begun to unwind in only two and a half years.
• 9:26
  SPEAKER_00: Not because anyone found a clever new lever,
• 9:29
  SPEAKER_00: but because someone stopped pulling the old socialist ones.
• 9:33
  SPEAKER_00: The knowledge and energy were already there,
• 9:36
  SPEAKER_00: distributed among the people in their heads, hands, and productive capabilities.
• 9:42
  SPEAKER_00: It didn't need to be granted.
• 9:44
  SPEAKER_00: It needed to be unleashed.
• 9:47
  SPEAKER_00: From the rooftops.
• 9:51
  SPEAKER_00: So, shout about it.
• 9:53
  SPEAKER_00: Peronism was the warning.
• 9:55
  SPEAKER_00: It's too easy to vote your way into ruin,
• 9:58
  SPEAKER_00: slowly and sincerely, with a credulous majority behind you.
• 10:02
  SPEAKER_00: Javier Millet is living proof that the alternative exists.
• 10:06
  SPEAKER_00: Reform is rough, but the pain is quick, and the results are impressive.
• 10:12
  SPEAKER_00: Freedom works.
• 10:14
  SPEAKER_00: Entrepreneurship works.
• 10:15
  SPEAKER_00: While the U.S.,
• 10:17
  SPEAKER_00: mired in debt,
• 10:17
  SPEAKER_00: is running toward democratic socialism,
• 10:20
  SPEAKER_00: they're running away from it in Latin America.
• 10:23
  SPEAKER_00: I'm Max Borders.
• 10:24
  SPEAKER_00: Let's criticize by creating.
• 10:31
  SPEAKER_00: Underthrow is brought to you by Human Respect Labs,
• 10:34
  SPEAKER_00: committed to advancing the philosophy of human respect worldwide.
• 10:37
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• 10:42
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• 10:43
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• 10:47
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• 10:48
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• 10:52
  SPEAKER_00: That's humanrespectlabs.org.