In front of the Chilean mirror: Milei, between the austerity party and the inflation party

It is no longer Latin America's macroeconomic oasis of unstoppable growth, but for Argentine politics, Chile remains a model of normality that Argentina has yet to achieve. Sunday's presidential elections offered two snapshots. First, the scene that generated the most obvious admiration: the outgoing president's phone call to the president-elect. A dialogue based on the logic of political coexistence even when there is a change of ideologies in power. In the Chilean case, this time, a change between the more pronounced left, that of Gabriel Boric in alliance with the Communist Party, and the more defined right of José Luis Kast. But that scene does not occur in a vacuum: it requires the pre-existence of prior consensus, which is very difficult for society and politics to achieve. And that is where the other image offered by the Chilean election comes in, the least commented on, a key snapshot of Chile's thirty-five years of democracy: the continuity, surprising to the Argentine eye, of macroeconomic rationality. "For Argentina's political leadership, Chile represents a possible regional utopia that, however, is still very far away on this side of the Andes: undisputed democratic consensus crossed with sustained macroeconomic consensus, regardless of the political party that occupies the presidency. In Argentina, the former is a fact. The latter is a major outstanding debt. The Chilean case takes on even greater significance given the situation in Argentina. Two recent news items deserve attention: they relate to two efforts to lay the foundations for a macroeconomic architecture that is resistant to the corrosion of political change. One piece of news is from Monday: the start of “a new phase” in the monetary program, according to the Central Bank's announcement. Milei's administration begins the second half of its term with a focus on two of the major critical issues pending for Milei's macroeconomic policy: the level of reserves and the exchange rate. According to the Central Bank, 2026 will become synonymous with the year in which Milei and his economic team enter the phase of reserve accumulation and a floating exchange rate within bands, but one that is increasingly realistic and now better suited to inflation. "The other news, from last week, was the Executive Branch's submission of a bill to Congress to promote a tougher criminal regime with fiscal rules, a ban on deficit budgets, and the imposition of ten-year prison sentences for officials who authorize unsupported spending or increases in spending. "In both cases, the government seeks to consolidate the macroeconomic order and its continuity in the short term but also in the medium term: if this law is approved—and if it passes judicial review—political alternation would not generate the risks of macroeconomic impact that it currently generates. For example, Argentinians made record purchases of dollars in October in response to the risk of defeat for the ruling party in the midterm elections: US$4.699 billion in a single month. If the culture of rational macroeconomics takes time to take root in politics and among voters, Milei chooses to try to impose it by law. The goal is for rational macroeconomics to outlive him: that would be his greatest legacy. "It is true that the Chilean economy is under pressure: the diagnosis is ‘stagnant growth’. The ‘miracle’ of the Chilean Concertación in the 1990s, with average annual growth of around 6.2 per cent, peaking at 11.5 per cent in 1992, has come to an end, with growth stagnating at around 1.8 per cent in recent years. “This trend of vigorous growth lost momentum and, by the 2020s, growth was barely above 2 percent,” according to a June 2025 IMF report. However, unlike Argentina, this challenge occurs in a cultural context where inflation is inconceivable. In 1990, Chile returned to democracy with 26 percent inflation, but ten years later, in 2000, after a decade of steep and sustained decline, it had already brought it down to 3.8 percent. In recent years, it has hovered around 3 and 4 percent, except in 2020 and 2021, due to the pandemic. "Public spending has also been increasing. Its most critical rise occurred between 2014 and 2018, during Michelle Bachelet's second term as president, when it settled at around 20 percent, again far from Argentina's levels. Even with the outbreak of 2019, already in Sebastián Piñera's second term as president, the macro indicators that are of such concern to Argentina were far from the distortions seen in Chile: that year, Chilean inflation was only 2.25 percent. "From a Chilean perspective, that macro has problems. Massive rejection of the ideas that brought stagnation and decline. A great triumph for freedom and democracy. Freedom and common sense are advancing throughout the continent. VLLC!!!" This was how Argentine Deputy Minister of Economy José Luis Daza expressed himself in X, celebrating José Antonio Kast's victory. As a Chilean, Daza knows the trans-Andean economic landscape better than anyone: seen from the return of democracy to Chile, the Chilean macroeconomy is beginning to crack. Seen from Argentina, the desire for continuity in macroeconomic rationality on the part of a leftist experience such as Boric's, beyond questionable decisions, is enviable. "That Chilean macroeconomic picture is what resonates in Argentina. And it leads to two questions. First, what is the role of Milei's presidency in the context of Argentina's great impossibility? In other words, what historical role does his mandate play in the absence of macroeconomic continuity between the liberal and Peronist-Kirchnerist experiences? And even more: what role does it play after the broken promises of the two liberal experiences of Argentina's forty years of democracy? "After Menemism came its downfall and a political-economic experience of the opposite kind: Kirchnerism, first that of Néstor Kirchner and then that of Cristina Fernández. After the macroeconomic rationality of Macri and Cambiemos, the fourth version of Kirchnerism returned, with equally opposing policies. For Milei, the problem is that the two experiences with a desire for orthodox and rational macroeconomic reorganization, each with its own nuances, ended in failure. Milei has the dual historical responsibility of creating economic liberalism with economic and social success. And he must also achieve continuity, regardless of who is in power. Chile did it. And in the most inconceivable way for the Argentine eye: through a continuity of policies from the Pinochet dictatorship to the Concertación democracy, and beyond, even with Bachelet and Boric, despite their problematic points. Alejandro Foxley was the Concertación's first finance minister. Once democracy was restored, he adopted Pinochet's Chicago boys model, which grew at 7 percent, with improvements in social aspects: trade and economic openness, fiscal balance, and an independent Central Bank. Javier Milei's project is played out between these two parties: between the side effects of the Adjustment Party, on one extreme, and the Inflation Party, on the other. In other words, on the one hand, libertarian management is obliged to demonstrate a central point: that political experiences that promise rational macroeconomic management, with adjustment as the first step, do not end in crisis and social unrest and a new escalation in poverty levels. On the other hand, Milei's economic policy is obliged to dismantle the common sense that sustains the Peronist-Kirchnerist experiences in power, the Inflation Party: the promotion of the domestic market and consumption at the expense of the public coffers and unstoppable issuance and inflation. That is why the Chilean experience is a fundamental test case for Milei: the recipes offered by center-right proposals in Argentina were successful in Chilean democracy. Orderly macroeconomics led to growth and a reduction in poverty and inequality. The Chilean experience historically demonstrates that adjustment is only the first step in a chain of macroeconomic causes and effects that first leads to fiscal balance or surplus and declining inflation, and then leads to growth, development, a larger middle class, and less inequality. “There is a second question that arises from this comparison between Chile's stable macroeconomic situation and Argentina's discontinuity: why does much of Argentine politics continue to view Chilean democracy as a path to the consolidation of inequality and social injustice when key indicators contradict this view? The category of ‘neoliberalism’ as a label for everything bad. ”The facts tell a different story. Between 2000 and 2020, compared to Argentina, Chile spent half as much on social protection, but its poverty levels were barely a third of those in Argentina. The data comes from the CIAS's “Map of social policies in Argentina. Contributions to a fairer and more efficient social protection system.” And according to Chilean indicators, between 1990 and 2018, poverty fell by 40 percent. Inequality also decreased. Furthermore, Chile's education system has the best results in Latin America, and its vulnerable sectors are more included in university than in Argentina. The Kirchnerist interpretation is a symptom of an epistemological limitation of Kirchnerism: a political-cognitive resistance that privileges belief and ideology over perception and reality. Based on this distorted mirror, Kirchnerism, and much of Peronism in general, has consolidated itself as the party that distrusts the macro order. Without a political perception free of ideological constraints, based on an analysis of the facts, the continuity of the rational macro faces an enormous obstacle. Any ideological shift can take it away from its center."