Argentina's recent $20 billion currency swap agreement with the US underscores the delicate balance of economic reform and the vital need for liberalization. Last month, there was a sudden run on the Argentine peso, fueled by a series of political setbacks, including Buenos Aires provincial elections in which Peronists won many of the congressional seats. Following this tumult, the Argentine Central Bank burned through more than $1 billion in just two days to keep the exchange rate within the government-backed currency band. 

Soon after, President Javier Milei was in New York securing a deal with the US Treasury Secretary Scott Bessent for what amounted to an effective bailout to prevent the sudden surge of the peso. While critics view Milei's request for support as a vulnerability, stabilizing the Argentine peso is essential to propel his austerity agenda into the latter half of his term.

Indeed, Argentina is on the brink of transformation, driven by the bold reforms of its libertarian President Javier Milei. Not since the early 1990s has the nation seen such rapid policy shifts. After spending nearly a month in Argentina this summer, I observed a country brimming with potential, yet weighed down by its historical burdens.

Milei's La Libertad Avanza party has pushed through significant market reforms, achieving eye-popping results. Annual inflation, which soared at 289 percent when he took office, dropped to under 40 percent. In early 2025, Argentina recorded its first fiscal surplus in 14 years, and poverty rates fell from 53 percent in early 2024 to 31.6 percent by mid-2025. These accomplishments mark a sharp departure from decades of economic mismanagement.

However, Argentina's progress is hampered by a legacy of Perónist policies fueled by bureaucratic control and special interests. Milei's efforts to liberalize the economy face fierce resistance from labor unions and career bureaucrats who view his reforms as a threat to their existence. Market liberalization, as I've noted before, is far easier in theory than in practice. Success stories like Poland and Chile, which transformed into thriving market economies, are exceptions. They succeeded by restructuring institutions to protect property rights and unleash human potential. Argentina, despite its wealth of talent and resources, struggles to follow suit.

The nation's universities, among the best in Latin America, produce highly skilled graduates who could drive economic growth. Yet, a dense web of regulations stifles their potential and limits the human capital that is the backbone of prosperity. In cities like Córdoba, where I spent much of my time, this tension is palpable. The taxi industry, for example, has lobbied to ban ride-sharing services like Uber, yet drivers operate in defiance of these laws. This rent-seeking, rooted in Perón's mid-twentieth-century policies, continues to choke innovation and entrepreneurship.