As Americans increasingly disapprove of capitalism and the free market, Javier Milei’s Argentina presents a dramatic South American contrast. Two years ago, Argentina found itself in a desperate situation, with a collapsing peso, triple-digit inflation, and an overbearing regulatory government. The inevitable result was a strong impetus for radical change. Milei took his chainsaw and got to work, producing one of the most aggressive free-market experiments of the modern era.
Inflation
Before the first inflation report of his term, Milei told a Buenos Aires radio station: “If the number is closer to 25%, it means that the success was tremendous”. Inheriting a monthly inflation rate of 25.5% and an annual inflation rate of 211.4%, Milei brought it down to an incredible 1.7% per month.
“¡Afuera!” (“Out!”) shouted Milei, as he ripped magnets off a whiteboard symbolizing the Argentine government. Shortly after assuming office, he embraced a program of fiscal discipline that the country desperately needed. His government slashed 19 ministries, reducing the count to 9, and dramatically cut federal spending on provincial funding, direct investment, pension spending, and energy subsidies. In the first quarter of 2024, primary spending fell about 35% from the previous year, adjusted for inflation. He slashed subsidized healthcare programs, Research Grants, and university funding. These measures helped produce the country’s first budget surplus in over 14 years, a sharp break from the long-standing excess and waste Argentines had come to accept as normal.
However, this historic economic leveling has still been met with skepticism, with some describing it as a “deliberate and engineered collapse in people’s wages.” His critics point to declining manufacturing output, more than 2,000 business closures, the loss of 73,000 jobs, and low industrial capacity utilization as evidence. However, average wages in Argentina rose 2.8% in July, 33% more than inflation during the same period, as reported by the National Statistics Institute of Argentina. Wages rising faster than inflation, which continues to fall, does not indicate a structural economic collapse. Instead, it signals that workers’ purchasing power is beginning to recover.
Labor “Crackdowns”
Milei has significantly overhauled labor laws, contributing to Argentina’s long-term economic revival. In order to formalize the fragmented yet rigid labor market, Argentina enacted Law No. 27,802 on Labor Modernization on March 6, 2026, one of the country’s largest labor-and-employment reforms, rewriting large parts of the 1976 labor code. Among other changes, the previous blanket 8-hour daily cap has been removed, allowing shifts to extend to 12 hours, provided the 48-hour weekly maximum and a 12-hour rest window between shifts are maintained. Milei has also narrowed strike protections across the commerce, education, port, and telecommunications sectors, and established an Employment Assistance Fund to support workers affected by economic hardship.
Former Deputy Myriam Bregman frequently touts that Milei defends the “freedom to enslave”. That line exemplifies the left’s broader reaction to this law: Argentina now permits 12-hour days with gutted protections and has enabled employers to take advantage of employees, transferring power from workers to their bosses.
Yet the narrative that Milei’s reform licenses exploitation fundamentally misreads the law’s design and its early empirical outcomes. Rather than dismantling worker protections, the law introduces new flexibility into a historically stagnant labor market. Critics often assert that a 12-hour shift “gives employers the upper hand”, but this misconstrues the situation. The changes do not override the 48-hour weekly ceiling or mandated rest periods; instead, workers still have protection, while both businesses and workers gain the flexibility modern industrial needs demand. Additionally, the law explicitly states that no individual or collective bargaining agreement can waive workers’ rights, hardly a provision that would be found in a system of slavery. In short, the new labor law changes the distribution of employee hours, while preserving protections on weekly hours, rest, and waivable rights.
Another concern is that the rate of informal labor, employment not registered with the social security system, has increased, leaving workers without pension contributions and other employment benefits. Labor informality rose to a record 45% by the second quarter of 2026, up 1.8% from the same quarter in 2025 and the highest level since INDEC began publishing the indicator. However, this may be a structural hangover that will take multiple years to disappear fully before returning to normal. The rise in informal labor has coincided with shrinking opportunities for formal employment: Argentina lost 121,000 registered private-sector jobs between June 2025 and June 2026, including 51,800 in industry. When formal jobs disappear, workers may turn to unregistered work to maintain their incomes, potentially increasing the share of employment without social security coverage. While employment figures suggest this phenomenon, they do not establish how many displaced workers have entered informal employment.
However, beneath the headline, the formal workforce showed signs of life earlier in the period. In the first half of 2025 alone, social security data show 71,000 workers were added. Real wages also rose in the private sector. Additionally, when paired with the Régimen de Incentivo para Grandes Inversiones (RIGI), the long-term prospects for formal labor improve. The RIGI is a 30-year investment stability regime that locks in tax, customs, and foreign-exchange treatment for large-scale projects in strategic sectors like mining and infrastructure, in exchange for minimum investment and binding commitments from local suppliers. The $7.82 billion already committed, combined with the Labor Modernization Law, guarantees demand for Argentine labor not just within the particular projects, but across the broader economy.
Housing Market
Beyond the labor gains, Milei’s radical economic reform offers other benefits. Perhaps the most ambitious test of Milei’s free-market bet has been his housing reform, taking his chainsaw to the entire rulebook. ‘It was not just that the law was repealed, but also that it was replaced with nothing’, said a former vice president of Argentina’s central bank.
Before Milei, the 2020 rent-control statute had already failed on its own. In an interview with a local landlord from that period, they said they turned to under-the-table agreements with buyers in USD to protect themselves against currency uncertainty and smothering regulation. After the December 2023 repeal, rental units listed in Buenos Aires on a leading Argentinian rental platform rose 180%, and listings across the Buenos Aires Metropolitan Region rose 200%. And, consistent with the basic economic principles Milei follows, real rents fell about 27% in the first 7 months after the 2023 level, driven by the abundance of willing and trusting housing suppliers. This policy has already proven itself empirically. According to a 2025 analysis: “Deregulation led to a substantial revival of rental supply. At the same time, contrary to theoretical expectations of sharp rent increases, we observe more moderate price dynamics: both nominal and real rents declined in response to the reform, a pattern that emerges consistently across specifications.” On the ground in Buenos Aires, a local real estate professor touts that ‘The deregulation of rents allowed the sector to regain vitality’.
The lending side tells the same story of increased market participation. The total stock of mortgage credit grew an inflation-adjusted 173.9% by the end of 2025, with home-purchase loans up 186.4% YOY, driven mainly by inflation-adjusted UVA-indexed mortgages, which provide security to both borrowers and lenders. In Buenos Aires city alone, home-sale deeds rose 26.8% in 2025, to 69,461, an increase of 15000 new homeowners. These 15000 additional new homeowners do more than just increase housing demand. By letting families buy homes instead of saving indefinitely in an inflationary environment, an expanding mortgage market helps new households build wealth and creates a stronger investment ecosystem for all of Argentina.
Argentina’s ongoing transformation offers a strong antidote to growing skepticism about free-market capitalism in the West. Argentina serves as a live, high-stakes stress test of the idea that aggressive deregulation, not state intervention, is the best cure for an economy suffocated by its own government. Inflation has fallen from crisis levels to single-digit monthly rates, while real wages have begun outpacing those same numbers. Labor law reform created a flexibility that benefits both employers and employees. Deregulation across the housing market exploded housing availability, a net positive the country sorely needed. Milei is successfully charting a new path that defies the modern populist playbook.
Image Credit – Wikimedia Commons
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