Buenos Aires — Niall Ferguson believes that Argentina under Javier Milei could be remembered as “one of the economic miracles of the 2020s” — and he’s betting his own money on it. The renowned British economic historian has invested in both liquid and illiquid Argentine assets, telling Bloomberg Línea that election day 2023 was the day to buy and that many foreign investors missed out on one of the world’s “best trades.”
Ferguson, who was in Buenos Aires last week to interview Milei for The Free Press, says the Libertarian’s reforms are “the best shot Argentina has had in our lifetimes” to break more than seven decades of economic failure. The Stanford and Harvard fellow believes what sets this attempt apart is that it represents a complete “policy regime change” — in alignment with Nobel laureate Thomas Sargent’s theory that ending chronic inflation requires changing almost everything, not just monetary or fiscal policy.
While critics have expressed concern about Milei’s combative style and the challenge of fostering private sector job creation, Ferguson isn’t concerned. He argues Argentine voters “understood it was game over for Peronism and Kirchnerism” after nearly hitting hyperinflation, granting Milei a lasting and unusual level of support, even in the midst of such painful reforms.
The Harvard fellow sits on the board of Argentine fintech unicorn Ualá, founded by his former student and partner at macroeconomic and geopolitical advisory firm Greenmantle, Pierpaolo Barbieri.
Ferguson sees Argentina’s transformation as more than fiscal housekeeping for a perenial underperformer. With massive untapped energy reserves and AI driving global power demand, Ferguson believes Argentina is “in a very promising situation” to become a major commodity exporter beyond agriculture.
“Argentina’s role in the global economy is changing structurally and at a time when its relations with the United States are friendly, and it still has the option to trade with the rest of the world,” he says.
The following interview was edited for length and clarity.
Bloomberg Línea: You recently stated that to see where a country is going, you have to look at its history. Given Argentina’s past 70 years or so of failed reforms and country risk that still doubles the Latin American average, what makes you think Argentina can change for good this time?
Niall Ferguson: Well, nothing is forever, and that includes economic underperformance. It’s certainly true that for most of the last century, certainly since World War II, Argentina has underperformed, and it’s been characterized by almost every kind of financial crisis you can think of. So much so that when I was writing my book, The Ascent of Money, back in 2006-2007, I cited Argentina as the classic case of a country with great economic potential that has self-sabotaged, mostly through bad politics and bad policies. And yet, it’s possible to turn around a failing economy, just as it’s possible, of course, to crash a successful one. That’s one of the key insights of economic history. The key to improving an underperforming economy is to have a policy regime change. This is a phrase I borrow from the Nobel laureate, Thomas Sargent, who argued in the early 1980s that to end a really chronic high inflation problem, you couldn’t just change monetary policy or fiscal policy, you had to change everything. And that policy regime change is what Argentina is going through now, under the leadership of President Javier Milei, and it’s in radical contrast to all previous attempts, because he is so radical in his thinking that he’s changing just about every aspect of economic policy. This is the right way to do it. And unless Tom Sargent is completely wrong, it’s the best shot that Argentina has had in our lifetimes to change its ways and return to the good old days. Because let’s not forget a century ago and certainly in the late 19th and early 20th century, Argentina was a very wealthy country, which was regarded very positively by foreign investors.
You recently mentioned the UK under Thatcher as an example of an economic turnaround. What other countries can serve as inspiration for Argentina? Milei points to Ireland, and many here regard Australia as a model.
You could obviously cite the Chilean case, but Chile, of course, was a dictatorship when it emerged from the inflationary period of its history. The same was true of of South Korea. It’s better to look at the democracies that have voted for reform. France, interestingly enough, had the last attempt at socialism under Francois Mitterrand (1981-1995), realized it couldn’t work, and then embarked on a period of reform and liberalization. And indeed, if you look at the 1980s around the world, you can see that a significant number of democracies pursued policies that aim to liberalize their markets, lower trade barriers, reduce restrictions in the labor market, improve capital markets, and by and large, these experiments worked. So there are plenty of precedents for what President Milei is attempting. What’s interesting is, first of all, he’s doing it at at a time when the rest of the world is going in a different direction. The populist policies of the sort that we see in the United States and in some European countries are in some ways the opposite because they don’t aspire to free trade, they aspire to tariffs, they don’t aspire to free markets, they aspire to industrial policy. So President Milei’s an outlier in pursuing this libertarian agenda. The other thing is, he’s much more radical than any of the governments of the 1980s. It took Margaret Thatcher 10 years to reduce public sector borrowing by 5% points of GDP. Well, President Milei did that inside one year. So he stands out for me as the most radical libertarian we’ve ever seen in government, in any country. And if you believe, as I do, that free markets are the answer to a very large number of problems, then it’s very exciting to see somebody take this kind of approach. I was a Thatcherite as a young man back in the 1980s, and I strongly supported Margaret Thatcher as she turned Britain around. it’s exciting to see somebody take the same approach, but to do it with even more conviction and even greater boldness.
What does Trump’s tariff policy mean for a country like Argentina, which is heading in the opposite direction? Is it more of an opportunity or a risk?
President Milei told me you can’t understand Trump in terms of the economics textbook, because his goals are geopolitical as well as economic. And if you understand the geopolitics of what he’s attempting to do, you can see that the tariffs are being imposed almost as a kind of sanction on countries with which he has disagreements on other issues. One can see that in the case of Brazil, where President Trump is taking exception to the way that former President Bolsonaro has been treated. Take India, where higher tariffs were just imposed this week, because India imports oil from Russia. From that point of view, Milei has been quite smart, because he’s made sure that he is close to Trump. I’ll be surprised if Argentina is given a bad deal when we get details of its it’s tariffs with the United States. Rather like Britain, Argentina is a country that Trump has a positive view of. That was true before actually, if you think back to Trump’s first term when he had a good relationship Macri, but it’s even more true now. In this world in which tariffs are being used by the US as a political lever, the key thing is to have a good relationship with President Trump and President Milei does that.
Do you think it’s reasonable to interpret Trump’s tariffs as a way to pressure countries to limit Chinese initiatives, given China’s significant presence in Argentina and Latin America?
It’s clear if you look at Trump’s trade negotiations with Asian countries, that this is a big priority for the administration. They’re trying to make sure that Chinese goods don’t simply get transshipped through third countries, which happened on a very large scale in the first Trump administration when the phase one trade deal didn’t really work. Because Chinese goods were simply sent via Vietnam or India or the other third countries. How far it’s going to use its trade policy in South America to that end, I’m not sure, because it’s a little different, isn’t it? In Latin America generally we see Chinese investments happening in a wide range of sectors. This is true, in Chile as well, and I’m not seeing the same concern in Washington with Chinese investment in, say, Chilean retail. That’s not a high priority for the administration. I’m not sure that it will be a key driver of the the the terms that the Trump administration offers it’s different South American trading partners.
What do tariffs mean for Latin American exports in the next few decades? Do you see more potential or a slowdown for countries like Argentina?
In conversations that I had in Buenos Aires last week, not only with President Milei, but also with Economy Minister [Luis] Caputo, I was told, quite convincingly, that Argentina’s outlook as an exporter is bright because it’s no longer going to be primarily an agricultural exporter. It also has the prospect of becoming a major exporter of other commodities and especially of energy. That’s important, because it’s another reason why this time could be different for Argentina, that, economically, its role is changing. And in a world hungry for energy, given the insatiable appetite of AI for energy, Argentina is in a very promising situation with really large energy reserves that haven’t really been tapped. Argentina’s role in the global economy is changing structurally and at a time when its relations with the United States are friendly, and it still has the option to trade with the rest of the world. I don’t think Cold War II is like Cold War I, to put it really simply. In Cold War I between the US and the Soviet Union, many parts of Latin America became an ideological battleground, and a strategic one in some cases. In Cold War II between the US and China, it’s different because the two economies are far more integrated into the global economy than was true in the case of the Soviet Union. And so what Latin America finds is that it can, if it plays its cards right. Have the best of both worlds, enjoy good relations with the US, but also continue to trade with China. That puts it in a different situation from those countries that are geographically closer to China, which are under much more pressure to reduce their role as as transshipment centers for Chinese goods that ultimately end up in the United States. Not only that Argentina is in a better position than it has been in for many years, I think South America generally is in a better position, provided that the leaders of South American countries pursue the right policies. And here Argentina is the poster child because it’s pursuing just the right mix of policies. Other countries, Bolivia comes to mind, are going in a very different direction. Everybody can see how disastrous the left wing populist path can be, because Venezuela is now a failed state, and it’s been a catastrophe for its population. We can see a spectrum, and at one end you have Venezuela showing you exactly where the path to hell leads. At the other end you have Argentina, which is adopting radical market solutions, deregulating sectors of the economy, it’s balanced its budget, it’s stabilizing its currency, getting rid of exchange controls. Nothing is overnight in economics. If President Milei can continue to enjoy the kind of popular support that he has, succeed in the midterm elections, and get re-elected in two years, then I think there’s a good chance that Argentina will be one of the economic success stories, if not one of the economic miracles of the 2020s.
Given Argentina’s pendulum swings since 1990—from the Washington Consensus to Kirchnerite interventionism, and now back to free-market policies—and Milei’s embrace of polarization as a political strategy, is there a risk that any new consensus could prove short-lived?
I’m cautiously optimistic about this, because if you look at all the shock therapies that there have been in modern economic history, and there have been many attempts to deal with high inflation or to deal with low growth by a radical regime change, it’s very rare that a government doing that kind of reform stays popular even for a year. If you think about that first year [2024], when the really painful stuff was done, the economy contracting, initially worse poverty numbers, Milei’s popularity held up because Argentine voters, especially young voters, understood that it was game over for Peronism and Kirchnerism, that the country had been on the brink of hyperinflation at the end of 2023, and that there was no alternative. Milei’s popularity has held up remarkably well. I wrote a piece for the Free Press before coming to Argentina saying, it’s not the economics that’s amazing, that’s what you’d expect. It’s working in the way that you’d expect from libertarian economic theory. It’s the politics that’s amazing. The government stayed popular even when the pain was at its most intense, and there doesn’t seem to be much political fatigue of the sort that you conventionally would see in a period of really quite radical adjustment. That’s partly because the opposition is divided, but it’s also because the electorate has understood that there isn’t any longer a possibility to just keep borrowing and printing money, and hoping that somehow you will be able to violate the laws of economics. There’s a new enthusiasm in Argentina, a new sense of optimism, a new belief that the country can change and is changing. And that it’s now possible to imagine starting businesses in Argentina that can be competitive throughout the region and indeed conceivably beyond the region. There is a real change here, and it’s reasonable to be quite sanguine about the government’s prospects in the upcoming elections.
Many, including parts of Mauricio Macri’s party, have criticized Milei’s aggressive style and insults toward opponents. Do you find this troubling in terms of its potential divisiveness?
Look, I respect former President Macri, and I understand that it must be a little painful for him to realize that his gradual approach didn’t work and didn’t get the country out of the hole, allowing the the Kirchnerites to get back in. So of course, he’s going to have mixed feelings about Milei’s success. Stylistically, entirely different individuals. Macri is a member of the Argentine elite, he’s a highly cultivated individual. Milei in his public persona, likes to be a rabble rouser and his social media profile is, is a remarkable one for a world leader. It’s a kind of a rock star personality. It’s not only his distinctive hairstyle, but also the way that he speaks, the radical language combined with the sometimes quite rough language. All of that, I think, is part of what makes him popular. Not just within the elite, but right through Argentine society. When you meet him in private, he’s not like that. The interesting thing about Javier Milei is that he’s an intellectual. He’s that rare case of somebody who’s essentially in love with ideas, with books, with theories, who, because of the circumstances of the Argentine economic crisis, was able to catapult himself all the way into the presidency. So there are really two Mileis that the public social media Twitter [X] Milei, who some people find hard to take in, and then this highly sophisticated intellectual who is transforming Argentina’s political economy, one political fight at a time. It’s tough to do this kind of reform. You’re up against some very tenacious opponents who have years and years of political experience and cynicism. He’s bound to have some rough edges, and he’s right, I think, to to convey to voters that this is a fight. There’s nobody else who’s done this around the world. He’s said to ordinary Argentines, you are the losers from a system that benefits insiders, corrupt political classes, plus businesses that benefit from the system, trade unions. And other vested interests. Milei has figured out that there is a way of mobilizing ordinary people in support of market reforms, and to that I think one has to just say three cheers.
Unemployment ended up as a weak point of the country’s last great free market push under Carlos Menem in the 90s. With AI reducing hiring needs and Argentina’s private sector not creating jobs for 15 years, could this be a pain point for Milei?
I don’t think so. If you compare the situation today with the situation at the time of Menem’s government, worldwide unemployment rates are surprisingly low. And that’s partly for demographic reasons and partly because of the way that economies are changing. Service sectors have grown more important relative to manufacturing sectors. And some sectors, in fact, employ quite large numbers of people. It’ll be a while before AI changes that. Most people, I think, imagine that the impact of AI on the labor market will be much swifter than is likely. Actually, these changes will take many years, and it will only be in the first phase that certain sectors see major disruption. So you can see in the big tech companies in the US that they’re hiring fewer people to code because AI can do much of it. But it’ll take a long time for that to start to be true of the wider economy. I don’t think this will be the real problem for Milei. I think in some ways he’s doing his reforms at a time that’s more benign than was true in the period when Menem was trying to do similar things.
During the 2023 campaign, Milei promised to eventually shut down the central bank and dollarize the economy. Would that be a good move for Argentina?
I don’t think it’s a possible move at this point. You need to have significant dollar reserves to do that. President Milei knows that, and he knows that it’s quite a long road ahead, to get there. You mentioned, correctly, that international investors are still waiting to see. The country risk premium is still high and the IMF is still playing a key role for Argentina. So this is not the time to start talking about that kind of currency reform. I think it’ll be quite a few years before that can even be contemplated.
The government has recently shifted from setting benchmark rates to managing liquidity via monetary aggregates. What’s your take on this approach from the central bank (BCRA)?
Well, I think history is pretty clear that when you’re on the brink of hyperinflation and you don’t have a very developed credit market, which was true of Argentina when President Milei was elected, conventional interest rate policies won’t be very effective. And indeed, I think it’s been argued quite convincingly by the government that it would have been a mistake to have gone down that road. Monetary aggregates are not perfect, but as a way of resetting expectations and persuading people that the inflationary era is over, they have worked very well. One should regard them as a necessary transitional path that gets, the public accustomed to stable fiscal and monetary policy. The idea behind Tom Sargent’s famous paper from 1982 was that you basically have to reset everybody’s expectations when inflation is close to hyperinflation. And that means you have to change the rules very explicitly. What struck me during my interview with Milei is that part of what he’s trying to communicate to people is: “You’ve never seen anything like this. You’ve never seen a balanced budget. You’ve never seen the supply of money stabilized, you’ve never seen a shift towards a truly open economy.” He’s the anchor, and when we talk about fiscal anchors or monetary aggregates, actually, it’s President Milei’s commitment and his conviction that are the real anchor. As Minister Caputo said to me, people can come and ask for increased spending here or there, but they know they can’t appeal to the president, because he will definitely say no, whereas you might actually get something out of me. The critical thing here is about signaling that we’re not going back to the old ways.
Many investors remain in that wait-and-see stance. Have you bought Argentine assets on your view of the Argentine miracle?
Yes. I’m long Argentina. And I urge other investors to stop sitting on the sidelines, because you’ve already missed out. The day to buy was the day Milei won, and anybody who took that trade and and bought Argentine assets on election day has done amazingly well. There aren’t many trades, maybe Bitcoin has been better, but there aren’t many trades as good as long Argentina has been. And my conviction in Argentina is such that I’m not just invested in liquid assets, but more importantly, in an iliquid venture, and fintech assets, because I think Argentina has a great future ahead of it. Argentine tech is going to be a big part of the region’s future economic history, so I have certainly put my money, as well as my reputation where my mouth is, and that’s the most important vote that you can ever give a government as a foreigner.
You sit on Ualá’s board. How far away are we from an IPO?
It would not be appropriate for a member of the board, even a founder, to answer that question. All I can say is that Ualá is in extraordinarily good shape, not only growing and constantly growing in Argentina, but also growing in Mexico as well as in Colombia. We’re very excited about what Ualá. It symbolizes the promise of the new Argentina that you can have a unicorn, a really successful fintech that bears comparison with any of the successful fintechs in Europe or elsewhere and have it based in Buenos Aires. That, that I think is a sign that things really have changed in Argentina. It didn’t seem like an obvious thing when Ualá started out, but it’s turned out to be a brilliant success. All credit to our CEO Pierpaolo Barbieri. He’s a star. but you know, when I went to the offices of Ualá in Buenos Aires last week, I was just stunned by all the energy, the young people working there are so filled with enthusiasm. It’s just really uplifting to see.
