Socialism Didn't Work In Argentina. It Won't Work For America Either.
To understand this week's election, look to economic and political lessons from Argentina.
To understand why Democrats overperformed in this week's elections, look to Argentina.
Last month, Argentinian president Javier Milei won an unexpectedly large electoral affirmation, as his party significantly outperformed expectations by more than doubling its congressional representation in what was widely seen as a referendum on his agenda.
Over the past two years, Milei, the world's most libertarian national leader, has slashed spending, cut red tape, and made his top priority restoring economic order and prosperity to a country that has long been a socialist basket case. Critics warned that his policies would be destructive, destabilizing, and unpopular. But not only did he deliver the country's first balanced budget in over a decade, he oversaw a radical decline in inflation—from 200 percent when he entered office down to 32 percent last month.
Despite warnings that the country would reject Milei's brand of austerity, the country responded with a strong vindication of his policies. In a post-election analysis, The New York Times noted that Milei's message was that only he offered a "path for a country that has undergone years of runaway inflation under high-spending populist governments." The report pointed to Milei's economic record to explain his party's win: "Many Argentines had grown tired of prices swinging wildly from day to day and of a ruling class they considered to be corrupt and irresponsible."
The same report said Milei's outsized victory was "unexpected." But perhaps it shouldn't have been, because economic stability and low inflation are what voters the world over clearly want.
When voters swept President Donald Trump into office for the second time last fall, large majorities of his voters gave the economy poor marks and said their own family finances had worsened over the years. Under President Joe Biden, the American economy had been wracked by the biggest surge in inflation in forty years. American voters punished the party that was in power when that happened.
This was true all over the world. After the pandemic, inflation skyrocketed globally, and in election after election, voters rejected ruling parties.
Inflation and economic instability have long been political losers: Look at Ronald Reagan's victory over Jimmy Carter in 1980, and his ensuing near-sweep of states in 1984 after taming a decade of out of control price hikes. The post-pandemic years have further reinforced this lesson.
This week's referendums reinforced that idea, as voters rejected Trump's economy by voting for Democrats who promised to bring down the cost of living. As Derek Thompson wrote today, Democrats in the three biggest races embraced a message of affordability and pinned the blame for persistent economic anxiety on Trump.
In Virginia, Abigail Spanberger won the governorship running ads that focused on high prices. In New Jersey, Mikie Sherrill made opposition to Trump a major campaign focus and promoted an agenda she said would address the cost of living. And in New York City, Zohran Mamdani relentlessly repeated the word "affordability," promising to lower the cost of everything from rent to child care to halal cart meals while hammering opponent Andrew Cuomo for not even saying the word.
I am profoundly skeptical that Mamdani's spendy socialist policy agenda will actually bring about the price stability and widespread prosperity he promises. His economic policies have repeatedly failed where they've been tried. They have more than a little in common with the Peronist malaise that Milei is helping Argentina escape. Don't cry for the petite socialists of Brooklyn; they brought this on themselves.
But both New Jersey and Virginia are states which, within recent memory, have shown themselves willing to elect Republican governors. And the message from those states is clear: Trump isn't delivering on the economy. NBC's exit polling found that in Virginia, the economy was the number one issue, and voters who prioritized the economy preferred Spanberger by a 20 point margin. Notably, in the 2021 Virginia gubernatorial election, while Biden was president, the economy was also the number one issue—and economy-focused voters preferred the Republican, Glenn Youngkin.
When the economy isn't working—when it doesn't feel like it's working—voters punish the party in power. And under Trump, despite some strong headline numbers from stock market performance, prices have increased, hiring has ground to a near halt, and while it's not official, some data suggests that much of the country—more than 80 percent of counties—may already be in a recession. Trump's nationalist economic agenda of freewheeling tariffs, ad hoc quasi-nationalizations, and workplace immigration crackdowns is raising prices, creating massive uncertainty for domestic producers, and resulting in labor shortages and complications for employers. That's affecting firms, who have pulled back on hiring, and consumers, who are faced with rising prices for consumer goods and a worryingly frozen job market.
Despite his campaign promises, Trump's mercantilist economic agenda simply isn't coming through.
As Reason's Eric Boehm recently wrote, it can fairly be called a kind of Republican socialism. Socialism didn't work in Argentina. It won't work in New York. And it won't work for America, when implemented by extra-legal executive power, either. Milei didn't just make campaign promises and appear on stage with a chainsaw. He delivered tangible results on economic issues voters care about. He won an electoral mandate by turning away from failed socialist policies, and the failed economies they produce. Trump, and the rest of America's political class in both parties, should do the same.
