Guillermo Oliveto: Milei’s austerity has created a ‘dual society’

Argentines are asking themselves “for what purpose and for how long” they should tolerate President Javier Milei’s austerity plan, says a leading economist and expert on social and consumer trends.

Guillermo Oliveto, speaking on the eve of Sunday’s midterm legislative elections, argued that the fiscal adjustment Milei launched nearly two years ago has deepened social fragmentation in Argentina, resulting in a “dual society” in which around 30 percent live comfortably, while 70 percent struggle.

Oliveto, the author of Clase media argentina: entre el mito, la realidad y la esperanza (“Argentina’s Middle Class: Between Myth, Reality and Hope”) says the government will need to apply a series of “resets” if it wishes to reverse social sentiment – which was initially benevolent, but is now increasingly impatient.

Below, his main reflections:

Two years with Milei

“Milei is an absolutely unprecedented case: Argentines hate austerity. They like living well. The fact that they voted for a man who came along brandishing a chainsaw shows that they had reached a suffocating point with the previous model.”

“They said: ‘I voted for this because I understand it will allow me to recover from a process that had become stifling,’ even if it means walking through the desert for a while. That gave Milei a sort of bonus track – an extra dose of tolerance.”

“That’s why he was able to implement an extremely harsh adjustment, with a fall in everyday consumption only comparable to that of 2002, the worst crisis in Argentina’s history.”

Social impact

“The fall in inflation and, until quite recently, the stability of the dollar are achievements valued by a large part of society.”

“There was even a kind of consumption ‘boom’ among the upper and upper-middle classes – about 30 percent of the population – with rising sales of cars, property, and trips abroad.”

“But our studies also show that the remaining 70 percent – made up of the lower-middle and working classes – have run out of money by the 15th of the month, not even the 20th. ‘I pay my debts and fixed expenses, and then I’m broke.’”

“The society that forms under this fragmented structure is a dual one. And what does a dual society produce? Dual consumption. This has deepened a process that has been under way for years.”

Public mood

“Now we’re starting to hear many people say, ‘What was moving slowly now feels endless.’ And they’re saying: ‘All right, I put up with the chainsaw, I had unprecedented patience – six months, a year, all through 2024. But in 2025 I’d like to see some kind of oasis.’”

“But they don’t see one. What used to be a stoic mood, one of prudence and restraint, has now turned sacrificial.”

Patience

“When someone in your immediate circle loses their job, patience runs out. In a situation of falling purchasing power, if you still have a source of income, you can more or less cope. But if you lose it, you’re out of the game.”

“Over 200,000 jobs have been lost. Society tolerated a very harsh adjustment and Milei enjoyed 60 percent approval. Today that figure is no longer 60 percent – it’s 38 percent.”

Electoral impact

“The government underestimated the effect that the real economy has on daily life, on social mood, and therefore on the electoral mood. Bringing down inflation was a necessary condition, but it isn’t sufficient.”

“Today, the main concerns revolve around employment, low wages, and money that doesn’t stretch far enough. People are saying, ‘I’m not living any better; I can’t afford a treat.’”

“So they ask: ‘What’s the point of the adjustment? How long will it last? Give me a night at the cinema, a McDonald’s with the kids, a week’s holiday – something that lets me keep supporting you.’”

“Underestimating the complexities of Argentina’s social and productive fabric will come back to haunt you – and that’s exactly what’s just happened in Buenos Aires Province [where Milei’s party lost local elections by 14 points on September 7].”

“That was too clear a signal to ignore. There’s a need here for several resets – conceptual and practical ones. Beyond rhetoric, at the heart of it all lies the everyday economy.”