Why should I care about Argentina?

The UK is not pre-Milei Argentina yet, but it is the road we are travelling down. Milei has shown how a country can truly transform itself even when it is trapped in deep economic and social despair.

We are pleased to continue our new series: What is happening in Argentina! Each month, Fighting for a Free Future Associate, Luke Lucas, will report for Voices for a Free Future on what has been happening under the world’s only libertarian presidency.

A lot of people who have read my previous articles on Argentina might be wondering, “but Luke! Why do you keep harping on about a country that is seven thousand miles away?” Well, it’s very simple. There are three main reasons why you should care.

• First, we are currently going through an economic U-turn not remembered nor seen by most living people.

• Second, we have a state with an unquenchable thirst for taxation that does not care that tax as a percentage of GDP is now predicted to be the highest on record since they began.

• Third, this creates a nation reliant on state intervention, which is the hole Argentina is currently crawling out of.

So, you should care, because we could find ourselves swirling down the drain into decades of a nanny state that echoes pre-Milei Argentina.

We are looking at a recent budget from the Labour Party that shifts resources from households to the state in subtle ways. Dampening private decision-making and economic dynamism in exchange for government control and fiscal stagnation.

Freezing tax thresholds is a stealth tax. The reality for the everyday household is that wage gains are quietly absorbed by the state: people will pay more tax without Parliament explicitly raising rates. The effect of the freeze on individuals is that it weakens incentives to work more, earn more, and upskill. The impact of the freeze on the economy is a strangulation on middle earners and a reduced productivity growth. The state will grow by default, absorbing autonomy from households.

The government has correctly recognised that cost-of-living subsidies distort prices and fuel inflation, but it has learned the wrong lessons from them. The state has failed to offset this restraint with tax cuts or deregulation that can ease the pain of rising costs. Demand will cool, but without a supply-side reform to boost growth, households will have to tighten their belts whilst the state carries on, leading to spending staying high.

The state is propping up consumption while neglecting productivity. Targeted benefits stimulate spending today for low-income families at the expense of growth tomorrow. But this redistribution weakens personal responsibility incentives, and these expanding welfare commitments will increase long-term tax burdens. All modern economies are grappling with this through state pension liabilities. As populations age, the cost of supporting those systems grows, and so does the tax burden required to fund them. This only adds fuel to the fire. The consequences of this are that public spending trumps private capital formation, and high spending multipliers do not indicate sustainable growth.

Capital is mobile. In a globalised economy, punitive taxation encourages avoidance or exit, making investment decisions tax-driven rather than opportunity-driven. Those who have already “made their millions” will look to go elsewhere. Those trying to build it face higher barriers at home. The result is lower investment, fewer scale-ups and less risk-taking. This is how a tax system stops funding growth and starts fueling decline. Capital does not disappear; it relocates. As private investment retreats, the state expands to fill the gap, further entrenching the very dependency it claims to be correcting. This is not redistribution, it is capital erosion.

A prime example of this is the future Electronic Vehicle tax. It demonstrates an ever-expanding state. What is advertised as a “fair replacement” is in practice a mechanism for permanent state expansion. Road pricing introduces surveillance, tracking drivers’ movements and limited autonomy. The individual trades predictability for constraint. This tax is particularly contentious as previous governments had advertised electronic vehicles as being front-loaded on cost, more expensive at source, but with less tax after. By adding a tax now, it looks like a revenue grab by the government. People were lured into purchasing more expensive cars, and now they must pay more. In addition, the proposed way of taxing through a per-mile charge is obvious state surveillance of personal movement. It implies location tracking with location data, creating a shift of roads from shared infrastructure to metered permission.

The stability Labour is aiming for is achieved by limiting freedom, not by enabling growth. Households are not being prudent by saving more and spending less; they are exhibiting defensive behaviour. We are hedging against an unpredictable and extractive tax system. The markets will not fail, but growth will be slower as incentives are blunted. Government credibility is maintained not through growth but by suppressing private activity and bolstering the reliance on the state.

This is precisely the path Argentina spent decades walking: not an overnight collapse but a slow erosion. A state that grew year after year, funded by taxation, borrowing and inflation. Each time the burden increases, justified by temporary, targeted or necessary policies. Each time incentives were weakened, capital became more mobile, productivity fell, and reliance on the state increased. Middle earners were targeted, ambition was punished, and private enterprise either shrank, left or hid. Argentina did not fail because the markets failed. It failed because the state ignored their growth. What we are seeing now under Milei is not extremism, but an attempt to reverse decades of systematic decline that began with exactly the kind of policies we are normalising in the UK today.

The UK is not pre-Milei Argentina yet, but it is the road we are travelling down. The UK is choosing stagnation at the cost of dynamism, while Argentina is gambling on radical reform to escape the very stagnation that we find ourselves in. Ultimately, we are incentivising participation whilst penalising ambition, progression and independence. We do not have to go down this road.