no place is ever the "same" as any other place- but, yes, there were a lot of similarities.
A century old history of unionized local manufacturing was just shut down by the changes in laws, import restrictions, and government support, in both countries.
Nationalized rail networks were abandoned, privatized, and, subsequently, shut down.
existing manufacturing and mining sold to foreign "investors", who shut down the mills, mines, and factories.
Social services, be they educational, health related, retirement oriented, job retraining, or safety, were cut to the bone.
Local producers were driven out of business by cheap imports.
government spending and taxes were slashed.
the pound crashed against foreign currencies
interest rates on loans soared.
many many similar things, and of course, some very big differences as well.
As much as there were some similarities, I don't think it extended across the board.
Inflation was around 18-25% annually. This was also during and after Iran crisis.
In the 80s in Canada inflation was up to ~13%. Mortgage rates were over 15%.
Callaghan (prime minister before thatcher) already started to open up capital controls in 77, two years prior to the Thatcher government.
I also don't think you had ~50% of you population working in informal labour not paying taxes, nor small businesses not paying taxes. Most of the labour force was in unions. It wasn't until her government where they deregulated and were trying to get more "flexible" employment terms.
Britain also had credit available to it in debt markets.
The 80s is also when much of domestic manufacturing in the west started transferring to the far east (from North America) and probably also from Europe though they utilized eastern European countries also and still do for cheaper manufacturing. In otherwards, England went through a similar transition from manufacturing to a more service based economy like the North American economies.
Historically, you can look at Canada (Federal and Provincial) in the 90s, Ireland Post-2008 crisis, and Baltic states in the 2010s that instituted severe cost cutting. These examples are considered successes and were periods were followed by large growth. Any government talking about returning to a balanced budget or surplus these days will require severe cuts/ austerity measures.
Switch forward to Argentina, international debt markets were closed to the country effectively. This is a total game changer.
All countries these days run deficits and fund it with debt. When this is not available your play book needs to change. And that is what is going on now and is working.
Argentina did not have the option of continuing down the path it was on. It already was in hyperinflation territory.
Argentina needed to cut spending. Previous Kirchener governments 1) swapped lower interest IMF loans (5%) to selling bonds to Venezuela at 50-150% higher interest rates (7-15%) no clear indication why?, and 2) they robbed the pension system and replaced it with debt as well as in other departmental agencies. So sure external debt didn't go up, but they sold the farm to do so.
Also worth noting, that any funds earned from partial stakes of government companies/agencies sold in Argentina are not included in the surplus calculation used by the IMF loan to Argentina. So they need to make sure they are on a sustainable path.
My opinion, everyone against natural resources (mining and oil and gas) and agriculture (cattle and crops) expansion think Argentina has different options than every other country in the world but won't explain what they are. These industries provide higher wage direct and indirect jobs, support local vendors and local communities, a future where they can provide services in engineering and support in these industries to other countries, exports that support the peso.
The loss of 18k jobs over 2+ years in the textile and its upstream industries will be balanced out by the these industries easily. There were major changes with technology throughout the 1900s. People retrain and new jobs and industries emerge. How much of the economy and jobs revolves around mobile technology and the internet, none of which realistically existed at scale in 1990? Online shopping changed stores, malls etc 20-30 years ago. Argentina is going through this now. Stores moving to storefront on Mercado Libre etc.
Additionally, the focus needs to be on formalizing the economy. No large economy has 50% of its labour force working off the books, and small businesses either entirely or partially off the books. When people want to know why the government is not spending (more) money on certain things, ask them with what money. People want to not pay tax but demand the government provide services etc.
If Argentina continues on the path that they are on, then I don't think it will be an issue for them to reenter debt markets to finance government spending in 2 years, so long as it is limited and disciplined. Right now you can already see the risk between 2027 and post election bonds. Although Caputo thinks the "kuka" risk is 0, the market is not indicating that. See the graphic below for interest rates on bonds by maturity. If Milei wins, and the fiscal prudence remains in place, and the growth comes then things should return similar to a more "normal" country. Yes, I know I said the growth comes, this is purposeful. There is investment lined up, in execution and progress. You simply don't just spend that money that fast. Things take time to plan, engineer, build. Even if Argentina provides approvals, some of these projects will be going to international organizations and banks for funding rather than funding themselves from existing operations, and that requires additional things for approvals which may be more stringent than Argentina requirements. There is still more to change behaviorally within the country, and that includes formalizing the economy. Everything takes time. If Milei loses, then you can already see the risk assumed by markets of what that entails, and if it is simply a return to previous policies then I think things will get far worse. Personally, I agree with individuals opinions that I have read that suggest the left is secretly pretty happy with the cuts that Milei has made because they know it was necessary and helps the country and they didn't need to spend political capital on it.
Frank, I have also included an AI Detector result for you at the bottom, I'm still human.
