When Argentine President Javier Milei bounded onto a stage in Santiago back in 2019 to greet Rolf Lüders — one of the last surviving “Chicago Boys” — he was paying homage to a man whose radical economic ideas once reshaped Latin America. But Lüders, now 90, had a warning for the fiery libertarian economist: real structural reform is not quick, nor painless.
“Structural economic changes are complex,” Lüders told Bloomberg in a recent interview at his apartment in the Chilean capital. “People don’t understand how much it cost to bring change here. It was a process that took years, not without big costs initially.”
Milei’s embrace of shock therapy in Argentina echoes the economic transformation Chile underwent five decades ago under General Augusto Pinochet. Guided by the free-market principles of Milton Friedman and other University of Chicago economists, Chile slashed public spending, abolished price controls, and opened its economy to global trade — steps that triggered painful recessions in 1975 and again in 1982.
It was only after these crises that Chile’s “economic miracle” took hold, ushering in decades of steady growth, plunging poverty rates, and the emergence of a vibrant middle class. But Lüders — who once invited Friedman to Chile and helped implement those reforms — stresses that the Chilean model was ultimately a social market economy, one that combined free markets with state oversight and regulation.
“There is an enormous difference,” Lüders said. “Libertarians want a free market with no state. In reality, that’s not feasible.”
A Tale of Two Reforms
While Milei has cut government spending and pulled Argentina’s runaway inflation from nearly 300% to roughly one-tenth of that, his government has also maintained policies at odds with pure libertarian theory. The peso’s exchange rate remains tightly controlled against the U.S. dollar, tariffs stay high, and the state continues to intervene in key markets — including a controversial stabilization effort backed by the Trump administration following the October 26 elections.
The comparison to Chile’s experience underlines how ideology alone rarely delivers stability. Chile’s reforms were shaped under the dictatorship of Pinochet, whose repressive regime made political dissent virtually impossible. Argentina’s transformation, by contrast, must navigate the turbulence of democracy, social unrest, and investor skepticism.
Lüders — who once served as finance minister during Chile’s turbulent 1980s recession — recalls how the country had to reassert state oversight after an early credit-fueled boom collapsed. “The result was the more cautious, state-managed version of neoliberalism that brought four decades of growth,” he told Bloomberg. “Friedman called it the miracle of Chile.”
The Long Game
Even today, the essence of that model endures. Despite recent slowdowns and rising inequality, Chile’s major political factions — from Communist candidate Jeannette Jara to conservative José Antonio Kast — all largely agree on maintaining the social market framework.
“At heart, they are very similar,” Lüders said of the economic agendas ahead of Chile’s November 16 presidential election. “No one wants to expropriate or fix the price for the guy selling vegetables on the corner anymore. The battle in favor of a social market economy is won.”
Milei, meanwhile, continues to wield his trademark “chainsaw” — both as a symbol of austerity and a rallying cry for dismantling Argentina’s bureaucracy. But as Lüders’s reflections make clear, sustaining growth may ultimately depend less on cutting and more on calibrating.
“I’m optimistic about Chile’s economic future,” Lüders said. “The lesson for Argentina is simple: the miracle takes time.”
