Middle-Class Revolt in Argentina

Inflation is the thief of middle-class prosperity, and in Argentina prices are rising by more than 115%. So it shouldn’t be a great surprise that Argentines on Sunday gave the most votes to presidential candidate Javier Milei, an outsider promising to close the central bank and replace the peso with the dollar.

Argentina, once prosperous but degraded by Peronist socialism, is bracing for another currency crisis and owes $44 billion to the International Monetary Fund. The economy is stalled. On Monday the peso fell more than 13% in the black market, and the central bank moved its official exchange rate to 350 to the dollar, a 22% devaluation. The effective rate of 28-day government paper is now 209%, according to Goldman Sachs. Who wouldn’t yearn for dollar assets in that economy?

Mr. Milei, who holds a seat in Congress, wasn’t challenged in his primary bid for the nomination of the La Libertad Avanza (Liberty Advances) party. But since all candidates are on the multiparty primary ballot every four years and voting is technically mandatory, the exercise is widely considered to be a dry run of the first round of the presidential election.

Pollsters had Mr. Milei getting around 20%, but they underestimated popular resentment. He won more than 30% of the vote and finished first in 16 of the country’s 24 provinces.

Two candidates of the ruling Peronist party together received less than 27%, which shows how unpopular the government is. Two candidates vying for the nomination of the center-right opposition coalition Juntos por el Cambio (Together for Change) received 28%. Patricia Bullrich won the Juntos race but had been expected to do much better than her 17%. She’s tough on crime, an important issue. But her stint in the failed government of center-right Mauricio Macri (2015-2019) may have limited her upside.

The international press is portraying Mr. Milei as a crazy populist, and there’s no doubt he’s disdainful of Argentina’s political establishment—left and right. He draws large crowds of young Argentines and rails against the “entire political caste, stupid and useless.”

Mr. Milei is an economist who favors limited government and blames Argentina’s economic problems on suffocating taxation, hyper-regulation, special-interest subsidies and protectionism. He wants to open markets, cut public spending, end capital controls and privatize state-owned enterprises. He’s also a social conservative, but his appeal stems largely from his rage against the establishment.

With international reserves in net-negative territory, the next president will inherit an economic mess. If the prospect of a Milei presidency willing to break with the status quo excites a third of voters, it also raises questions about Mr. Milei’s ability to govern if he wins. His party has only two seats in Congress, which means he’d need to work with some of those he is lambasting now.

Much can happen between now and the first election round on Oct. 22. But Mr. Milei’s showing has sent a message to Buenos Aires—and the world—that the Argentine middle class may no longer accept a status quo that robs them of the fruits of their labor.