Subsidies, Stories And Self-Deception

It is interesting how people make arguments and don’t even understand how contradictory they are, especially when those who support collectivism spin a story of tragedy on an individual level and then claim a collectivist economy and the inevitable authoritarian system that erases the individual is the answer.

I’m part of an email discussion group where a person, one on the Democrat left, decided to get “woman on the street” information about how awful Javier Milei truly is to counteract the solid economic news coming out of Argentina. The report, of course, was not good:

“I can only say that Milei’s administration is probably the worst I have experienced. And, after 50 years in this country, thinking that I would never live worse than with Peronist or Kirchnerist governments, Milei proved me wrong. It is always possible to be worse.”

She went on to complain about the rising prices under Milei.

The individual who solicited the information responded:

“I wish more people would understand that capitalism and socialism (the democratic kind) balance each other out, and a stable economy and society needs a mix of both.

I wrote a longer piece over on my Substack addressing the substance behind the argument, but I want to address the form used because it is used a lot.

First, let’s recognize this “argument” is a very old tension dressed up in fresh anecdotes: the clash between lived experience and aggregate reality, and the instinct to universalize one into a moral argument about the other.

People tend to evaluate systems in terms of whether they can pay their bills this month, not in terms of macroeconomic charts. That doesn’t make them wrong; it just makes them human, and it does mean that any serious discussion must hold two ideas at once: individual hardship is real, but individual hardship alone is not a sufficient basis for judging an entire economic system.

Under prior governments, Argentina ran a long experiment in heavy subsidies, price controls, and currency manipulation. Energy, especially natural gas, was artificially cheap for years. That wasn’t because it was cheap to produce, but because the state absorbed the cost. When Javier Milei came in, one of his first moves was to unwind those subsidies. The predictable result was that bills suddenly began to reflect something closer to real market prices and to someone living through that shift, it feels like things have gotten dramatically worse, and in a narrow, immediate sense, they have.

But that doesn’t answer whether the previous system was sustainable, or even honest. Subsidies don’t eliminate costs, they relocate them. Argentina financed them through deficits, money printing, and debt, which is why the country has spent years cycling through inflation crises. Milei’s program is essentially a shock correction, pain now in exchange for the possibility of stability later. Whether he succeeds is still an open question, but the logic behind the policy isn’t mysterious or uniquely cruel and it has the advantage of appearing to work based on the data coming out of Argentina.

That leads to the second layer of the cake: the use of anecdote as argument. The lady in Argentina offers a sincere personal account, and it shouldn’t be dismissed out of hand. Economic transitions always produce winners and losers, and often the losers speak first and loudest because they feel it most acutely, but a single “woman on the street” perspective is not analysis; it’s a single data point. If you collected ten, or a hundred, you would likely get a distribution of experience. Likely there will be some worse, some unchanged, some better, especially if inflation moderates and wages begin to stabilize.

The danger is when one story is elevated into proof of a system’s moral failure.

The reply about needing a “balance” between capitalism and socialism is also worth unpacking. It sounds reasonable largely because it is so vague. In practice, nearly every modern economy is already a mix: markets allocate most resources, while governments provide public goods, safety nets, and regulations. The real question is not whether there is a mix, but where the line is drawn. Argentina’s problem historically hasn’t been the existence of a social safety net; it’s been the extent to which the state distorted prices, suppressed market signals, and financed the gap through inflationary policies to maintain power but that ultimately hurt the very people those policies were meant to protect.

The fact is that markets tend to produce volatility and inequality, but also growth, innovation, and adaptability where state intervention can reduce volatility and cushion shocks, but at the cost of efficiency, incentives, and, if overextended, long-term stability.

Argentina’s recent history is a case study in what happens when the second overwhelms the first. Milei’s reforms are a necessary and drastic move to rebalance that equation.

If you notice parallels between this discussion and Trump’s Iran position, the common denominator is the idea of short-term pain versus long-term viability. It’s entirely fair to acknowledge that people are hurting right now but the stronger point to consider is whether the prior system or situation was quietly producing a larger, delayed harm, one that eventually forces painful correction.