A major pinnacle of libertarian economic thought concerns the market’s role in providing public goods. Argentina is probably one of the world’s hottest laboratories for putting the theory to the test at the moment. Your favorite road trip across the nation’s highways might have to wait for a few years as a result, though.

Let’s look at infrastructure spending. The government has slashed not only discretionary (say, new highway projects) but also a lot of maintenance spending. Milei has promised to cut public works to zero. He’s followed through: It’s down almost 90% in real terms in mid-2026 compared to the same period 2023. No surprise then that the national roads have visibly deteriorated.

The theory is clear, though: Milei and his disciples believe that if a road were socially desirable, the market (i.e., private enterprises) would provide them and finance the upfront investment by a toll. The state is not a good allocator of capital. There is too much graft, resource misallocation, etc., with Argentina historically the Exhibit A. You might as well throw the money away.

The state should instead focus on granting concessions, e.g., by having a good auction system in place. The government can also ensure better operating conditions. The pet project in Argentina is RIGI (Regimen de Incentivo para Grandes Inversiones), offering 30-year tax, customs and FX stability guarantees.

(In)famously, it also allows domestic investors to bypass local courts and avail to international arbitration in case of legal disputes. It is also more targeted towards extractive industries than plain-vanilla highway projects.

There is little international precedent for following through with this approach of letting the private sector take care of infrastructure spending in totality. Most countries have picked from this pro-market toolkit and selectively added to their ongoing public investments.

Mainstream economics, as rejected by the so-called “anarcho-capitalists”, believes public goods to be non-rival and non-excludable. There’s also the free-rider problem, requiring some modicum of national taxation to provide a basic set of services in addition to defense and policing for the population.

In Argentina, you don’t even have to draw on that but look at the geographical realities. The vast distances involved render most of the highway system ineligible for concession style financing given the little traffic going on them. Assigning a market price to a toll here would hike tolls absurdly, erase traffic, and cut off most of the country from vital supply lines.

The share of private investment in infrastructure varies around the world, but in Latin America it is about one third, with Chile and Brazil historically being the major adopters. Chile, an example Milei often praises, has a strong Ministry of Public Works, complemented by investments coming through its private concession system. The gross capital formation share of GDP, in which infrastructure investments sit, was a respectable 23.5% in 2024.

Argentina’s gross capital formation meanwhile, is very low at 16% of GDP, and likely to fall further given the government’s recent measures. Note that this is a gross figure, and possibly completely cancelled out by the depreciation of the existing capital stock. The growing potholes are one of the better illustrations of the corroding and real-life effect of depreciation in national accounting.

The idea in Argentina seems to be that the government must deliver balanced books whatever it takes in order to prove the private sector it is serious this time (i.e., orchestrate the regime change in line with Thomas Sargent), so that the latter steps in as a provider of these public goods and starts investing in roads, bridges, and other infrastructure.

It’s a big gamble, and rather unlikely to provide a boost to investments in the short to medium term, while the existing infrastructure crumbles. Investors are taking note. The macroeconomic pain the current policies are causing should be put to at least some good use by complementing them with long-term investments, or at least some reactivation of public works as the government balances its books and runs a primary surplus. However, despite budgeting for infrastructure investments in the 2026 budget, actual execution on the ground is virtually zero.

To conclude, this IMF study is noteworthy: It estimates that even in the least efficient public investment environments (bottom quartile), 1% of GDP in public investment still results in 0.3% higher national output, vs. 0.6% in the top quartile. Yes, investments can be wasteful. But throwing money away literally is always more wasteful.