The amazing reforms in Argentina are the big story in Latin America. Javier Milei’s libertarian agenda is rescuing an economy that was mired in long-run stagnation because of Peronism, so it’s understandable why it’s getting so much attention.

But let’s not overlook the economic lessons we can learn from other nations in the region.

Today, let’s compare Chile (famous for adopting free markets back in the 1980s) and Venezuela (infamous for shifting to socialism over the past several decades). And we’ll look at three charts to see how this natural experiment turned out.

We’ll start with some data from Economic Freedom of the World. As you can see, it is definitely the case that economic liberty dramatically increased in Chile and dramatically decreased in Venezuela.

Did these shifts in economic policy make a difference?

The answer is a resounding yes. Here’s a map from Michael Arouet, which I’ve already shared, showing that Venezuela was the richest nation in the region in 1980 while Chile lagged far behind.

But everything has reversed since then. Free markets have led to more prosperity for Chile while statism has produced stagnation in Venezuela (and Guyana discovered oil, which tends to have a very positive non-policy impact on a country’s economic numbers).

The map confirms some numbers I shared in 2011, 2016, 2021, and 2023.

But let’s take a different look at the data, courtesy of Oxford University’s Our World in Data.

There are several counties included in this chart, but notice how Chile is the best performer over the past few decades while Venezuela has lagged far behind.

This should be slam-dunk evidence for capitalism over socialism. Even the World Bank has noticed.

However, I doubt the pro-Venezuelan ideologues like Joseph Stigliz will be offering any apologies (just like I’m not holding my breath waiting for mea culpas from Thomas Piketty, Gabriel Zucman, and the other supposed economists who warned that Javier Milei’s election would lead to disaster).

P.S. Chile has a presidential election next month, followed by a run-off election in December. In 2021, voters made the mistake of electing a hard-core leftist. It will be interesting to see whether “Milei-ism” crosses the Andes Mountains and Chile moves back in a sensible direction.

P.P.S. Venezuela does not have democratic elections, so we have to wait until people overthrow that tyrannical government.