President Trump, Elon Musk and President Javier Milei of Argentina have shaped a particular bond. Mr. Milei was the primary foreign leader to satisfy with Mr. Trump days after he gained the U.S. presidential election. Mr. Trump has referred to as Mr. Milei his “favorite president.” And Mr. Musk has been in shut contact with Mr. Milei’s authorities reform crew for the reason that U.S. election in November, if not earlier than. So it was no shock to Argentina watchers that Mr. Trump started his time period by blocking authorities money flows and firing staff, precisely as Mr. Milei’s authorities began doing a yr in the past.
In current months, Mr. Milei has been bragging in regards to the “export” of his reform mannequin. Governments ought to little doubt borrow good practices from each other. Nevertheless it ought to give us pause that the USA, the world’s main financial system, is borrowing authorities reform strategies from Argentina, a nine-time serial defaulter and 100-year financial laggard. Mr. Trump, Mr. Musk and Mr. Milei might share the identical anti-state rhetoric and use the identical strategies, however they’re taking their international locations in very completely different instructions.
Mr. Milei’s administration is restructuring Argentina’s authorities for good motive: failure. Within the early 1900s, folks used the expression “as wealthy as an Argentine,” and hundreds of thousands of Italians and Spaniards immigrated there in hopes of a greater life. However quickly after, populist, nationalist politics took maintain. In 1946, the strongman Juan Domingo Perón took management and his occasion perfected the artwork of channeling authorities money flows to its supporters. This sport ended badly for Argentina, with the political machine demanding increasingly cash earlier than each election, which led to overspending and a repeat cycle of increase, bust, devaluation and default — all the way in which till 2020. Argentina’s G.D.P. per capita, as soon as among the many world’s highest, is now a small fraction of Italy’s and of Spain’s.
That is the backdrop towards which Mr. Milei ran for president, gleefully waving a sequence noticed at crowds of supporters. Not like his Peronist predecessors, Mr. Milei didn’t blame ageing generals and overseas lenders for the nation’s ills. As an alternative, he instructed the reality. He stated that Argentina’s authorities spent an excessive amount of, forcing it to print more cash, which in flip led to inflation and finally default. His resolution was to chop the funds, and that’s what he has accomplished since coming into workplace, backed by a crew of seasoned technocrats. He has earned many critics from his aggressive type of governance — typically utilizing decrees — however the identical was accomplished by the Peronists before him.
The centerpiece of Mr. Milei’s program has been to make use of his figurative chain noticed to chop the funds by 5 percent of G.D.P. He achieved this by altering the pension payments system, bringing cuts to public works and lowering utility and transport subsidies, amongst different measures. He introduced down the federal government head rely by about 35,000 jobs in 2024, slicing the work pressure by about 7 p.c.
His fiscally laudable reforms have damage. In February 2024, Mr. Milei more than doubled the worth of bus and prepare ticket costs, whereas a utility value reform in June was estimated to hit middle-class households with a 155 p.c rise in energy payments. Unemployment rose from 5.7 p.c to six.9 p.c between the third quarter of 2023 and the third quarter of 2024, and the proportion of the Argentine inhabitants dwelling in poverty jumped 11 percentage points, peaking at over 50 p.c within the first half of 2024.
However to date, Argentines are sticking with Mr. Milei. Latest polls present his approval score hovering near 50 percent. Many see no various — and the financial system is exhibiting glimmers of hope. When he took workplace in December 2023, client value inflation was operating at a 25.5 p.c month-to-month price. Now the financial system is normalizing and client costs rose by solely 2.2 percent in January 2025. Mr. Milei has not too long ago introduced a string of different triumphs, too, together with a fiscal surplus for 2024 and a seasonally adjusted G.D.P. enlargement within the third quarter. With sturdy assist from Mr. Trump, Argentina seems poised to win a brand new program from the Worldwide Financial Fund, whereas Mr. Milei made the case for a U.S.-Argentina free commerce settlement at CPAC final month, an occasion at which he additionally offered Mr. Musk with a glittering chain saw.
There are dividends to being Mr. Trump’s favourite president. The query is what Mr. Trump — and the American folks — get out of this particular relationship. Sadly, the reply appears to be Mr. Milei’s anti-state political theatrics and never his technocratic approach of governing.
Like Mr. Milei, Mr. Trump began his time period by ordering mass firings and the tip of telework within the federal work pressure. However as a substitute of extracting occasion hacks from the federal government, Mr. Trump is firing profession civil servants and high military officers and inserting MAGA party loyalists. He has fired inspector generals, whose job is to maintain a watch out for federal mismanagement, whereas letting free Mr. Musk’s 20-something programmers to suck data out of the nation’s most carefully guarded pc techniques.
Not like Mr. Milei — who introduced out the chain noticed to succeed in a selected funds goal to stabilize his financial system — Mr. Trump has been celebrating the usage of his energy to get rid of D.E.I. packages and to kill the “deep state.” Briefly, Mr. Trump’s crew to date is producing extra headlines than funds financial savings, and doing substantial hurt alongside the way in which.
After shifting to dismantle the USA Company for Worldwide Improvement, Mr. Musk crowed on X, “We spent the weekend feeding USAID into the wooden chipper. May gone to some nice events. Did that as a substitute.” This shameful and unlawful act instantly put untold lives in danger and degraded America’s standing on the earth, whereas value financial savings could also be lower than marketed as a result of varied U.S.A.I.D. packages could also be restored by the courts or moved to the State Division.
For America, appearing Argentine will not be a superb look. Argentina is a failing nation that’s simply now turning the nook after finishing up painful reforms. If Mr. Trump had been a real reformer, he would have offered particular funds objectives, put seasoned technocrats in main positions and centered on offering value-added technical innovation. As an alternative, he’s taking us on the Peronist path the place energy politics issues greater than good coverage. As Argentina teaches us, 100 years of distress may observe if the rule of legislation is changed by the rule of 1.
Gregory Makoff is a senior fellow on the Mossavar-Rahmani Heart for Enterprise and Authorities on the Harvard Kennedy College and the creator of “Default: The Landmark Court docket Battle Over Argentina’s $100 Billion Debt Restructuring.” He beforehand labored as an funding banker advising governments and companies on managing their debt and as a senior coverage adviser at the USA Treasury Division.
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