Perhaps Javier Milei’s economic reform program has been oversold by Milei, along with myriad free-market proponents in the United States. That’s not a dig at free markets. It’s just a comment that if Milei were really pursuing market-oriented reforms, Argentina wouldn’t require U.S. aid.
Just the same, that Argentina is apparently in need of $20 billion from the U.S. is the surest sign that the aid won’t work. Which is basic market logic: if Argentina were thought to be good for the $20 billion, then Milei wouldn’t be asking President Trump for it.
Milei’s request for funding is the tell that either his reforms aren’t as extensive as previously billed, or that his ability to keep Argentina on the path to market-based reforms is very much in question. Whatever the answer, the government aid is the near certain sign that Trump and Treasury secretary Scott Bessent are on the verge of a proverbial helicopter drop of money into Argentina that won’t save it, that won’t be returned to the U.S., and that almost certainly won’t stay in Argentina.
To understand why, contemplate a poor part of the United States like East St. Louis, IL. Imagine Trump and Bessent dropping $20 billion from the sky there. If so, the money would be gone almost as quickly as it arrived. Assuming what’s unlikely, that residents of the economically desperate locale might spend even a portion of the helicopter drop where they live, the simple truth is that no East St. Louis business is going to expand based on the helicopter drop that is government funding.
What this means is that even if all $20 billion were spent locally, the windfall banked by local businesses would soon migrate well outside East St. Louis, and to businesses, neighborhoods, states and countries where the funds would have the chance of being matched with ideas capable of yielding a market-driven return. Money goes where it’s treated well.
Argentina should be viewed in the same way. If it’s really on a growth path, then foreign aid isn’t just superfluous, it’s also harmful. Governments offering help are terrifying, but also a sign of future decline for those getting aid.
As we’ve seen in the U.S. over the decades, money as the path to economic recovery for downtrodden cities and states is a growth-sapping non sequitur. It is because markets work. Not only do free markets associate with economic growth, those same free markets are a lure for the investment that is always and everywhere attracted to the returns associated with market-driven growth.
Some have and will say that while Milei has freed Argentina’s stuck economy, the Argentine president hasn’t “dollarized,” and a failure to do so is what has held his country back. Nonsense. See East St. Louis once again. It’s “dollarized” for being a part of the United States, yet dollars are difficult to find there.
Applying the above to Argentina, if Milei has the country on a market-oriented path, and better yet can keep it on that path, dollars will be everywhere, and as though an “invisible hand” placed them there. In free economies, and contra the Keynesian/Monetarist magic that's informing $20 billion in aid for Argentina, money is an effect of economic progress, never the driver.
At which point it’s worth asking again if Milei’s reforms have been more rhetoric than reality. The request for $20 billion says so. That’s because no individual, business or government ever runs out of money, rather they run short of investor confidence. Milei shouldn’t need Trump if he’s who he says he is, and Trump can’t help him if he’s not.
