2023-11-18 03:25:49
Argentina is in a hyperinflationary process that has not yet exploded and that is what we must aim to avoid; since it implies paying a very high social cost. We have already experienced three that resulted from three of the stocks that bankrupted the Central Bank (BCRA) for trying to support them. We had 21 who wanted to keep them and all of them ended up in major exchange and monetary crises. However, today they propose to us to continue sailing towards the iceberg to “come out later in better conditions” and to do so only with “cosmetic” modifications that do not solve anything. It should be noted that Argentine history has already shown that with each passing day, the cost of leaving in an orderly manner is greater, because the BCRA is increasingly bankrupt.
An explosion is a possible future today for Argentina and will depend on what we vote on November 19. Will we keep the captain of the Titanic who believes that the iceberg in front can break in half if he accelerates enough or will we look for another who proposes trying to avoid it, even though no one can guarantee that he can do it?
Argentina’s problem is no longer just that we have a huge excess of spending and that to finance it we use the machine to print pesos, causing our currency to lose purchasing power. That is why when we want to buy something we have to hand over more and more bills; which we call inflation. Today, neither Argentinians nor foreigners believe that this course that has led us to this trend towards impoverishment and from crisis to crisis will change. To regain confidence in a future of normality for our country, we must address the structural reforms that the countries we look at with envy made in the last six decades because they offer growing possibilities of progress to their people. That is where our young people and entrepreneurs are going.
Which are? For decades we let politicians build a State that serves politics and uses Argentines. The worst of all is that it is impossible to pay; although, according to the World Bank, we are in 21st place, out of 191 countries, among those that squeeze the most from their companies with taxes. A blank employee, who cannot afford to pay income tax, works almost half the month for the Government and, with the rest, we intend to be enough to support his family. They also use available domestic credit and only leave regarding a third for producers, consumers and mortgage loans. And, since it is still not enough, they finance themselves with more and more inflation.
We must build a State that serves Argentines and that we can pay for with reasonable taxes, designing it so that it meets the objectives stated in the Constitution. Those who do not fulfill a useful role for society or, worse still, to justify their position put a stamp that complicates the lives of their fellow citizens, would be left unavailable. This figure is in the Public Employment Law and guarantees that no one is left without an income. For a year, which might be two, the person goes home, collects his salary and has to train to enter the private sector. The State should subsidize the businessman who takes it, encouraging him to work producing goods and services useful to society.
All companies managed by the State must be sold or closed. The same officials who are useless in fulfilling the roles mandated by the Constitution consider themselves capable of managing companies. Absurd. Of course, they end up full of “gnocchi” employees, parasitized by “friendly” unions and suppliers. Overall, the losses are paid by taxpayers.
By reducing state expenditures that are not useful to society, a schedule for lowering taxes can be proposed to bring them to reasonable levels that do not scare away Argentine and foreign investors as happens today. On the other hand, it seems that our officials believe they know more than us how to do our jobs, run our businesses, or be more creative. For this reason, there are more than 67 thousand absurd regulations that suffocate entrepreneurs and SMEs, complicating their lives and forcing them to be more inefficient. We must see what regulations are needed so that we can do our task or business well and repeal all the others.
If we take the last twenty years and choose one at random, more than 50% of Argentines were unemployed or in the informal sector or with unemployment insurance disguised as public employment that is not useful to society. It is obvious that the only thing that was common to this entire period is labor legislation that discouraged the creation of productive employment. It is not regarding taking away rights, but regarding protecting all workers. Today the regulations “exclude” those who do not have one from a good job. Therefore, we must stop overprotecting those who today feel comfortable because they have a productive job and protect everyone’s right to have it. It even means taking care of those who currently have a good job, but who might lose it and who would find it difficult to find another one today.
On the first day of its administration, with the trust that Argentines will place in it, the next government has to launch the laws and/or the roadmap of how the urgent reforms will be implemented over time. Some will take two or three years to implement; But the act of launching them and starting to execute them will help increase their credibility. Thus, in a few weeks it will be possible to get out of the “traps” to exchange rate unification. Not without cost; but with one infinitely smaller than a monetary or exchange crisis or hyperinflation, which we can prevent from happening.
Today people are tired of having their purchasing power taken away from the pesos they have and demand less, to reduce what they get. Now our currency loses value because a lot is produced and because less and less is demanded, which is why inflation accelerates. The risk is that, at some point, fed up, Argentines repudiate the peso and do not want to have it; which will lead to it tending to be worth nothing. That is hyperinflation and that is why prices rise like crazy. It has already happened three times in Argentina and, if we continue down this path, it will happen once more.
Finally, let’s keep in mind that when you do a great job at your job, there is no magic wand that will solve it. With effort and sacrifice you solve it and then enjoy the benefit of having done it. The same thing happens with countries. Therefore, even if the next government does everything well, solving the immense problems that this government is leaving will imply a very tough start to 2024. Only towards the middle of the year will we see that inflation begins to decline and the economy recovers more and more strongly. A great effort and sacrifice will have to be made; but to have a better future, not like today to simply not drown anymore.
You have to decide who will be the captain of this ship and, even if you don’t vote or do it blank, you will still be as responsible for what happens as those who opted for a candidate. Think that, like on the Titanic, if the iceberg hits, those who have the least will be the ones who will suffer the most.
*Economist and director of the Libertad y Progreso Foundation.
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