The president is wrong, Argentina progressed when it approached liberal capitalism

Member of the Academic Council of Libertad y Progreso. Degree in Economics from Universidad Católica Argentina. He is an economic consultant and author of the books "Economía para todos" (Themes, 2002) and "El SindromeArgentino" (Ediciones B, 2006). He serves as a columnist in the newspaper La Nación. Previously, he worked the same task for the newspapers La Prensa (1985-1992), El Cronista Comercial (1992-2001) and La Nueva Provincia de Bahía Blanca (1992-1998). He's the host of the cable TV show "The Economic Report." Lecturer in Applied Economics of the Master of Economics and Administration of ESEADE, senior lecturer in Macroeconomic Theory of the Master of Economics and Administration of CEYCE. President of the Center for Economic and Institutional Studies. He was Economic Adviser to the Argentine Chamber of Commerce (1983-2002) and to the Argentine Chamber of Importers (1992-1993).

INFOBAE – Alberto Fernández made inaccurate references in the Davos forum, when he manages a country whose imbalances have different causes and a single origin: the fiscal deficit and the way to finance it

During his presentation last week at the Davos forum, President Alberto Fernández affirmed that “Financial capitalism where fortunes are made in minutes by betting on a bond or stock makes many rich but postpones millions of human beings in the world ». In fact, it would be necessary to see where it comes from that relationship between financial commitment as the engine of capitalism, in any case this type of financial “scam” is stimulated by governments with public indebtedness. In the Argentine case, it is necessary to repeat once again the phenomenal increase in the BCRA’s indebtedness in order to restrict market liquidity and curb the exchange rate, generating huge profits for the financial system, the type of case mentioned by the president and the BCRA makes low. your government.

The president also cited the book “Unhappy Capitalism”, by Luigino Bruni, stating: “We have to overcome the opulent unhappiness that discards the weakest and idolizes the unbridled and dehumanized profit of an amoral model.”

Beyond the vagueness that is to speak of unbridled profit. From what amount is rampant? How is unbridled profit determined? In fact, it is not capitalism that discards the weakest, but incorporates them with the creation of jobs. The one that makes them and uses the poor is populism, which has done nothing but submerge Argentina in a long decline, bringing poverty, indigence and unemployment to unsuspected levels.

When Argentina approached the capitalist model, its economy attracted investments and immigrants who came to these lands to seek an opportunity to get out of the poverty of their countries of origin. The Argentine economic system did not offer social plans, but rather opportunities to progress through a work culture based on liberal capitalism.

Figure 1

At the beginning of the 20th century and until the 1930s, Argentina’s GDP came to represent 27.5% of the GDP of all of Latin America. When Argentina moved away from capitalism and the world and state interventions began in the 1930s and accelerated in the 1940s, the country entered into a long decline and currently Argentina’s GDP represents only 10% of GDP in Argentina. LATAM. And it is not that the other countries did things much better than Argentina, but that Argentina was the worst and continues to be one of the worst students in the class along with Chavista Venezuela.

When comparing the evolution of Argentina’s per capita GDP with that of Canada and Australia, countries of immigrants and endowed with similar natural resources, it is observed how at the beginning of the 20th century Argentina’s per capita GDP was very similar to that of both countries.

Graph 2

Taking Angus Maddinson’s data, in 1905 Argentina’s GDP was equivalent to 98% of Canada’s GDP / inhabitant and 81% of the same relation to Australia. In other words, the GDP per capita of Argentina, Canada and Australia were similar. In 2018, Argentina’s per capita GDP was 41% of Canada’s and 37% of Australia’s.

In 1900 the per capita GDP of Argentina was 70% higher than the GDP / inhab of Spain. In 2018 the GDP / inhab of Spain was 70% higher than that of Argentina. If the comparison is made with Italy, in 1900 Argentina had a GDP / inhabitant that was 40% higher than that of Italy and in 2018 the GDP / inhabitant of Italy was 85% higher than that of Argentina, always following the data of Angus Maddison . For this reason, when Argentina was capitalist, our grandparents came from Italy and Spain to Argentina to work, because the conditions of liberal capitalism gave opportunities for progress. Today our children go to Spain, Italy, Australia, New Zealand and other countries in search of a future that populism does not offer. He only offers to submit to the political pointer to collect a social plan or have a public job.

In 1911, Argentina’s GDP / inhabitant was 4.4 times that of South Korea. In 2018, Korea was double our per capita income. In 1901, the same relationship with Taiwan, the country that was looked upon with pride when talking about Taiwan’s umbrellas, Argentina surpassed it in per capita income by 4.3 times. In 2018, Taiwan with its umbrellas, had a per capita income 141% higher than that of Argentina.

You can continue with the comparisons with Ireland, Hong Kong, Ireland or Japan itself and the results are just as catastrophic for Argentina.

When Argentina abandoned the liberal ideas that inspired the Constitution of 1853/60 and immersed itself in redistributionist populism, punishing the culture of work and rewarding the culture of giving, it entered an unstoppable decline.

Those who reject the growth model of the late nineteenth and early twentieth centuries will always jump, arguing that wealth was concentrated in a few hands. In the first place they do not have data of the Gini coefficient of that period, so they affirm without demonstrating, but, perhaps today, with populism, wealth is not concentrated in a few hands, generally of the political caste and its business partners? prebendaries and the rest live in a poverty that was not known in Argentina? Can anyone seriously affirm that this populism that makes a culture of poverty improved the distribution of income in Argentina?

On the other hand, what is relevant is not that the person who earns the least has an income of 1,000 and the one who earns the most of 10,000, with a difference of 10 times. Under a capitalist system, the one who earns the least goes on to earn 11,000 and the one who earns the most 160,000, thereby increasing the gap between the richest and the poorest to 14.5 times, but the one who earns the least earns more than the one who earns the more it earned under populism. In other words, the problem is not in the Gini coefficient, which is a terrible indicator of income distribution. The key is that those who earn the least, earn more and more. It does not matter that the one who wins the most, wins a lot, as the populists say. That is resentful comparison. Of envious. What matters is that the poor stop being poor and have upward social mobility. And that is not achieved by redistributing income. It is achieved by generating more investments that create jobs and improve the productivity of the economy.

It is a lie that those who say they care for the poor are really concerned. In any case, they are concerned with increasing the number of poor people to have more captive electorate. It is the liberal capitalist system that actually takes care of the poor, but not by distributing what others earn, but by creating opportunities for investments, people can develop the capacity for innovation and each one improves thanks to their work.

Furthermore, populism denigrates people because it makes them depend on the political pointer for their family to eat. Liberal capitalism dignifies people because they feed their family with the fruit of their work.

In short, it is not capitalism that must be reviewed. It has already proven to be the most efficient system for improving people’s living standards. It is populism that tries to sell that politicians have a monopoly on solidarity and the only thing they seek is to maximize their political benefit by manufacturing poor and ignorant people to subject them to their whims.

Argentina progressed when it approached liberal capitalism and entered sustainable underdevelopment when it embraced redistributive populism. What you have to do to grow again is as simple as returning to the culture of work and abandoning the culture of giving that impoverishes and denigrates the population.

THIS NOTE WAS ORIGINALLY PUBLISHED AT http://www.infobae.com

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