The formula to expand revenue: free activities from impositions, rules and discretion

Enrique Blasco Garma
Consejero Académico en Libertad y Progreso

INFOBAE – The normative agreements open everyone, even the poorest, to the greatest satisfactions, according to the skills they develop. opportunities for advancement. The rules define opportunities, the game of all sports and activities. Without them, everything would get stuck.

The book “For a Fairer and More Flourishing Country” explains: “the value of personal skills grows with stable rules, free of obstacles, throughout individuals, trades, countries, situations, times. Such teaching is verified with the income differences of the countries ”. The 25 most prosperous nations on the planet have an average income of USD 54,000 per year per inhabitant. And the other 170 countries register incomes that are decreasing as the redundant obstacles and uncertainties that the rulers impose on their individuals increase. From USD 39,000 per year per inhabitant in Japan, to USD 260 in Burundi. The differences are not in their people but in the rules that govern them.

Forceful: variations in rules and artificial obstacles increase uncertainties that hinder activities and decisions. They take away experiences, times and opportunities for learning, contrary to the example of football or any sport.

Variations in rules and artificial obstacles increase uncertainties that hinder activities and decisions

The Decimal Metric System boosted commerce and business across the globe. The Uniform System of Measurements, a great creation of the French Revolution, proposed rules for universal understanding. He simply established fair measures: this is the same for all humans, for all time The Metric Decimal System boosted commerce and business around the globe (Pixabay) The Metric Decimal System boosted commerce and business all over the globe (Pixabay)

Inflation, tax modifications, exchange rates, regulations, obstruct the learning of better alternatives. Serious damage to the well-being of the peoples. The decline in Argentine revenues corroborates this effect. Today the average income of Argentines is barely a third of what it received 40 years ago. Strong teaching for those who are willing to rid themselves of ideological prejudices.

Regulatory stability favors exchanges

The freedom to exchange individual rights -transactions-completes people, advancing income and wealth. Productive capacities increase by integrating associations with growing exchanges, freeing from unnecessary obstacles and variations in commercial conditions and individual properties.

To that extent, they learn and take advantage of skills, jobs, works, carried out by other people without spending time, energy, to do them. A discovery that advances the attention of individual needs.

A constellation of incentives, values, properties, prices, costs, encourages work and satisfy the needs of others so that everyone benefits by exchanging goods. And they encourage efforts of others who attend to our demands.The freedom to exchange individual rights -transactions- completes the people, advancing income and wealth The freedom to exchange individual rights -transactions- completes the people, advancing income and wealth

Transactions – voluntary exchanges of rights – take advantage of skills, achievements, dispersed among all humans; more effectively the more free from arbitrary interference. Becoming much more productive, satisfactory, how much more voluntary, less obstructed with arbitrary fences, meddling, violations, corruption. Transactions generated with stable rules, the same for all participants.

However, politicians exhibit a drive to innovate and legislate, thus justifying their salaries. Now they propose to increase the non-taxable minimum of salaried income. A part of the taxpayers. They don’t say if they will cut state spending or who will pay the final bill. They distract with magical passes while they hinder by subsidizing those who obstruct the transit. “Better than working is getting plans.”

Two legal systems that addressed this issue

  1. The Constitution of 1853/60 freed the activities of then less than a million inhabitants of these lands, attracting millions of immigrants of good will. Under the motto, to govern is to populate, the inhabitants increased to 7.9 million, in 1914, achieving the highest income and most spectacular development on the planet. “Rich as an Argentine” became a common expression.

Breaches of the rules dampened the bonanza. Over the past 40 years, regulatory abuses precipitated the terrifying contraction in revenue.

Over the past 40 years, regulatory abuses precipitated the terrifying contraction in revenue

  1. The 1989-1999 ordinance is complex and disputed. It served unsatisfied demands for long decades. The star was the Convertibility. It unified the peso with the dollar standard, providing a reliable value to transactions and markets for the first time in more than half a century. Taken together, the reforms achieved a substantial liberalization of activities. A quantum leap in competition to meet individual needs.

Deregulating, privatizing state companies, freeing up public services, reducing regulatory corruption. Such novelties modernized energy, transportation, home services, telephones, internet, water, sewers, electricity, gas. From useless sheds to the buildings of Puerto Madero. From narrow routes to the expansion of the Panamericana.

Convertibility Numbers

Convertibility ended with inflation, the bid for salary updates, retirements, rates, prices. A gigantic leap in productive capacities and quality of decisions stretching horizons.

In ten years, per capita income, measured in current dollars, doubled. The value of assets much more, with the liberation of the capital market. Deposits in banks multiplied by 93, adding up to the equivalent of USD 93,000 million, 30% of GDP. Fixed gross domestic investment went from 12.5% ​​of GDP in 1989 to 18.5% of GDP in 1998. Public spending did not exceed 30% of GDP. Poverty in GBA in October 1989 was 47%, in May 1995 it had dropped to 22% and in October 1999 it rose to 27% of the population.

Without export withholdings or exchange traps, domestic prices reflected international variations, favoring the allocation of resources. Although they released the labor market somewhat, it was not enough and unemployment doubled, from 8% to 16%, also affected by privatizations, rationalizations and the Southeast Asian crises, Russian default and devaluation of the Brazilian real. Those laid off from the public sector received significant compensation.

Fixed gross domestic investment went from 12.5% ​​of GDP in 1989 to 18.5% of GDP in 1998. Public spending did not exceed 30% of GDP

Privatizations prompted unusual improvements in services and reduced the twin deficits. Privatized companies pay taxes and comply with regulations. It is said that the public companies, “grandmother’s jewels”, were sold at a low price. In 1999, the State sold YPF for just over USD 15,000 million to Repsol. Then a barrel of oil was trading around USD 10 to USD 15. In 2014, the government paid for 51% of YPF, USD 5 billion. Now, with a barrel of oil at USD 60, the market value of the entire oil company is less than USD 3,000 million. The sale was big business for the state and freed the activity from harmful privileges.

With the prestige gained from the reforms, the internal debt was consolidated and the external debt was renegotiated, opening up access to the international capital market. Legislation was updated, adapting global standards for bankruptcies, patents and trademarks, trusts, leasing, mortgage bonds, etc. Long-term mortgage loans with the lowest interest rates in Latin America drove home purchases.

Such profound reforms could not be made without broad consensus involving Congress, unions and representative entities that stopped some of the release of regulations. Even so, the system of union social work was deregulated, allowing free choice by workers, collective bargaining, and establishing coverage against occupational hazards. The pension reform opened the capitalization AFJPs.

Such profound reforms could not be made without broad consensus involving Congress, unions and representative entities.

Focused on consensus, pending boundary disputes with neighboring countries were resolved and Mercosur was founded.

The widest freedom of the press was achieved and most of the media was privatized. The last military uprising was punished and mandatory conscription was eliminated. The Armed Forces specialized better.

Argentines gained world confidence, in their institutions and in themselves. But the rules are fragile in the face of contrary incentives to uphold them. Unlike Samson, those in debt in dollars lashed out at the financial system, hoping to benefit.

Argentina is now on a kind of roller coaster.

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