DATA CLAVE – The President’s speech at the opening of the ordinary sessions of Congress left some positive expectations and quite a few concerns. One of them: his sayings about a reform of the Council of the Magistracy that restores his independence. Today he has a great participation in politics and one of his functions is to appoint and remove judges. So you can imagine the concern and pressure that a magistrate will have who has to face subjugations of the law or the Constitution by the State or by legislators or politicians.
Therefore, changing the composition of it to comply with the constitutional mandate of the balance of representatives would be a step in favor. However, until we see the letter of the reform, doubts will remain; because it should be remembered that it was in the mandate of Cristina Fernández that the current format was given. Since then, the “Libertad y Progreso” Foundation has maintained that it is a priority and necessary to advance in this reform, offering a proposal that was presented to the different administrations and, also, to different legislators with little success.
On the other hand, the rest of the judicial reform that is underway and the harassment of the Justice, seems to aim to subdue it or restrict its independence from politics. This issue is not only relevant for those who believe that there is no Republic without an independent Justice and, therefore, and over time, not Democracy. Or for those who fear that it is the door to impunity for those who committed acts of corruption or that it is used as an instrument against those who think differently. It is also vital for investment; since nobody will sink their capital to produce and generate employment in a country where, if their rights are overwhelmed by the political power, their chances of claiming before the Justice are minimal.
Therefore, if we want Argentina to have any chance to prosper and provide more opportunity for progress to its people, we must guarantee legal certainty, “horrible words” for some of this government. Whether the current administration likes it or not, it begins with the burden of the previous Kirchnerist mandates, in which the right to property and freedom of business were obliterated; so the burden of proof is reversed and they must first demonstrate that they are truly committed to respecting the rights of workers and producers.
Another part that was very worrying was when he blamed businessmen for impoverishing Argentines by speculating on prices to amass fortunes by driving consumers out of the market. If we look at Argentine history, we can identify periods like the 1990s or the first years of Néstor Kirchner’s administration when inflation was low; although it is true that most of our past was high. We should ask ourselves what was it that in those few moments of less variation in prices “dominated those ambitious and immoral economic powers.”
Well, we won’t get an answer; because they were simply moments of lesser or no issuance of currency at their demand. If not, we should conclude that the “Model K” worked better by containing the economic powers at the beginning and then it did very poorly. An absurdity, that there are few left in the world who continue to defend it; since the great majority of the countries managed to lower inflation with austere monetary policies and not subjecting them to “dark and immoral powers”.
In all the countries where people were lifted out of poverty, they did so while respecting legal security, that is, with clear, general rules of the game that respect property rights and freedom of business. Even the best example is China. When the communist government of this country saw the collapse of the Soviet Union it was clear that, if they wanted to continue to hegemonize political power, they had to reduce poverty, in which they had failed. For this reason, they embraced the market economy, managing to get hundreds of millions of poor people out of that situation and in a short time.
There are no miracles, the answer to achieve greater opportunities for progress for all is capitalism and what always fails is “friend capitalism”, as it happens in countries like ours. In them, governments make life impossible for true entrepreneurs, with excess taxes and regulations, and the only easy way to get rich is closeness to political power to obtain perks.
Unfortunately, we intend to continue on the path that always led us to failure. The answer to inflation is price controls, which discourage production and lead to a scarcity of the affected goods; the application of a Supply Law worthy of a dictatorship or communism, which discourages any Argentine or foreign investor who may be thinking of producing in the country; or an illusory price and wage agreement.
The latter always ended in huge failures; but I don’t know if there was ever one that worked in any country. If this was the case, it must have been because, while businessmen and unions did their part, the government did its part, rapidly reducing the deficit and containing excess emissions. In this way, the expectations of the former are aligned with the inflation actually generated by their central bank. In Argentina, given that these types of agreements unify the expectations of businessmen and unions; so, at the beginning, they achieve some improvement in the price increase.
However, governments did not do their part on fiscal and monetary austerity. So that? If everything was being resolved without them having to reverse policies that benefit them. Therefore, inflation soon reappeared, businessmen and unions realized that they had been cheated in their confidence and prices were strongly rearranged, even creating a crisis. Today these agreements have very low credibility, given history; so they can be a very temporary palliative that, if the government does not do its part, it will end badly like everyone else.
The presidential speech did not mention any of the structural reforms that must be done to solve the underlying problems that have been incubating for decades and that continue to accumulate in the current administration. It did abound in the typical patches that seek to encourage investment in the sectors that they determine “strategic” or relevant, alleviating the inconveniences generated by the general economic strategy and that, therefore, will continue to negatively affect the rest of the economy.
These types of policies are destined to breed mediocrity or a resounding failure; since, who assures the “privileged” that in the future they will not be added to the generality if it suits the government or if it changes its mind about its “relevance”? In fact, Argentine history is plagued by these “changes of ideas”, which almost always implied unconstitutional violation of some law, as happened with the mining legislation during the K administration.
Regarding the judicialization of the decision to take credit with the IMF, the reality is that, if they had not taken it, in 2018 Argentina would have entered into default and in a crisis like that of 2001-2. It is true that it was not used to solve the underlying problems that generated that credibility debacle in the future of Argentina; which is something that people have to judge with their vote and not a magistrate, since it is an economic policy decision. For there to be a crime, someone must have been deliberately favored with a certain measure.
It should be clarified that I had the same opinion when the sale of the future dollar that was made at the end of the Cristina Fernández government was prosecuted. For this reason, I think it is a mistake that the President continues to create precedents that may cost him future complaints without substance, if his management also fails like the previous ones. The bad news for him is that it is very likely that this will happen to him, if he repeats the error of CHANGE of relying on a strong initial reactivation and not carrying out the structural reforms that solve Argentina’s underlying problems, putting it on a growth path sustained.
Finally, it is worth mentioning a worrying and great contradiction in the presidential speech. He ended by defining that his great achievement would be to create the unity of the Argentines. However, he was forceful when he said that those who think differently from him on how to manage the country do so “preserving the interests of concentrated economic powers” and damaging society. I think this speaks to the lack of respect for the other who can honestly have different ideas and who is consolidating on both sides of the gap.
If the President believes that whoever thinks differently does so out of obscure interests, the unity that he seeks can only be achieved within the framework of the “Unique Thought”; which moves away from the spirit of a Republican Democracy to get closer to populist regimes, some of which ended up consolidating in dictatorships, as in Venezuela.
Let us hope that the President becomes aware of the profound problems that the country has and the right way to solve them. Not only in terms of recovering the unity of Argentines, but also in avoiding a crisis by carrying out the structural reforms that the country’s economy has demanded for decades and that is why we suffer an eternal decline with crises that are increasingly followed.