Why so many exchange controls ?: to corrupt better

Consejero Académico en Libertad y Progreso

INFOBAE – The group of countries achieves monetary stability without traps or severe obstacles to the movement of foreign currency, Argentina is among the exceptions.

Argentine politicians are reluctant to incorporate the knowledge of economic sciences and world news. In particular, they are not open to alleviating productive activities with releases contrary to their historical recipes. Disregarding the forcefulness of knowledge and experience, they prefer to cling to ideologies of yesteryear. As if they were novelists, they do not know truths; they make up epic tales. Don Quixote fighting the windmills. They fear and distrust people acting freely. They try to gain strategic positions by dividing opinions and projecting the figure of a fighter “through the Argentine table.”

Aiming to curb inflation, they impose “Care Prices” and sanctions on private entrepreneurs, while making prices more expensive by issuing more pesos than those demanded and hindering offers and production of those goods.

They pay for the overabundance of State spending with overabundance of taxes and the issuance of pesos, papers of low reputation, without sufficient support. They displace people from productive jobs, those that generate more value, to occupations that spend more than they produce. This takes away assets from the population, as a result of imposing exorbitant burdens and regulations on genuine income-generating activities, and subsidizing the least productive. The consequent shortages of goods haunt them with failed regulations for millennia. Exchange controls always, everywhere, encourage buying dollars from the BCRA, when the alternative prices are so much higher. There is no case. Exchange controls miss the advantages of competition in all ventures, the consequent shortages of goods haunt them with failed regulations for millennia

The graph outlines the evolution of the dollar prices, in this version of exchange controls, initiated at the end of the government of Cambiemos and accentuated by the current one. When we had enjoyed foreign exchange freedom since the end of 2015.

Humanity confirms. Across the planet, individual freedoms expand personal satisfactions. To that end, they develop competitive institutions. The role of the State is to ensure them with the division of competitive powers.

Humans learned to overcome personal deficiencies by trading, exchanging individual surpluses and deficiencies. Competition is a collaborative process, where everyone offers something more valuable to others in exchange for goods that they value better than their counterparts. The markets disseminate this information for their joint benefit, as long as they are not unnecessarily hampered.

Advanced nations are the ones that made the most progress in eliminating arbitrary fences on voluntary transactions. At the opposite extreme, countries are all the poorer the more they hinder with impositions that violate individual freedoms. Exchange controls are almost non-existent. An expression of artificial obstacles, violating personal properties and desires, advanced nations are the ones that made the most progress in eliminating arbitrary fences to voluntary transactions

Wherever you see inflation and exchange controls, you will see countries in retreat that repel investment and worse satisfy the needs of their people, even if their leaders speak stories of triumph. Politicians dissonant with individual realities. The controls increased the risks.

Since July 2019, the month before the PASO, the country risk index reports greater variations in Argentina than in Bolivia, Brazil and Chile, than in previous years.

Countries lose certainty when controls encourage arbitrariness by officials. The Argentine risk rose with the controls; so much so that it prevents investing in productive activities.

The leaders disguise the contradictions, bifurcating, splitting reality. They agree with favored sectors, segregating the population, according to affinities, relegating inclusive contracts. They divide instead of integrate, they punish competition and productivity. They make expenses more expensive and impoverish.

Example: instead of an inclusive monetary, exchange and fiscal policy, taking into account realities, they have exchange and trade controls. To transport the vaccines and overcome conflicts with the Aerolineas Argentinas unions, they hired passenger planes instead of freighters.

Argentina is a Babel of corruption, unequal rules that prevent the production of the most valuable goods. The dispersion and exchange rate variations added to the country risk are a sample. Different languages ​​imply rules, voices, uncertain signals for the same action. Lacking prompt translation, they would be assimilated to normative corruptions: Different valuation for the same particular act. Instead of an inclusive monetary, exchange and fiscal policy, taking into account realities, they have exchange controls and trade

Longing for the system accepted all over the planet, BCRA refers to the MULC, the Single Free Exchange Market, forgetting the whirlwind of quotes that it implements. As in the story “Through the Looking Glass”, the character says “the word I use means exactly what I want, no more, no less. But, Alicia answers, the question is whether the word can mean such different things. The question, answers Humpty Dumpty, is who is the boss ”. The corruption of controls restricts individual freedoms, empowering officials.

The book “For a more just and flourishing country” explains the amazing decline of Argentina in the last 40 years, is a consequence of the appropriations of rights to collect and dispose of income and assets. The purchasing power of per capita income in 2020 was 32% of that of 1980. Each Argentine lost 68% of the purchase value of their income, while the world average reached 136 percent.

In 1980, the income of the average Argentine was more than three times higher than the world average; in 2020, it was 22% lower. Poor country of so many injustices. Let’s review the facts. Corruption kills skills. We need a more Just and Flourishing Country.