The 7 steps necessary to change the course of decline and return to the culture of work

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 –Maybe as never before, many people –among them, businessmen- live in a situation of complete uncertainty about their personal and economic future, but there is a way out towards a better horizon.

Perhaps as never before, people and entrepreneurs live in a situation of complete uncertainty about their personal and financial future. In the 2021 elections, it is not a question of who will have a majority in deputies to pass laws, but the very existence of individual freedoms is put at stake, with the risk that the republican system of government is forgotten and is replaced by a autocratic system.

The crack is precisely those who are opposed to replacing a liberal republican system with an autocratic one in which the Executive has absolute power over the three powers, particularly justice, and destroys democracy from within. Reestablish a monarchical power.

It would not be the first time in the history of the world that a certain group used democracy to win elections and then, in power, destroy it and establish a dictatorship.

The closest example that can be seen is that of Chávez in Venezuela. So it is difficult to think of a 2023 without a 2021 in which a limit is placed on the autocratic projects of Kirchnerism.

But, at the same time, the opposition has a serious problem that has to do with a history of horrible economic management.

Put another way, Juntos por el Cambio never finished making a serious self-criticism of the mistakes it made in the field of economics, while its staunch defenders limit themselves to saying that they did not have a majority in both houses to carry out the necessary structural reforms.

The reality is that it never seems to have crossed the mind of Cambiemos to implement these reforms and there was not even a minimum of spirit in the change of discourse.

At times it looked more like Let’s Continue than like Let’s Change.

Figure 1

As an example, you can see graph 1 where the evolution of social plans between 2008 and 2019 is shown.

They practically doubled end-to-end and despite them we have more and more poor people.

In addition, during the government of Together for Change, they went from 10.6 million beneficiaries to 12.8 million beneficiaries, an increase of 20.8% in just the number of social plans.

The Argentine economy has a monumental problem ahead. Level of public spending and its poor quality, a delusional tax system, it has no currency, it lacks internal savings to finance consumption and investment, it has regulations that paralyze the capacity for innovation of economic agents and it lives with its back to the world.

Live with what is our refugee in protectionism.

To get out of this long decadence there are three gigantic steps to take:

1) stop Kirchnerism in October to maintain a republican system and preserve the most elementary individual freedoms,

2) begin to build a majority in Congress that, if we change, to the government in 2023, support the necessary reforms. It is not something that due to so much ideological mixture, if in 2023 it is a government again, it ends up having the opposition in Congress in its own ranks because they oppose certain minimum reforms that must be carried out to get out of this decadence

3) agree on the Minimum economic measures essential to apply to twist the collision course of the ship and lead it towards a safe port. The first economic step to start the recovery.

What would be those minimum economic policy axes that would have to be applied to get the economy going?

The maximum possible that one would like is not asked here, but the minimum from which it cannot be lowered because it would fall into another economic failure. Before listing the measures, it is convenient to clarify that there is no economic team that can solve the economic problem, if behind there is not a political leadership convinced of the way forward and willing to support against all odds the minimum measures to apply to start the recovery or , if preferred, change the collision course of the ship. In other words, the counterargument that you do not have the political power to apply it or that in Argentina it is impossible because of Peronism is not valid because if those were the cases, then we would be in front of promoters of discouragement and without wanting to fight.

Looking for excuses not to do what needs to be done. Or looking for excuses to continue with this decline.

The minimum measures to apply would be 7:

Currency reform. Argentina lacks a currency. It destroyed the national currency peso, the peso law 18,188, the Argentine peso, the austral and this one that is dying.

Without currency, you cannot do economic calculations.

How does an entrepreneur estimate the profitability of an investment if he cannot calculate future costs because the peso is depreciating day by day?

How is long-term credit granted without price stability?

Without a coin there is no meter to measure. In this sense, removing the forced course from the peso and establishing the legal course of other currencies would allow people to choose to make their contracts in the currency that deserves the most confidence and has a certain stability over time.

Labour reform. At this point, the minimum that is required is that any new person who may be hired by a company is not threatened by the trial industry that generates panic, particularly in SMEs, when hiring staff.

Many companies, even having paid the corresponding compensation, then have to face costly labor lawsuits brought out of the hair in which, generally, employers lose, which makes companies not want to expand their personnel plants.

Considering the delicate situation of unemployment, poverty and indigence that prevails in Argentina today, making this market more flexible to encourage companies to hire personnel becomes a key point.

Even if there is going to be a reform of the state that transfers employees from the public sector to the private sector.

A wide deregulation of the economy that frees the capacity for innovation of the people and removes the very high costs that make companies less competitive.

Transform the social plans into something transitory, forcing all beneficiaries of the social plan to take a course in some trade (electrician, plumber, carpenter or other trades that give them a quick job opportunity). The beneficiary of a social plan will take that course or lose the benefit of the plan.

Once the course is finished, the social plan will be reduced by 20 percent per month to give you 5 months to get clients to hire your trades. This together with the social monotax is perfectly possible and would begin to reestablish the culture of work instead of the culture of giving.

State reform. The problem of public spending in Argentina is twofold: high and inefficient.

The first thing to do is lower it to go as quickly as possible to fiscal balance, then work will be done with time to improve the quality of spending, which will take longer.

Eliminating the fiscal deficit as quickly as possible is because Argentina lacks the instruments to finance the deficit and relying on external credit is as risky as Cambiemos was left hanging on the brush in April 2018 when external financing to cover the fiscal deficit ran out. When the blind was lowered, everything was blown up.

is why it is imperative to move quickly to the elimination or reduction to manageable levels of a minimum fiscal deficit.

Tax reform. Simplifying the tax system and lowering the tax burden is key to attracting investment. Argentina not only does not have established legal security over property rights, but also people and companies are taxed in such a way that it already has an exodus of companies and people to other countries in search of another tax residence.

It is not possible to create jobs without investment, and it is not possible to attract investment with this tax burden.

Integration of the Argentine economy to the world. Nobody is going to make large investments, and therefore create many jobs, to supply an internal market of 44 million inhabitants where almost 50% of the population is poor, another part is indigent and those who are not poor or indigent are with the water up to the neck. To supply this internal market, investment is not required.

On the other hand, if the Argentine economy is oriented towards exports, companies will have to have higher production volumes to export and this will attract investment and create jobs. In this sense, the MERCOSUR-EU agreement, which gives access to a market of almost 450 million inhabitants with a per capita income of US $ 34,000 per year, cannot be missed, with the advantage that the agreement is that the EU lowers prices faster. tariffs and gives MERCOSUR time to lower its tariffs and make its companies competitive.

Once exports are significantly increased thanks to investments and structural reforms, unemployment will fall, the real income of the population will improve and poverty will be ended by increasing consumption.

To believe that Argentina comes out stimulating domestic consumption before exporting is a gross conceptual error or pure populism.

In summary, this being a journalistic note, it is not the place to elaborate widely on each measure, but it does take into account that these 7 economic measures are the minimum essential to turn the ship’s course and put it head north to start sailing to full speed to prosperity.

Nobody says that this is going to be easy, but what cannot be done is to insist on more public employment, more social plans, more taxes and more violations of property rights. Surely there will be more measures to be adopted so that Argentina can once again be a country that offers opportunities to its children, as in the past it offered opportunities to our grandparents who came to Argentina because it was the country that offered a future.

In short, Argentina has to end the culture of giving and return to the culture of work. The way to start moving this conversion towards the work culture would be these 7 minimum measures to apply. That the Argentine political leadership and the population get it right in their heads that they are not going to leave with people living on social plans, but working. Creating the conditions to return to the culture of work is the first step to end Argentina’s long decadence.