The ABC of progress: Eliminating obstacles for wealth

Enrique Blasco Garma
Consejero Académico en Libertad y Progreso

Humanity advances through freedom to coordinate enteprises.

INFOBAETwisting or redistributing individual rights by force frustrates opportunities, shrinking income and asset values. This is the opposite of transactions that, precisely because they are voluntary, expand the value of rights, properties and income. This explains why societies freed from obstacles coordinate better remuneration and produce satisfactory goods. Freedoms expand individual skills, income, and wealth.

However, some opportunistic rulers undertake campaigns denouncing “speculators” or “internal enemies” to tilt the field, divide the people, impose controls and extract contributions from opponents, in order to gain support and increase their power.

For example, since the beginning of democracy, Uruguay has been freeing and stabilizing norms and measures, managing grow three times more than Argentina in terms of its GDP per inhabitant in dollars. The graph illustrates that development, the impact of the hyperinflation of 1989, and the institutional collapse of 2002.

The belief that economic resources, including mineral deposits, fertile plains, fishing in rivers and seas, etc., are a gift of nature. This is not true. Since humans first appeared, the nature of the planet has not changed much. However, the knowledge revolution freed individual decisions from unnecessary hindrances. Encouraging to undertake and multiply individual remuneration, therefore, economic resources are the capacities to produce, meeting individual needs.

People are discovering agreements that better satisfy participants, expanding their remuneration. They value private activities by better satisfying individual needs. The State should remove redundant obstacles and protect private goods, providing public goods that strengthen incentives, private property and individual rights. In the same way that traffic rules speed up individual transit.

STATE INTERVENTIONISM

Some politicians prefer to manipulate powers to privilege favorites, even if they harm majorities, and thus gain power, recognition and support. Thus, they impose taxes and artificial hindrances on those who produce to subsidize unproductive populations.

Over the last 20 years, the Argentine government have increased taxes and imposed foreign exchange traps and price controls to benefit those they considered “vulnerable” or “priority sectors”.

The phenomenon of “social organizations” that mobilize crowds and extort the rulers to grant them rewards, in exchange for lifting obstacles to circulation in public spaces, is notable. Such payments encourage not to work and consolidate the pickets. They could manifest where they interfere the least with circulation, but then they would lose disruptive power. Other options would be to pay beneficiaries directly, taking away incentives from leaders. As Robert Mitchels posits, “Organizations feed ruling elites”.

It is up to the private sector to offer productive jobs. The State has plenty of idle bureaucrats.

OBSTACLES TO DEVELOPMENT:

Currency exchange limits: Nations prosper by recognizing the advantages of competition and setting just rules and stable measures, that equal for all, against the corruption that comes from having different norms depending on who is involved. Therefore, it is convenient for the foreign exchange markets to be free from artificial obstacles and that each interested party pays or receives similar values, managing to meet the entire quantity demanded at the lowest price.

In contrast, the corruption of the stocks determines differential prices, intervened by bureaucrats, causing the permanent shortage of dollars. Ironize the situation, calling MULC, single market and free of change, notwithstanding the different quotes and the shortfalls.

Prohibition to export: The acceleration of inflation sharpens conflicts. Given the inevitable failure of price controls, certain officials will decide to control and limit sales abroad to decompress the rise in food prices, despite this has been repeatedly proven to fail.

Nations move forward recognizing the advantages of integrating with the world to expand income. Between 2011 and 2021, the value of Argentine exports fell 8.5% and their physical volume 4%, while GDP per inhabitant shrank 40% in current dollars. In contrast, Uruguay expanded its exports of high-quality meat and imports inferior meat from Brazil and Paraguay, to the extent that it needs it, achieving the highest per capita income in Latin America.

Service fees and prices much lower than those of its neighbors compress production and expand irrational consumption, unbalancing activities. Fuel and goods are in short supply.

There are numerous investigations that conclude that restricting exports to stabilize the domestic market deteriorates aggregate production.

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