INFOBAE: In his “Treatise on Human Nature”, 1739-1740, David Hume established that association is the natural complement to human limitations: “By coordinating individual tasks, our powers increase. By specializing trades, our jobs become more valuable. While helping each other, we are less exposed to accidents and misfortunes“. On the other hand, we must accept that “the enjoyment of those properties acquired with our energies and good fortune” can be ended by the abuse of power. Such insecurities reduce incentives and make people less industrious.
This reasoning led Hume to establish that the peace and prosperity of societies depends on the stability of property (including life). Security of possession is one of the three foundations of transactions – voluntary personal exchanges. The other two are: the transfer of property by consent and the fulfillment of commitments.
How do these conditions translate into market requirements? Interpersonal exchanges can be more or less satisfactory, depending on whether conflicts are overcome in exchange for shared advantages. Achieving mutuality of transactions, each party benefits as they are voluntary. Consent is the opposite of imposition, such as tax and regulatory surprises, financial crises and economic fluctuations.
Indeed, nations advance by sanctioning laws, regulations and agreeing on agreements that are as inclusive as possible. On the contrary, in lagging societies, impositions by the State and powerful groups that twist wills and desires abound.
Interpersonal exchanges can be more or less satisfactory, depending on whether conflicts are overcome in exchange for shared advantages.
Such is the reasoning behind libertarians who rail against those who impose highly resisted rules. Poverty and inflation are common signs of troubled countries, frustrating their people. The prohibitions, stocks and restrictions demanded by officials are constant in societies that fail to agree and, therefore, become impoverished. It has already been exposed in various columns in Infobae: the universal productive resource is the set of hiring skills and inclusive voluntary transactions.
In primitive societies central banks and financial organizations establish advantages for public entities; They distrust private ones. The rules often favor distinguished public servants and politicians.
Monetary, financial and commercial balances are distorted with the anomalies of price and quantity controls denounced by the Association of Argentine Businessmen.
The same is observable in the administration of justice and transparency in public acts. Government decisions are aimed at privileging the State and close business groups, as evidenced by the increase in taxes on computer imports. Officials and relatives are quickly and considerably enriched in societies biased towards backwardness, infected by mistrust towards independent private parties which they do not control. They claim to do so based on popular interests, even if they are their own.
Poor societies protect the interests of leaders and supporters in preference to ordinary people. The difference between Burundi’s extreme poverty ($300 per capita GDP per year) and Ireland’s prosperity ($100,000 per capita GDP per year), is the history of non-privilege, confirming Hume’s reasoning.
The difference between Burundi’s extreme poverty ($300 per capita GDP per year) and Ireland’s prosperity ($100,000 per capita GDP per year), is the history of non-privilege, confirming Hume’s reasoning.
The caste crack reflects the greater abuse of the general population condemned to face impositions for businesses, retirements and remunerations that are exorbitant from those close to power.
Is it possible to dollarize in Argentina today, with foreign currency reserves of less than USD 40,000 million and a monetary base of more than $5 trillion? Economists estimate that it would demand more than $1,000 for every dollar delivered, because the entity's own available currency is almost a tenth.
The conversion would triple current prices, liquefying revenue. This would make dollarization impossible, unless a forced monetary absorption of the BCRA's liabilities, such as Plan Bonex, is implemented with marked fiscal contractions or other measures to sterilize excess pesos.
Frankly, it seems a well-founded but improbable view, since it would imply that exchange controls would lower prices and would have been preferable. Such views gloss over the expansive impact of a stable currency on the whole of society. Forced controls frustrate free transactions and increase poverty.