Lately, there has been a lot of talk about the proposal to dollarize the economy that hoists javier milei as the main campaign banner for the presidential election. He poses it as a solution to all the problems of the economy local and one of the main arguments that many of their voters choose to support it is that they would start charging in dollars. However, they are unaware of the true effect such a measure would have on their pocket and income.
“Any salary or income transfer policy, yes or yes, is tied to the availability of dollars that the economy has (similar to convertibility)”, explains the economist Florencia Fiorentin, from Epyca Consultores, to Ambit.
The value of the dollar: a central theme
And this is closely linked to what the economist Federico Glustein warns when he says that “the essentials of dollarization is the initial conversion, that is, how much the exchange rate will go when the measure is announced”. With this data, it is automatically equated to a official valuewhich tends to be high, which explains why, initially, the wages they go down considerably.
For example, if a dollar is expected to reach $2,100, the minimum wage would be around $53, now, if it were at current value, it would be $186. Thus, as Fiorentin indicates, “the key issue is the conversion to be made from pesos to dollars when the peso disappears and that will depend on the level of productivity and competitiveness of the economy”.
Consequently, for the economist Martín Carro, “a dollarization that is being talked about today would undoubtedly imply very low income because the stock of dollars that the BCRA has today is scarce and we do not produce that currency”.
Thus, he thinks that a dollarization with the current situation of shortage of Dollars implies a conversion to an exchange rate very high. “It’s like one said we started doing all the transactions with diamonds. Argentina does not have an abundance of diamonds and there will be few for each. We do not produce the Dollars and it is a case similar to that of diamonds”, he illustrates.
The Argentine worker and the salary in the world
Consequently, it is clear that without their own currency and without local exchange and commercial regulation, the worker competes directly with the level of productivity of another worker from another country.
Taking into account that, Fiorentin points out that “the levels of Argentine productivity, in most sectors, they are below the international border”, he points out that the salary in dollars should reflect that competitiveness. Whereas, the fact of having a own currency it helps balance those international sectoral differences in productivity.
“Ultimately, a dollarization it makes you compete directly with the rest of the world and you are going to lose. In a international crisiswhether financial or due to a pandemic, the only room for maneuver of the Government and companies is through price adjustment and employers also lose room for maneuver to increase income. the only way is increasing productivitybut they are quite far from the businessmen of other countries”, describes the analyst.
But, on the other hand, Glustein points out that, with a dollarization at this time, the loss of purchasing power of salary “can fall in inestimable terms, up to 70%”, if we analyze some calculations taking into account the currency availability of the system.
Dollarize: an unfeasible path?
In this sense, the economist from the University of Buenos Aires Pedro Gaite points out that, “today, it is a speculation calculate how much the wages because, with the reserves that exist today, you can not dollarize to any kind of change.”
According to his vision, there is no way to convert all contracts in the economy to dollars. He even debunks views that one possibility would be get the dollars through a loan, because he warns that “Argentina does not have much more room to borrow.”
Let us remember that he obtained an unprecedented loan from the IMF and that it would be necessary to think about how to do it in another way, but Gaite doubts that any lender is going to guarantee or finance Argentina with the current conditions of the country. “We are not in a position to dollarizeNot even with financing”, he says.
And he indicates that “we have already seen that such optimistic proposals are not such, as happened with the rain of dollars from the macrismo” and, in these current conditions, he anticipates that you can go to any value the price of the dollarwhich would imply “a unprecedented deterioration in revenue That seems untenable.”
basically the dollarization sets an income ceiling for all economic actors, especially workers, well below what is now, and it is a monetary model from which it is very difficult to get out, as seen in the case of other countries that have gone down that path.
Source: Ambito
