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From the May Pact to the Agreement for Argentina

From the May Pact to the Agreement for Argentina

Although President Milei obtained the Presidency with a majority in the second round, which implies borrowed votes that choose between two alternatives, all the public opinion polls of these years and these months reflect that a majority of Argentines, even many who They voted for Milei, they believe in the importance of values ​​before the content of the Pact.

Milei has just recognized him in Spain with his high-sounding and violent style by stating that “he is a liberal President in a country of left-handed people.” The country is far from being libertarian or neoliberal, nor is there a majority of any other ideological sign. Argentina is pendulous between alternatives as seen in the last elections.

The country has sustained few public policies in 40 years of democracy, some with a lot of consensus and others with some nuances and questions. But values ​​have been respected that imply greater civil rights, a present State, prioritizing social justice, a balance of State and Market, the rejection of the privatization of various public companies, the importance of education, science and technology, the Malvinas, the deepening of Mercosur, productive policies, public health, in addition to the rejection of an anti-rights labor reform as well as the privatization of the pension system.

A consensus that led to various governments maintaining a non-dollarized financial system that has a limited deposit guarantee (SEDESA). This is a reflection of a majority having a diffuse ideology, while there are various sectors that ascribe to popular or populist national positions, centrists, moderate conservatives, liberal progressives, social democrats or social Christians to use global categories, which the President has anathematized in his global speeches, but that coincide in that balance with a little more of the State or a little more of the Market and with nuances in the aforementioned values.

In many cases values ​​that were not matched with adequate policies. But society wants more and better public goods, beyond anger with the policy that did not provide them in quantity and quality, not their disappearance.

Thus, a true Pact of May, June or July should include a middle range between the antagonistic positions of the historical rift, which led to a tragic pendulum and not an extremist decalogue of a circumstantial majority to be effective and lasting. What is partial or what is imposed would not survive this management.

In a world and a country of high uncertainty, an agreement of good faith and without impositions would limit uncertainty and improve the confidence of economic agents and citizens, generating investment, employment and growth and also, and not least, reducing the level of confrontation.

Let’s analyze each of the 10 points and some ideas for a possible consensus synthesis that is enriched by a broad debate.

Inviolability of private property

There is no doubt that private property must as a rule be respected. Not only that of large investors but that of citizens who often see their property and rights violated. Citizen security is a value that progressivism often did not adequately measure.

But private property is not an absolute right that can be exercised against collective values. All countries include expropriation for just cause and compensation in certain cases of public utility.

This point could be agreed upon like this:

  • Alternative: Inviolability of private property subject to it fulfilling its social function
  • The non-negotiable fiscal balance

Fiscal balance is a policy instrument, not an objective and even less a dogma of faith. From 2011 to 2023 the US, Japan, France and Great Britain had fiscal deficits every year. Germany and Italy had surpluses from 2011 to 2019 and deficits since 2020. Canada had surpluses only from 2014 to 2019. Brazil and Mexico alternate years of surplus and deficit. Certainly fiscal policy is an instrument that depends on the economic cycle and all developed countries make countercyclical policies to achieve the highest growth with the lowest inflation and resort to the fiscal deficit to face both economic crises (2008-2009) and shocks (pandemic). . It is true that Argentina is an indebted and dollarized country that does not allow a significant and sustained margin of fiscal deficit, but no country can tie its hands to sustain its economy.

2 Alternative. The country will tend towards the greatest possible medium-term fiscal balance, with temporary fiscal deficits to sustain growth and 4) The reduction of public spending to historical levels of around 25% of GDP. A tax reform that reduces tax pressure, simplifies the lives of Argentines and promotes trade

In line with what was analyzed in point 2. Argentine society must find a balance between the State and the Private Sector. The important thing is that the State is efficient, beyond its size. Also that it provides adequate infrastructure and public goods, where the needs are multiple due to the absence of services or the poor quality of services. While cuts must be made to eliminate unproductive spending, the spending necessary to guarantee basic rights is no less than the cuts that can and should be made.

In Europe, public spending exceeds 40% of GDP, in France and Italy more than 50%. Japan 42%, USA 36% and China 33%. That is, in no developed country, except the US, does it drop below 40%. In Argentina, national public spending reached 23.6% in 2022 and, adding provinces and municipalities, 42.3%.

If the Government intends to reduce the spending of all jurisdictions/GDP to 25% (average from 1976 to 2005), this implies a draconian adjustment of 17 points of GDP that is unfair, unfeasible and socially explosive.

Although it is necessary to eliminate or lower certain taxes, there are sectors that can contribute more to bring direct tax rates closer to international standards. Apart from combating evasion and avoidance and eliminating unfair exemptions or subsidies.

In summary, a broad progressive tax reform is necessary that finances the necessary public spending with sustainability and justice.

3 and 4 Alternative. The country will carry out a progressive tax reform that taxes those who earn the most, combating evasion and reducing taxes on middle and popular sectors in addition to analyzing the structure of public spending, increasing it where it is productive and socially necessary and reducing it where there are unacceptable privileges.

Rediscussion of federal co-participation to end forever the current extortionate model

This point requires a pending discussion since the Alfonsín reform, the patches (Conurbano Fund) and what was raised and not implemented in the reformed Constitution. It is necessary to adapt the participation of the Province of Buenos Aires, which is underrepresented according to various criteria, and to adapt the participation of CABA to the new status of autonomy, among various issues that include promotional regimes, national and provincial taxation criteria, as well as clear guidelines. to define co-participation with multiple and reasonable criteria that reconcile enhancing the stimulus to generate own resources with federal and comprehensive development criteria.

Alternative Rediscussion of federal co-participation with regional development criteria with sustainability and equity criteria

A commitment of the provinces in the exploitation of the country’s natural resources.

This point is reasonable if it is reconciled with the care of the environment and the chaining of primary exploitation with added value, industrial and services, avoiding an extractivist enclave economy and promoting harmonious development with a reasonable regulatory framework.

Alternative a commitment of the Nation and the Provinces in a rational and sustainable exploitation of natural resources within the framework of regional development with added value

A modern labor reform that promotes formal work

This is a reasonable point that requires a discussion to adapt standards to productive and social technological changes. It must be clear that it is not an anti-rights reform and that capital and labor must share the fruits of greater productivity. Developed countries are reducing the working day. International experience indicates, as do various ILO studies, that labor deregulation promotes more employment in booms, but destroys more employment in recessions, so the reform must be carried out as a modernization of relations and not as facilitators of layoffs.

A reform that, to make the system sustainable, respects those who contribute and allows those who prefer a private retirement system

Without a doubt, the system must be sustainable and contributions must be respected. The current system allows private retirement insurance. The pension system must adapt to demographic and work changes and that will involve debating the modality of benefits, but the experience of the AFJP regime (1995-2008) shows that a private system increases the fiscal deficit for many years and does not ensure good coverage and benefits. Europe maintains a public distribution system. I have talked about this topic in the note https://www.ambito.com/economia/como-hacer-que-tengamos-buenas-jubilaciones-n5970461

Alternative A pension reform that reconciles sustainability, good pensions and distributive equity

Political reform

This issue is important and requires a serious debate and not in a hurry. The government itself would be willing to raise the point. I will analyze it in a separate note.

The opening to international trade, so that Argentina once again becomes a protagonist in the global market

Today’s world is moving away from openness. Countries are becoming more protectionist, as demonstrated by the 100% increase in tariffs that the US made on Chinese cars. A unilateral opening is productive suicide. To expand see this note

https://www.ambito.com/opiniones/argentina-contramano-un-mundo-que-incrementa-sus-politicas-productivas-n5981384

Alternative Deepen regional integration to increase Argentina’s systemic competitiveness and gain markets for national production.

Welcome to the debate to which this analysis provides some elements to be able to sign a true Agreement for Argentina. Pact or Agreement that is a synthesis of Argentine plurality and allows for the expansion with true consensus of a country strategy with State policies that expand the potential of our country and the quality of life of Argentines.

Source: Ambito

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