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Balances and imbalances in Argentina by Javier Milei

Balances and imbalances in Argentina by Javier Milei

A conventional view would attribute the evolution of the market to exclusively economic factors, focusing on whether the main reason for the deterioration in asset prices is fiscal or external in nature.

One of the main dimensions: the necessary condition of sustainability, is political sustainability, which feeds other dimensions of a productive, social, fiscal, external, monetary and financial nature.

Political sustainability in a country requires balance. Let’s review the definition of balance from the Royal Spanish Academy. It has two meanings.

  • State of a body when conflicting forces acting on it compensate by destroying each other.
  • Situation of a body that, despite having little base of support, remains without falling.

It is clear that the first definition expresses our national drama. The mutual destruction that in this case does not compensate and prevents national development.

The second definition reflects the evolution of our economy. Little support base to maintain sustained and stable growth. Which could drag the government and the country into a crisis worse than 2001.

Political sustainability is based on the ability to impose a policy that provides predictability to economic agents or the achievement of agreements. Clearly a minority government needs agreements not only to enact laws but to accumulate social legitimacy in the policies to be applied.

If there is something that the country has not reflected in recent decades, it is balance. Currently, from the President, who these weeks gave the worst examples of imbalance, downwards, it is key to regain balance to avoid exacerbating confrontations.

An emotional balance is necessary for the leadership, especially for those who lead the country, and a political balance for the proper functioning of the institutions, a necessary condition for an economic plan that can meet medium-term political and social objectives.

It would be very serious if this imbalance amplified the emotional and material imbalance of a people that suffers hardship. Thus, the behaviors of the actors are central to improving expectations, beyond the technical measures adopted.

It is not conducive to social balance to liquefy income or not distribute food in a country that doubled its poverty in 2024.

The Chamber of Deputies gave an example of balance by voting a retirement mobility that partially recomposes the income of those who receive benefits, balancing a better formula with the possibilities of the economic context.

It is not one of balance in the short term nor a total recomposition of income, but neither is it a liquefaction like the one that crystallized the mobility established by the DNU with the formula established by the Executive Branch.

The only thing that cannot wait is to guarantee food benefits. If not, the greatest imbalances will occur, if people do whatever, as the President pointed out, even beyond legality, to avoid dying of hunger. Not only is it an ethical and legal issue, it is a national security issue. Impossible goal without food security.

To end poverty and in relation to political balances, agreements must be rationally discussed between the political, economic and social sectors that guarantee that companies and citizens contribute according to their capacity. A balanced economic model promotes incentives that are reconciled with a better distribution of income and wealth to guarantee stable growth and equity.

Even the IMF itself raised the need to ensure governability, social cohesion and improve support for vulnerable sectors to establish a viable program.

A comprehensive tax reform is necessary that guarantees greater collection, reducing taxes on the productive and middle sectors, taxing high-net-worth sectors, eliminating unfair exemptions and combating evasion. How it is being implemented in the developed world. Argentina is a country with resources, poorly managed and distributed.

The tax reform that is proposed to be voted on has many components that promote greater inequality, such as the elimination of the Personal Property Tax and overly generous money laundering.

An economic program of “balance” cannot be a factious and unfair polarization of a partiality, which does not reflect the spirit of the vote. The citizens voted for a political change, an adjustment on caste, an anti-inflationary plan and not a libertarian program.

The people did not vote to “destroy the State”. No hate generates balance or sustainability. Balance in its etymology “equal level” is similar to “equity”. The ways to achieve this can be discussed, but a society ceases to be civilization if hatred and destruction are elements of political praxis.

An efficient state is key to a governable country that can grow with social equity. The country needs statesmen, political managers, a State that provides good health, education and security. The law of the jungle does not guarantee investments, except for a short, or at most medium-term, plunder.

Certainly the country presents economic imbalances. They are not new but Milei’s policies deepen both macro imbalances and social imbalances.

This is expressed in an increase in consolidated public debt in 2024, external imbalances concealed by short-term measures and a fiscal situation that will deteriorate due to recession and lower inflation.

The first thing is to organize the political and put an end to hate speech to reinforce the institutions, in addition to building a better State. With this, a true economic plan that guarantees external, fiscal, productive, social, monetary and financial balance. In the next article we will analyze the challenging fiscal and external dynamics that must be resolved from political rationality. With good management so that there is bread and the painful circus is suffered less.

Source: Ambito

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