The statistics institute -INDEC- confirmed this week the fall in production and employment in the first quarter of the current year, -5.1% GDP. Figure that we anticipated was going to be -5%, worse than that of the first quarter of 2020, the quarter prior to the pandemic. Could the second quarter of 2024 be projected to be similar to the pandemic moment of 2Q20? With the references of income distribution, unemployment and inflation, we could say that the fall in the second quarter of 2024 will be stronger than in the first and without a pandemic.
The point is that the economic policies adopted by Milei, Toto Caputo and Pettovello and other technicians, who in some cases are the same technicians from the PRO-UCR and UxP period, had the same results as the pandemic period, but without the pandemic. As in the Macri government, the economic policy is the same. There is nothing new in the ultra-liberal adjustment. Without graduation.
But let’s look at some permanent numbers that explain this fall, on the one hand, it drags down the 22% devaluation that Massa carried out in August 2023, but he said that the IMF had asked him for a 100% devaluation. In that case, the change of government in December 2023, Milei, Toto Caputo and sectors of the PRO and the UCR did nothing to avoid the 110% devaluation and closed the IMF request. By December 2023, inflation reached 211%. The months that followed inflation was high. A permanent blow. Some specialists agree with the government’s story that under inflation. Under inflation? No, monthly variations do not quantify the true impact, they only disguise it. It is the same error that has been dragging on for some years. That is why appropriate measures are not taken. Inflation in January 2024 was 254%, in February 276%, in March 287%, in April 289% and in May 276%, a price increase well above salary increases (public, private and unregistered) during these first five months. The fiscal adjustment did not correlate with a drop in inflation, therefore, a surplus has little to do with lowering inflation. From permanent chainsaw to permanent inflation. Liquify salaries with a permanent RODRIGAZO.
Continuing with the second point, which is a reflection of the data published by OEDE-Labour in March 2024, it shows a loss of 86,000 private sector jobs. Concentrated in the construction sector. The unemployment data gives us more information, between the first quarter of 2024 vs 1Q23, it grew by 114,000 people. The population of employed job seekers grew, in the same period, by 177,000 people. It could be said that unemployment went from 6.9% to 7.7%, an increase of less than one percentage point. But I mean that, in the first quarter of 2024, 291,000 people are having employment and income problems, either because they are unemployed or because the job they have is not enough and they go out to look for another job. If we multiply this number by four (typical family), we could say that there are 822,000 people affected by the economic policies adopted by the current government. They do not solve the socio-economic problems, but rather aggravate them.
If we consider the permanent price increase, people with employment problems because a single job is not enough to cover their daily diet and people who are not even earning a salary. Let’s add a third aspect, those who, with a job, their salary constantly deteriorates. All of this deepens the social fracture, which is difficult to overcome in the short term. What data are we missing? Precisely that of income distribution.
According to the director of Productive Planning at FUNDAR, Daniel Schteingart, “inequality (measured by the Gini coefficient) took a sharp leap and reached the highest level in 16 years.” Permanent chainsaw, permanent inflation and permanent social fracture. The income data provides an overview of the situation, according to the INDEC “Regarding the employed population, an average income of $350,593 and a median income of $260,000 was recorded, equivalent to the upper limit of income of decile 5, under which 50% of employed people fall. The average income of the first four deciles of the population, ordered by income from the main occupation, was $118,759. The average income of the middle stratum (deciles 5 to 8) was $329,826, while the income of deciles 9 and 10 was $855,881; according to Santiago Perez Pons, in terms of family income, in this first four months, a drop of 13% to 17% is estimated in these first deciles (1 to 5).
There is a worrying situation, a devaluation would further tighten wages, but why is Caputo going to devalue? For a simple reason, the IMF is asking for it to continue the program, just as PRO-UCR and La Libertad Avanza agreed to do at the end of 2023. The deadline is June 30. The exchange rate lag is not the main reason, it is economic nonsense, to request devaluation. The IMF, at the end of the eighties, imposed its program in Tito’s former Yugoslavia, which consisted of devalue, wage freeze, price liberalization and tax increaseThe consequence was the disintegration and balkanization of Tito’s Yugoslavia.
In the Argentine case, a devaluation, the third in less than a year, would complicate distribution, rising prices and unemployment. Will workers be able to resist another wage adjustment? The freezing of salaries It is already felt that few sectors have managed to match the price increase of almost 270%, on average; price liberalizationwe saw it in these first months with a rare exception such as the prepaid ones, which return the increases in installments, and finally, the tax increasein principle, those that are not co-participating increased and the reinstatement of the tax on high incomes and “the rapi kids” of the flat tax and reduction of personal property taxes to 1%. There may be differences, by history by type of country, but the IMF program applies to Yugoslavia (1989) and Argentina (2001, 2018, 2021 and 2024), no matter when you read this.
For these reasons it is difficult to give a Nobel Prize in economics to Demien Reidel and Javier Milei, because what they are doing is unoriginal. It’s the classic ultra-liberal sixties fit.
Every nation project has an economic and political model that is measured by its social result. It is clear that the economic policies of the current government did not solve any of the social problems, nor are they justified by a monetary issue, as we have been demonstrating in the economic nonsense that Milei, Toto Caputo and Sturzenegger want to impose. The objective is social fracture, to reduce the national capabilities of our scientific-technological system, SMEs and cooperatives so that other foreign industrial companies exploit the strategic resources together with the national capital sector that remains standing.
Economist at UBA and professor of Latin American Structuralism at UNDAV
Source: Ambito
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