By Alejandro A. Tagliavini *
In April 2016 I wrote a column entitled “Is Macri more populist than Evo?” And, although you may not believe it, beyond the inconsequential speeches and the “conservative” friends, in fact it is really more populist, demonstrating to what extent point a speech can confuse many people.
Evo had – and maintains – a populist discourse and a statist beginning that was manifested, for example, in the nationalization of hydrocarbon, mining, electrical and services companies. Macri keeps almost the same companies nationalized. But Evo moderated himself and coexists with the private sector. Macri, on the other hand, had a “pro market” speech, but it has strengthened and enlarged the State, especially if we add public works. Bolivia grew in the last 12 years and in 2015 its GDP advanced 5.5%, 4.3% in 2016 and 3.8% in 2017.
In Argentina, the tax pressure -and we should add the unbridled inflation and high interest rates- is higher than 34% of GDP and rising, due to uncontrolled state spending, while in Bolivia it is 28% with much lower inflation. In 2016 and 2017, the national Argentine public debt rose by US $ 80,269 million, equivalent to 15% of GDP, which would have achieved a “growth” -inflated, strictly speaking- of the economy of only 0.6%. (-2.3% in 2016 and 2.9% in 2017)
As expected – and I have pointed out in innumerable articles – these days a terminal crisis has broken out -if it was not because there is always someone interested in supporting populisms- which has been the cover of many newspapers. For example, the Financial Times published a note: “Argentina is an exceptional case?”. As Warren Buffet says, “You never know who is naked until the tide goes down” and the financial tide has retreated due to the strength of the dollar driven by the rise in interest rates in the US, discovering the extreme weakness of the Argentine economy.
The Financial Times notes that “In a week, the Argentine central bank allocated US $ 5 billion – 10% of its reserves in foreign currency – and decreed three rate hikes in an attempt to stop the collapse of the peso … it is likely that the decision to raise its official rate … to the unsustainable level of 40% intensify the panic … “. Imagine, 40% interest rates! There is no private productive system that can support that.
Clearly, the Argentine fiscal policy -the taxes and the rates- is confiscatory and before this reality the capitals, especially foreigners, are escaping rapidly to the point that the Buenos Aires Stock Exchange fell more than 10% in a few days, and then partially “recovered” due to “good” news for local investments.
By the way, before the facts that deny an approach to the market economy, Macri with a deceptive speech has managed to install the idea that his is a “gradualist” policy and that therefore one must be patient until the results are seen. If its policy were really “gradualist” and progress was made towards a “pro market” economy, positive results should be seen.
But instead of recognizing that his “caviar populism” has definitely failed and that he no longer has the money to continue financing it – or anyone who wants to lend him, at reasonable rates – the IMF bailout appears, which is dedicated precisely to this: to save insurmountable, total that the bureaucrats of this multi-state organism do not risk their own money, but that the citizens of the member countries contribute the funds through taxes.
* Member of the Advisory Board of the Center on Global Prosperity, Oakland, California