“We need a bigger bazooka.”
The phrase came from the former Prime Minister of Great Britain, Liz Truss, this Thursday to refer to the fact that
she could not fulfill her economic plan because she did not have support from the media.
Truss is a British politician who served as prime minister in 2022 and, as soon as she took office, she announced a tax cut that the market quickly took badly, triggering a run on the pound.
“
I wanted to reduce taxes, the size of the State,
” Truss told former Donald Trump campaign advisor Steve Bannon on a cable program in the United States, “
and all those people didn't like my plan.
The British economic establishment wanted to keep things as they were
.”
“
Wait, wait, wait,”
Bannon interrupted, holding up the print editions of two British economic newspapers.
Was it The Economist that caught you?
Was it London's Financial Times?
the city of London?”
.
Truss did not hesitate to affirm.
“These are the friends of the bureaucratic establishment
,” he responded, pointing to the covers of The Economist and FT, “
they are friends of a deeper State.
“We need a bigger bazooka
. ”
Truss and Bannon crossed paths on the eve of the Conservative Political Action Conference in Maryland.
One of the attendees there yesterday was Javier Milei.
Another, Donald Trump.
The umbrella that covers them all is to extend the functioning of the market to the greatest number of activities and services, restricting the role and action of governments for freedom.
But on that path, where there are many economists who boast of being the guides to the Promised Land, other economists are beginning to appear warning that their science lacks tools capable of offering generalizations to make economic policy.
In the last few hours, statements were made by two world-renowned people, both economists, in this regard.
Gita Gopinath, deputy director of the IMF, and Dani Rodrik, professor at Harvard University.
The two agreed that solving problems (Gopinath in the case of Argentina, Rodrik in general)
requires pragmatism
.
The number two of the IMF said after visiting Argentina this week, speaking with the President and the economic team: “We must work pragmatically to obtain social and political support.
It is essential to guarantee the durability and effectiveness of the reforms.”
The Government suffered a setback in Congress with the Omnibus Law and a mega DNU.
With both initiatives he sought to approve a series of shock economic reforms that seek to speed up, according to the President, the arrival of investments and the creation of jobs.
Faced with opposition and radicalism, Milei talks with Macri about a legislative alliance.
Rodrik, for his part, wrote a document this week – published on the IMF website as well as Harvard – under the title “Meeting the challenges of a new era: against the rule of thumb” (in Creole the phrase could be read ' to the eye of a good cuber').
Basically what the economist says is “be careful with doing cut-and-paste in economics.”
“Analysis at the margin, aligning private incentives with social costs and benefits, fiscal sustainability, are abstract ideas
that are not pigeonholed into the same remedies
,” Rodrik noted.
“The most pressing economic problems of our time require
pragmatic solutions closely tailored to the context
.”
The article offers a guide on how to address (or rather how not to) the main challenges facing the world economy today in its opinion: climate change, the erosion of the middle classes and international trade or globalization.
In these three areas, countries face a rebalancing of forces, demands and offers that generate tensions.
Economists start from the premise that their models have the answers and politicians buy, the economist observed.
A case that Rodrik has been studying and following closely in recent years is the debate on industrial policy in the US and the world.
He argues that the jobs problem today requires policies that go beyond traditional welfare state solutions.
They must be more targeted,
aimed at gaining productivity, complemented with minimum wages and regulations
.
He speaks of a period of “experimentation” and moving away from thinking about traditional industrialization to an era of productive service jobs.
“In economics, the valid answer to almost any policy question is
'it depends',”
says Rodrik.
Economic analysis becomes important precisely when it analyzes contextual dependence: how and why differences in the environment affect the outcomes and consequences of policies.”
So, are the newspaper covers what prevent reforms from being achieved? Or do dogma, the bazooka and the chainsaw cover up pragmatism?