Poverty is increasing and, with it, calls for this trend to be reversed.
The problem is how to do it and, to find the solution, we must identify the two factors that created this trajectory of impoverishment in recent years.
The first was to finance excess State spending with monetary emission.
This causes people's pesos to lose purchasing power, which the Central Bank (BCRA) appropriates to allow the government to spend more at the expense of Argentines' “pockets.”
That is why it is called an inflation tax.
Unfortunately, those who are impoverished the most are the lower-income sectors, who are the ones who have the most national currency with respect to their assets and have fewer instruments to defend themselves against this exaction.
Therefore, we must stop issuing to finance the government;
which implies that public spending coincides with genuine income, since it does not have credit.
That is what has been done since the new President took office and, in fact, the amount of pesos in the economy is almost the same as what the previous administration ended with.
If we wanted to help those who have less by hitting the machine as before, we would resurrect the hyperinflationary process left by Alberto Fernández and Sergio Massa, about which everyone was very worried until just over two months ago.
However, today it is no longer a topic that is talked about;
because it is beginning to be resolved.
In the short term, all that remains is to prioritize the use of the resources that the State really has to assist those who truly need it.
Not like until now, when subsidies were given to those who could cover their own expenses.
Of course, they received this benefit at the expense of the impoverishment of others who paid for it with their taxes or with the loss of purchasing power generated with inflationary financing.
The other thing that creates poverty is the recession inherited from the previous administration and that occurred because people perceived that a crisis was going away, like the many that Argentina has already experienced.
So, to have a “cushion” to weather the “storm,” people reduce consumption and investment, saving dollars that they send to the back of the closet, the safe deposit box, or outside.
Also, companies lower investments and all this leads to a drop in internal demand.
If there is less purchasing, there will be less production and that ends in a recession.
If economic activity is declining, that means that we are all becoming poorer, to a greater or lesser extent.
To solve this problem, people need to be convinced that the change in economic direction that the majority of the electorate voted for last year is going to happen.
If this happens, they will see the future with more optimism and will no longer save as much in dollars, increasing consumption and investment.
Economic recoveries are not created by poor people or people who lost their jobs.
It is generated by those who, being able to spend, did not do so before out of fear, and now they begin to do so because they do not fear a crisis.
The same thing happens with companies and this greater internal demand makes others improve, generating a virtuous circle of increasing the level of activity.
The bad thing is that until now the majority of the political leadership has not shown that it is convinced of doing what is necessary for Argentina to be a normal country.
To do this, laws must be approved that will economically affect business, intellectual, union and professional corporations that, at the expense of the well-being of the rest of Argentines, make money with regulations, subsidies and privileges.
Today, a large part of the population is making great sacrifices so that there are politicians who want them to make even greater sacrifices to benefit those sectors.
Laws must be approved for the country to change course and encourage Argentines and foreigners to spend and invest more.
This will begin economic recovery and we will be able to aspire to sustained growth that will allow people to get out of poverty with decent, well-paid jobs.
It will take much of this year for people to notice the improvement in their well-being, but it will be lasting.
However, if our legislators and rulers do not demonstrate their vocation for change with actions, we will maintain the deepening of poverty, which has already been a decades-long trend in Argentina.
Aldo Abram is an economist and director of the “Libertad y Progreso” Foundation.