A few days ago, Carlos Rodríguez published the following on Twitter (today X): “Be careful with public opinion and with Macro goals.
When I was deputy minister of economy in 1997/98 we had: -Negative or almost zero inflation.
-Free circulation of the dollar and other currencies, without CEPO.
-Three-digit Country Risk.-Consolidated Primary Public Expenditure/GDP: 28%.
And yet they kicked us from all sides: unemployment, poverty, the Current Account, Expenditure, the exchange rate delay, SMEs, etc.
And they were probably right.
The opening of the economy and the entry of capital without labor flexibility created disasters.
And we are still looking for dollars abroad as a first priority.
Financing the State with Employment Taxes.
“We must learn from the past and not manage the country like a money table.”
Carlos Rodríguez was Roque Fernández's vice minister of economy, they had to deal with the beginning of the end of convertibility, with double-digit unemployment: 17.3% in 1996, 13.7% in 1997, 12.4% in 1998, until reaching 18.3% when convertibility finished overturning.
“We must learn from the past and not manage the country like a money table.”
A brave reflection from an economist graduated from the UBA, with a doctorate in Chicago, who worked at the IMF and was one of the founders of CEMA (the Center for Macroeconomic Studies of Argentina).
Possibly Rodríguez simplifies things by assuming that “with labor flexibility” things would have been different.
To reach those levels of unemployment, mass layoffs after privatizations helped, but, above all, the opening of the economy with an exchange rate lag, which destroyed companies that could not compete.
To make matters worse, there were no policies, institutions and resources for productive reconversion and the massive incorporation of technology (Cavallo was one step away from closing INTI and INTA, just as Milei threatens to eliminate or reduce CONICET to a minimum).
In short: the fantasy that, with macroeconomic balance, more labor flexibility, it is enough to grow, is just that: a fantasy.
Much more today than in the 90's.
In these decades, science, technology and business innovation took a huge leap.
If young people finish high school without satisfactory knowledge in Language, Science and Mathematics and few continue at university, employment growth through labor flexibility is an illusion.
Particularly in a world in which competition between countries is a competition of educational systems, and of capacities to incorporate scientists and technologists into increasingly innovative companies.
With the new government we are in a new exercise of “managing the country like a money table.”
It will be successful: inflation will disappear, the dollar will appreciate to the point that the flow of purchases from the border areas will be reversed: Argentines will be supplied in Chile, Bolivia, Paraguay, Brazil and Uruguay.
From the current thirteen companies per thousand inhabitants (compared to fifty in Chile), the country will fall to ten, or less.
The shrinking economy will prevent tax reductions.
Looking at longer time frames, some visionaries see a virtuous exit in mining: the exploitation of hydrocarbons, lithium and copper.
The most promising of this vision is copper because the energy transition is already multiplying the demand for that metal, whose price will rise.
There are many mines that are in the feasibility process and, in five or six years, they will be able to contribute to a surplus trade and fiscal balance, although in no way to the significant creation of jobs.
Yes, on the other hand, they will contribute to an even cheaper dollar.
That will be a moment of decision, if political power is in the hands of demagogy, there will be excesses in spending and public employment as Néstor Kirchner liked during the commodities boom.
If this is the case, Argentina will be more like Venezuela than Chile.
Meanwhile, if the shortage of young people with the appropriate qualifications continues, it will be difficult for the bioeconomy, a promise of Argentina, to advance in the added value chain, to contribute to an explosion of employment.
There is a solution to get out of this over-determination: public-private management of development.
It has institutional complexity: it ranges from the educational system to incentives for governors, scientists and companies, support for productive reconversion, the development of new start-ups and much more.
Difficult but possible.
The examples of Israel and the United States (of presidential taste) can serve as inspiration.
Many human projects usually have five stages:
1. The glamorous stage of dreams and aspirations
2. The difficulties of growth
3. The growth of difficulties
4. The search for the culprit, to
5. The punishment of the innocent.
We are already leaving the first stage and approaching the second.
It's time to get out of the money table to start organizing development management.