What is deregulation? Why is it essential to do it now? Who is the opponent to blame for our stalemate? The answer to this enigma, simple, although not obvious, is corporatism; a social and economic system imposed in our country for decades, which prevents political and economic competition, and proposes a structured society.
With ambiguous and misleading objectives of social harmony and national unity against external and internal enemies, avoiding political pluralism and “punishing” economic competition, it has turned Argentina into a corporate and stagnant society. Argentina's evil is not only the exorbitant public spending but also the consequence of perverse regulations.
How to deregulate the Argentine economy? Why is it urgent? What is the function of legislators, and what is that of judges and lawyers?
The Argentine corporatist economy was organized with a limited number of monopolizing business organizations that negotiate with centralized unions and with government arbitration over public policy decisions. This would avoid the “anarchy” of the market, it would promote the “common good” and ensure the well-being of the unprotected.
The result is stagnation for decades with a profound worsening in recent decades, with the outbreak of misery. The structure of economic corporatism is simple. Employers commit to offering better salaries and job stability, and accept a limitation on layoffs.
In exchange, they are compensated with external tariffs to prevent competition from products that could be better and cheaper, it is “living with what we have.” Likewise, new companies are limited with burdensome labor and organizational regulations, and the possibility of competing is taken away from small companies.
A brutal application of the “logic of collective action” according to Mancur Olson, where organized groups impose their will on the unorganized and within the organized the less numerous on the more numerous.
In a poorly regulated society, legislative and regulatory forms multiply and confuse. Interest groups, companies and unions obtain privileged rules, creating a regulatory swarm that multiplies transaction costs.
They constitute a barrier to new companies and innovation, since one way to measure the dynamism of an economy is to analyze the existence of new products and new companies. The validity of the contract is denied, imagining its signatories as incapable of deciding their economic destiny. Regulation replaces their will and denies the importance of access to adequate information for contractors.
Resources are transferred through regulation, there is no innocent regulation, regulation of rights is the covert way of benefiting a sector without assuming the cost. Spending is simply transferred to another, politically weak sector.
The corporate economic strategy includes the need to resolve social conflicts through money transfers and a political clientele dependent on donations. But the resources available for any social welfare program are not unlimited; rights come at a cost.
The question is, do resource allocations through laws and decrees benefit the general well-being or only interest groups with good political contact with legislators and rulers?
How to deregulate a corporate society, built over decades? Furthermore, do so urgently, in the face of the urgent need to end growing stagnation and misery.
Whoever tries it will suffer the onslaught of strongly consolidated interest groups, which will make themselves felt in Congress, in the streets with protests and in union strikes. Without a doubt, the task of the government and the legislator is cyclopean.
Congress is not a corporate chamber but a democratic one. Traditional corporatism has sought to replace popular representation with functional representation such as an economic and social council.
All these attempts have failed, but they have caused a particular phenomenon, a Congress that does not legislate and delegates this function to the Executive Branch. The explosion of decrees of necessity and urgency as a source of legislation demonstrates this.
In executive legislation hidden from society, hidden rent seekers can act freely. Congress, where the activity is public, this is not possible. Legislators must react to a temptation to represent interest groups and do so in defense of society suffering from corporate organizations.
How should we common disorganized inhabitants act? The inhabitants are not just spectators in this spectacle of confrontation between sectors of interest.
It is the function of judges and lawyers through judicial control to ensure the derogatory nature of the Constitution in the face of monopolistic policies, said Alberdi.
Because in the face of the blockade of government institutions, it is legitimate for ordinary citizens to go to judges to assert our economic rights before corporate organizations. Because the judicial process is the instance where there is a certain equality between the parties, where a citizen can confront powerful people.
Juan Vicente Sola is a lawyer. Academic advisor at the Libertad y Progreso Foundation.