Blessings and curses of the Argentine economy

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-OpEd-

BUENOS AIRES – In his delicious and very original book Who made Adam Smith’s dinner?, Swedish author Katrine Marçal sheds light on the ways (paid and unpaid) in which women contribute to the economy. She also argues that homo economicus – the so-called economic or rational man – is oblivious to the moral, emotional and cultural considerations which have contributed so much to growth and economic development, and that his conduct endangers, in the long term, the most precious and most important things. precious.

Likewise, recent Nobel laureate in economics Richard Thaler argues that when we buy into the idea that people behave rationally, the predictions we make based on that assumption are at odds with reality.

I welcome these new lines of thought, which consider economics as a social science and broaden its analysis to include cultural, historical, political and ethical dimensions. The functioning of the economy depends on millions of decisions motivated by interest and greed, but also fear, a sense of duty or solidarity, or transcendent aspirations.

No economic system can function without an underlying scale of values

In addition, it should be clear that a country’s wealth and the well-being of its people do not depend exclusively on natural resources or interest or exchange rates, but also on the ability to build consensus, build and administer the right institutions while respecting the rules, generating certainty and applying an adequate system of rewards and penalties.

The economy is closely linked to the values ​​of society. Indeed, it is safe to say that no economic system can function without an underlying scale of values. A sustainable program that seeks to reduce structural poverty using education and job creation follows different thrusts from a program that simply seeks to control poverty. And this is diametrically opposed to a patronage system that creates even more needy people. Political rhetoric has sometimes led people to believe that the handouts that enslave them are in fact a great help.

The OECD reports that inflation in Argentina will reach 34% this year – Photo: Steve Johnson / Unsplash

Argentina is a nation endowed with so many natural resources. It also succeeded, at one time, in standing out through its public education standards (a prerequisite for the generation of human capital) and the quality of its scientists. And yet, so far, it has been unable to overcome the kinds of economic problems – like inflation and extreme poverty – that so many other countries have long overcome.

Are we cursed? What are we doing wrong? The answer is not purely and exclusively one of the economic variables. Rather, it lies in our inability to generate, agree and sustain a long-term project that defines the productive and commercial profile of the country (goods and services) and the levels of integration with the world, while taking into account geopolitics, demographics and a range of limitations.

It is also crucial to go beyond words: decisions must be made to match the rhetoric.

It is also necessary to define the precise types of policies that can be implemented to gradually reduce structural poverty. This will never happen by magic or trickle down, but with long term programs that not only distribute resources but also specifically help young people fit into a productive work program. If we blame our current economic problems on bad monetary, fiscal or exchange rate decisions, we can never get back on the path to creating a system that works for everyone.

It’s also crucial that we go beyond words: decisions must be made to match rhetoric. Part of that too is recognizing that everything will pass, including power. We need to look to the most appropriate people in each area. And that means choosing not only the smartest people, but also those with experience and specialization.

There can be no economic development (defined as growth plus human promotion) without prior institutional reconstruction. And that, in turn, requires a deep ethical dimension – in everything from politics to business to law. Even in sports.

Finally, an element of crucial importance is the moral and technical quality of our leadership (politicians, businessmen, trade unionists and intellectuals). Just as it is difficult for rude parents to raise a respectful child, so few incompetent and immoral leaders can be expected.

Not only that, but we have to keep them at an even higher level than ordinary people, because their actions affect the lives and well-being of so many people. It may all seem abstract, but it becomes dramatically real when, due to a mixture of neglect and shared immorality, an entire city is inundated or a train cannot stop in time.

* Caballero heads the Faculty of Economics of Argentina Pontifical Catholic University.


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