by Miguel Solé
in this article I wanted to talk, reflect, in the production model that seeks growth with equity, which is being implemented steadily since 2003, Nestor and Cristina Kirchner, and understanding how inflation can be controlled to avoid being affected.
In late 2001 what happened all still, ten years, with Terror to remember. No one imagined what would happen in 2002 and even less so that after the crisis Nestor Kirchner would assume the presidency of the country and initiate a process of transformation and restoration of national dignity continues today Cristina Fernandez.
Devaluations, and their effects are in any textbook of economics. Are a theory which means that devalue and reduce production costs through reduced labor costs, increasing competitiveness of the productive activity and that triggers a virtuous cycle of higher sales, higher profits, more investment, more jobs, better salaries ( theory spill-over or spill). Of course that rarely happens to the second point and the most affected are those who consistently give credit to economic activity, those who work a fortnight or a month to receive a salary at the end reaching for much less than reaching the start of the month.
promote Duhalde after the fall of the Alliance government assumed the presidency of Argentina in 2002 and produced a wicked innovation in economic theory. In early 2002, Duhalde, Remes Lenicov Mendiguren did something that was not in any manual and was the largest financial financial fraud of modern economic history worldwide. Combined these five steps:
Devaluation of currency, from 1 to 1.4 but in a few days the dollar fell almost four dollars and lost wages by 60% of its power purchasing.
Pesification asymmetric, the bank debt stood one by one, to benefit debt sectors of the economy including the agricultural sector that could pay off their debts in the financial system by paying a third of what they should and harvesting three times what had cost them to implement their crops.
Ownership and dollarization of deposits, Duhalde did not comply with the now famous "that receive U.S. dollars deposited dollars" and the deposits were returned generally devalued pesos.
socialized reservations. The reserves that were holders of pesos became a stroke of the Central Bank. There was no stampede inflation simply because the domestic market and was destroyed by force Argentines are accustomed to living with an unbacked currency.
continued to default on sovereign debt in more than 50% was in the hands of Argentine investors and AFJP
As terrible result from 1 January 2002 to September 30 of that year, thirty thousand Argentines went every day to be poor, nine million Argentina's most in nine months became poor. In September 2002, more than half of Argentines were poor and more than 25% were unemployed.
Nestor Kirchner rejected the insistent offer of Duhalde to be Chief of Staff, because I was in total disagreement with those who plotted maneuver, given the need to exit from convertibility, took the situation and created the largest transfer of resources from work and savings into the capital, in addition, it left the country (20000 U.S. dollars in 2001 and again in 2002).
The May 25, 2003 assumes Nestor Kirchner as president of the nation and takes the first measure of model transformation, putting politics over the economy and not vice versa as was the case traditionally.
Slowly and steadily began a process of inclusive and sustainable growth with equity. The balance of public accounts based on the fiscal and trade surpluses, debt reduction policy, industrial development and growth domestic market by incorporating mass of millions of Argentines excluded better living conditions, were central elements of economic action supported by the virtuous circle-sales employment-wage-investment-employment (the opposite to that promoted by Duhalde in 2002).
The historic growth of Argentina's economy since 2003, more than 7% on average, is the most important in our history and was achieved with a simultaneous increase in profitability business, labor employed and the improvement of their purchasing power. Quite the opposite of the effects the devaluations that lead to increased corporate profitability at the expense of employment and purchasing power of wages.
been developing since 2003 to strengthen trade union organizations and collective bargaining agreements as a mechanism for intelligent resolution of the conditions and remuneration of workers, supported by growth labor demand, year after year have managed to recover its lost purchasing power in 2002 and in many cases better.
This initiated a more equitable distribution expressed for at least five years of price increases in inflation that recovers for concentrated capital of what was achieved by the forces of labor in collective bargaining, or transferred to it a greater part of social investment increasing the state. Because that is inflation, a transfer of wealth from consumers to price makers always harms the weakest, as in all countries of the world, are the majority.
government driving the interest rate seeks to increase public investment and private credit, that rising demand is served by an increase in the production of goods and not their prices. Only in 2010 the private sector credit increased by almost 22% and investment rate by almost 24%, stimulated by the subsidy rate by the state with funds such as the Bicentennial Fund managed by the Ministry of Industry or Agriculture, although still very low and only accounts for 10% of GDP.
The government, which is not to blame for inflation, if you have a responsibility to take steps to further strengthen this successful model and attack inflation affects everyone, but especially those who have less.
There are many things to be done to tackle inflation without cooling the economy or decrease spending. A is to continue the fight against evasion and the formalization of the economy by nearly 40% is still "informal", ie not paying taxes and respecting labor laws. The head of the AFIP said in amazement as the big companies do not declare or pay income tax, but little by little investment in computerization is closing in on evaders. And as improved revenue capacity of state may be changing the tax structure, promoting investment and lowering production costs.
Another is to change the policy of subsidies to public service that is paid to companies and begin to provide such differentiated user. Would no longer subsidize the consumption of public services for citizens with ability to pay. Thus greatly improve the quality of public expenditure and without diminishing increase its positive impact on productive activity.
The last and most important, social mobilization for the price control and defense of what has been achieved through information and guidance to consumers, the proliferation of product markets and prices demonstration not only in the Central Market but throughout the country, and developing information systems that allow clear and simple social control of managers of public resources, so that every day we spend better.
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