Libertad y Progreso is defined as a think tank that works “for an Argentina inspired by the values of Juan Bautista Alberdi and the Constitution of 1853. We intend an open and tolerant society, with low taxes and regulations, with respect for the individual projects of people and equality before the law “.
The fiscal correction for a decrease in spending, stability and greater productive efficiency are the basic proposals. How to achieve them? Some of the guidelines that can be seen from its first pages and presented by Manuel Solanet, director of Libertad y Progreso, are among others:
Continue with the reduction of subsidies for energy and transport. “The impact on the strata of very low income should be selectively cushioned with instruments of subsidy to the demand”, can be read in the book they presented. How to Improve the Argentine economy
Eliminate remaining subsidies to productive activities, suppressing price control and intervention.
Gradually reduce social plans and transform them into work.
Public employment: according to the foundation, the number of public employees increased from 2.6 million in 2003 to 4.6 million in 2015 and 4.7 million in 2017 and is responsible for a large part of the expenditure. “While the national government reduced its employees by 30,000 agents during the Macri administration, the total number of provinces and municipalities increased by 102,000. Part of the proposal is, then, to get provinces and municipalities to pay their own employees, and not to do so through co-participation, but through their income.
Reform of co-participation under the premise that all provinces can generate wealth. “The fundamental thing is that the provincial and municipal governments have incentives to spend less and better. Today, through the co-participation regime, the governors have the benefit of spending, but not the punishment of increasing their taxes, “says Libertad y Progreso. “Our proposal is to return the tax powers to the provinces eliminating the vertical co-participation of Nacion to the provinces,” they maintained.
Raise the retirement age in a process that should start with 67 years for men and 63 for women, up to 70 years for both sexes in a decade or less. Start supplementary capitalization systems.
Prohibit government propaganda, as well as electoral, partisan or personal public officials using state funds.
Targeting state universities so that only those who can do so pay. The rest of the students should receive scholarships or receive loans of honor.
Tax reform to simplify the administration of taxpayers, eliminate distorting taxes and reduce tax evasion. “This is a current challenge in a country with more than 100 taxes or fees,” the book reads.
To the extent that public expenditure decreases, eliminate export duties.
Foreign opening with free trade agreements.
Labor reform: privilege negotiations at company level on collective agreements at the level of the sector of activity, provided that the representation of the workers of the company is unified. “Partnerships have to be at the company level, in a context of understanding because of the impact they produce,” said Solanet. There was also talk of reducing the cost and risk of dismissal by eliminating the compensation for dismissal by compensating it with a fund and unemployment insurance.
The rules that prevent the use of other currencies must be corrected, establishing their legal course.
Solanet was responsible for editing the volume, with the collaboration of experts such as Julián de Diego, Carlos Ayerra, Hernán Celorrio and Edgardo Zablotsky, among others.
Social cost
Based on these premises, the economists directors of Libertad y Progreso Aldo Abram and Agustín Etchebarne also spoke about the proposals “so that Argentina grows and leaves the path of decadence in which it has been for several decades”.
“If we do not want to con, it must be said that everything that is proposed in the book will cost, there will be a social cost to make the reforms,” said Abram. He also clarified that it is a program that “would not leave any person without income”.
“What happens is that when you come to power you have to ask yourself what are the alternatives that exist and then choose the scheme that has the lowest possible social cost. Unfortunately, what is observed is that politicians have a tendency to carry forward what has less political cost, beyond that we end up with the greatest social cost, which is what happens when these reforms are not made, “said Abram.
“The fact that we have gone from crisis to crisis in recent decades is nothing other than not having made these structural reforms and kicking them again and again forward. A crisis is to liquefy the problems generated by not having solved these issues. There will be social costs, yes, but always a crisis is the worst possible social cost. We have already lived in 2001 with more than 50% of Argentines living in poverty. If we want this to happen again, let’s continue as we do, we’re doing well, “he said.
He also referred to other necessary reforms:
Advance in an improvement of institutional quality, improving justice from its base. “The fact that in the Council of the Magistracy today has a greater power politics is a condition for judges, to be impartial.” assured Abram. He said that they had advised the government to carry it out in the first months of management, but that “unfortunately we did not have much success because their perception was that they would not misuse that instrument they had available. But state policies do not have to be thought of as good people but as proof of bad people. ” He added that this reform “could have been made (at the beginning of Macri’s term) and that it would have improved tremendously the institutional quality”.
He clarified that, on the other hand “this government has improved the institutional quality of Argentina although for this type of details could have improved even more. The reality is that we were ranked number 142 among 192 countries in terms of institutional quality when Cristina left, near Venezuela and North Korea. A barbaric neighborhood to live. Now we are improving, we are in position 112 “.
In the field of education the foundation proposes changes, such as “giving the possibility of self-management to educational institutions so that they can specialize”.
Switch to the Cabinet
On the other hand, Agustín Etchebarne said that, always, in a recurrent way, the problems are solved through a devaluation “to generate pseudo-competitiveness and increase taxes”. The result, he said, is that between 2000 and 2019 the world grew to 3.8%, emerging countries to 5.3%, advanced countries that are rich grow less because they increased their public spending, but grew to 1.8 % and Argentina grew to 0.8% (from 1998 to 2019). “When a country changes and begins to introduce pro-market reforms, it grows,” he said. He gave the example of Ireland, which was as rich as Argentina in 1980 and today is three and a half times richer than this country, “it was the poor country of Europe and today we passed the cloth,” he said.
If we grow up, he said, policemen, teachers, nurses and others should earn 3.5 times more in dollars. For this, “we must reduce unproductive work and increase productive. If we have three times more teachers per student than Australia, by lowering the number of teachers, with an efficient system, those that remain can earn twice as much at the same cost. But if Argentina is growing at a strong pace, they will be able to pay even more ”
The bet according to Etchebarne is that in 20 years Argentina will grow seven times more in its exports. How? “For example, we have nine provinces that do not want to do mining. If we do it with the same rules of efficiency and care of the environment that other countries that grow, Argentina can have a mining boom, “he recalled.
With regard to the high poverty rate, one of the reasons why gradualism was implemented, Etchebarne opined that “you can not wait to get 30% of people out of poverty to make the reforms. It’s the other way around. You have to do the reforms to take care of people. The social cost is not to make the reforms. If we do not do it, default comes and poverty will grow. In the next decade Botswana passes us. ”
The economist added that “in Argentina subsidies are given to what does not work and taxes are imposed on what works until this does not work either. The same happens with the Federal Co-Participation, we take out those who are better to give to those who are worse and both lose. Imagine if the province of Formosa is given to Israel for a while. It would do wonders. There is no poor province. ”
On the other hand he referred to the fact that people are now understanding what the problems are and that “when a government wins there is an opportunity. If he wins, let us suppose, Mauricio Macri, God wants this to be so, the opportunity is to form a new cabinet, change the head of the Cabinet, appoint a new Cabinet. That would create a shock of phenomenal confidence, if you choose them well. There would be an expansion of the economy that would begin to recover. But it is a very short window of opportunity, two or three months. If reforms are also made, optimism is again generated. ”
And finally he talked about dollarization. “You do not come out of poverty with consumption, but with saving in order to have working capital. The dollarization would allow to arrive at a healthy currency, if it were with a monetary treaty with the United States “.
By: Paula Urien
