Economist specialized in Economic Development, Strategic Marketing and International Markets. Professor at the University of Belgrano. Member of the Liberal Network of Latin America (RELIAL) and Member of the Institute of Ethics and Political Economy of the National Academy of Moral and Political Sciences.
Lic. in Business Administration. Master in Applied Economics of the UCA. PhD in Economics from the UCA.
INFOBAE – It is not so surprising that the Government advances on the Vicentin company. Fernanda Vallejos had anticipated that Kirchnerism wanted to keep shares in private companies that the State had to help, in the midst of a brutal crisis generated by a poorly managed quarantine. Vicentin’s case is clearly not due exclusively to quarantine, because it is also among the companies that produce essential goods and in one of the areas least affected by the current crisis. Vicentin is a company that went wrong a long time ago and has been helped by Banco Nación, some say in a disproportionate way. In addition, it is a company that has invested in the last 20 years in biodiesel plants, contracting debt with different institutions (mostly international). However, as Argentina never solved its structural fiscal deficit, there came a time when lenders told us “Enough!” to financing, back in 2018. So, renewing the lines of credit began to become more difficult. And not to mention after the elections it happened when the country risk shot up to stay completely out of the international markets that were already internalizing that populism was returning to Argentina.
It is true that in the US and in Europe, in critical situations, the State has taken private companies as collateral in exchange for helping them face pressing situations of illiquidity. But there are enormous differences with the Argentine situation. The expectation in these countries is that, once the problems have been overcome, when the company manages to return the aid package, it recovers the ownership of its shares. The intervention that the State makes in these cases is based on the idea of avoiding the systemic risk that the bankruptcy of a large company can generate, in terms of cutting the chain of payments and the consequent domino effect that it can produce when the general state of the economy is in a worrying situation. Supporters of this type of intervention would say that for those special cases the usual process of preventive contests (the famous chapter 11 of the United States) might not be enough. We are not going to discuss the weaknesses of these reasonings today. Simply because the Argentine case is different, and it is much more serious since the economic imbalances are structural and root.
In Argentina, the government has already appointed a “controller” by decree, which is itself questionable. Second, he warns that the intervention will be followed by the expropriation of the company (which should be done by law). Third, even more serious, the President himself says that “in this way we will be one step ahead of food sovereignty.”
State intervention to help private companies suffering from liquidity or solvency problems is healthily debatable. It is also true that the financial stress suffered by Vicentin, with a debt of almost USD 1.6 billion, affects an enormous number of sectors and employees. But the word expropriation on the lips of a government that has praised the dictator Maduro, whose members participate in the meetings of the communist and socialist parties in Puebla and in the Sao Paulo Forum, generate deep concern, since they keep him from being an intervention with the mentioned overtones of a developed country like the United States or countries of Europe. In addition, it is not the first expropriated company, and the most serious thing is that it will probably not be the last. It is only enough to do a little memory to remember that members of this government have known to have a strong appetite for this type of behavior: appropriation of pension savings, organic charter reforms to finance the Treasury, YPF, among others. The President himself anticipates, to try to minimize it, that we will once again alert the population to the potential economic debacle that may occur in our country if we follow in the footsteps of Venezuela. But if he tried to minimize the effect on expectations, he sharpened the anguish of the businessmen and a good part of the analysts with the third point: the argument of “food sovereignty” is an insult to the intelligence of the Argentines. The Argentine food sector is probably one of the most efficient in the world. It is a sector that is capable of producing calories equivalent to those necessary to feed more than 400 million people. It is a sector brutally punished by excessive taxes and regulations in a way unheard of and without equal in the entire world. On the other hand, we know that the State can never be an entrepreneur, because being an entrepreneur implies taking risk with your own capital.
That is why Alberdi said that “the only good thing to do with a public bank is to close it.” They now complain that the BNA would have been too lax with loans in recent years, but that is the essence of the State when it acts as a banker. Specifically, officials do not risk their own money and, instead, can receive a thousand different modes of favors from the benefited companies. Furthermore, the State will be unable to be a good business manager because it will lack any innovative vision, and its failures will be solved by the taxpayers who will cover their annual deficits. As the case of Aerolineas Argentinas, which has already cost us more than USD 7 billion and will cost much more soon. Socialism has shown that it is capable of melting the quintessential oil country of Latin America where even gasoline is scarce, as it has also generated disasters of misery, hunger and corruption in all cases, without exception, where it has managed to settle.
Fernández still enjoys high popularity for having made the hasty and unilateral decision to lock us up in a kind of house arrest to stop the pandemic. But the taba is already turning up in the air, and popularity has started to drop and will plummet in the coming months with the exponential growth of business failures. It will then have two alternatives, to deepen the stocks, the repression of economic freedoms and state controls; or, to face with maturity the structural reforms that take us to the path of freedom and progress. It will be difficult to travel intermediate roads. In this context, the expropriation of Vicentín anticipates which of the two paths is chosen.
