EL CATO – On her Twitter account, Vice President Cristina Fernández pondered an article by Mr. Alfredo Zaiat published on Page 12, last Sunday, July 12. In this note entitled “The political conduct of economic power” Zaiat criticizes the intention of President Fernández to summon “concentrated groups” for the noble task of building a new capitalism adapted to the new normality. The article incurs basic conceptual errors.
First fallacy: “concentrated groups”
Zaiat maintains that the “concentrated groups” have a different interest from the “national” since their profitability does not depend on the development of the internal market. To speak of “concentrated groups” in Argentina is almost an exaggeration. The companies that concern Cristina so much have a market value that, taken together, does not exceed 20,000 million dollars. (including banks). Paradoxically, Mercado Libre doubles that value. What’s more, Techint is worth less than the Premier League and the sum of all banks is worth less than the Bundesliga and the Spanish League.
It means that with the value of the teams from five European leagues you can buy all the “concentrated groups” of Argentina. That is, the unstable and risky value of three thousand soccer players is higher than the market value of all large companies and banks in Argentina. Argentina does not have large companies. Argentina is a country shrunk by mediocre policies that consumed the value of assets and projects. Only in a closed, small and blocked economy can one speak of “concentrated groups”. If we open the economy, these companies lose specific weight and therefore “hegemonic power”.
In Argentina there are two types of protectionism that impede competition. The classic tariff and para-tariff protectionism that isolates local prices from international prices and a kind of “internal protectionism” that consists of the institutional differential that keeps foreign investment away. Therefore the concept “concentrated groups”, which fills the official discourse with excuses, is nothing more than the result of the low level of competition.
Second fallacy: “national interests”
Zaiat suggests that the “large groups” based on commercial, financial and equity abroad do not have interests compatible with the “national” ones. This is equivalent to saying that if a soccer technical director defended with a “line of four”, he would be happy every time the rival striker passes easily bypassing a certain defender. No capital owner, a natural profit maximizer, will want to lose money in any of the markets where it operates. For this reason, no businessman, large, medium, small or self-employed will want the country where he operates to do poorly.
Also, the value of things is strongly influenced by the environment. The value of a company depends on both the environment and the company itself. The real estate market is sobering in this regard. An exactly the same house has a different market value depending on the environment in which it is located. The same thing happens with companies. Another reason that for any entrepreneur is strongly interested in the general welfare.
Third fallacy: “ideologized groups”.
In an attempt to play a game of TEG (board game “Technology and Strategy of War”) Mr. Zaiat outlines amusing theories about the relationship of some economic groups and ideologies. The “bad” would be stokers of the hungry neoliberalism while the good politicians would be the defenders of popular interests. There is no possibility of analysis except from the perspective of humor.
In a globalized world where each person has a cell phone in their hand with access to all the information on the planet, to maintain that a newspaper models the way of thinking is a lack of respect for people’s intelligence.
The president’s role is not to “think new worlds” or “design new normalities.” Argentina needs less taxes, fewer regulations, lower deficits, better institutional quality and less student paranoia. After the pandemic and quarantine, we need a strong capitalization shock to create jobs and reduce poverty. Paranoia and studentism add little to the work of the President.
