Member of the Academic Council of Libertad y Progreso. Degree in Economics from Universidad Católica Argentina. He is an economic consultant and author of the books "Economía para todos" (Themes, 2002) and "El SindromeArgentino" (Ediciones B, 2006). He serves as a columnist in the newspaper La Nación. Previously, he worked the same task for the newspapers La Prensa (1985-1992), El Cronista Comercial (1992-2001) and La Nueva Provincia de Bahía Blanca (1992-1998). He's the host of the cable TV show "The Economic Report." Lecturer in Applied Economics of the Master of Economics and Administration of ESEADE, senior lecturer in Macroeconomic Theory of the Master of Economics and Administration of CEYCE. President of the Center for Economic and Institutional Studies. He was Economic Adviser to the Argentine Chamber of Commerce (1983-2002) and to the Argentine Chamber of Importers (1992-1993).
LOS ANDES: Cachanosky states that “it is always nice to be back in Mendoza“. There’s a long line of people finishing their accreditation to participate in the conference “La Argentina que viene” at the Hyatt hotel’s hall. There are about 500 people who will attend the event organized by UCIM to celebrate its 104 years. Roberto Cachanosky is one of the invited speakers. In the meantime, minutes before the start of the event, the economist spoke with Los Andes about current affairs, the causes of inflation, the loss of real wages, electricity and the light at the end of the tunnel.
– Speaking of Argentina’s future, I cannot escape that question.
Before talking about the Argentina to come, we have to talk about the ground we are standing on today, which is a situation of high inflation, unemployment, a delay in the official exchange rate, a lack of investment and a central bank which is very complicated.
What we expect in the coming months is an economy submerged in an inflationary process with a lower level of activity due to a lack of dollars to import supplies and obviously with problems of falling real wages.
– If we propose a metaphor and compare the situation of inflation with that of the cat and the rattlesnake. What would the rattle be?
Public spending?
– In reality, deep down it is a problem of values. I can start by saying -from the economic point of view- that the fundamental problem is public spending and the tax resources that are not enough to finance that spending so currency is issued, we take on more debt, etc., etc., etc. That is one explanation, but if we go deeper, we have to ask ourselves why is public spending increasing. And there we enter into another debate of a political-sociological nature. Because politicians increase public spending to attract votes and expand their political clientele, but at the same time there are people who vote for them. This means that there is a supply of populism because there is a demand for populism.
The economic problems are not separable from the institutional ones, from the values that exist in society, our problem is not economic but one of values that impact our economy.
– What is the strongest point of your analysis?
My central point is to show that the problem of inflation is not multi-causal as is said, because there is evidence -through the data that the Government itself publishes-, which shows that the inflationary problem of the falling price of currency is a problem of waste in terms of public spending.
Public expense attributed to social spending has grown exponentially since 1980, while on the other side we have increasingly poor retirees… lower quality of education and health among other examples.
– And the role of the State?
What is supposed to be a welfare State has been transformed into one that does not allow people to work, one that destroys wealth, increases the levels of poverty and indigence, unemployment, and hurts retirees.
– How can you retrace this path?
To do so, we first require a political leadership that is not looking at the next elections but at the country 20 years ahead. That there be a continuity of public policies, a deep economic teaching exercise so that people understand what the problem is and then a very consistent economic plan. To carry this out, a team that has a track record is necessary, that knows how to communicate the situation very well and has enough audacity and determination to apply it. And, of course, political support is required.
– Is Argentina ready to reach this consensus?
When you look at other countries, such as Spain after the death of Franco, Ireland, Southeast Asia, and countless other… You will find that it is possible, but to achieve a political consensus with Kirchnerism becomes difficult because they are different hegemonic political projects that are not libertarian. There may be a coincidence of minimum and necessary public policies to move the country forward.
– On what bases should these minimum policies be developed?
Consensus on economic policy has to be achieved on seven basic measures. Monetary reform, the deregulation of the economy, the labor reform (putting an end to the industry of trials), reform of the state in size and quality, tax reform, incorporate the Argentine economy to the world so that it exports and imports more, and transform social plans into work. However, each of these points must be debated to reach an agreement.
Of course, each of these measures has a different speed of implementation. A monetary reform is much faster than a state reform. A deregulation of the economy is much faster than a tax reform. The important thing is to generate a shock of confidence so that the population sees and understands that there is a road that is not going to be easy, but there’s light at the end of the tunnel. That way out is possible, I think so, otherwise I wouldn’t be here talking.
– There’s an optimistic vision when looking at the bigger picture.
My thing is not to sell smoke and mirrors. I think it is possible, what you have to do is an exercise in transmitting basic ideas and concepts and making people understand that this cannot be fixed in four or eight years. In four years you start to walk, in eight you accelerate, in 12 we will be at cruising speed and in 16 years Argentina can become powerful.
– Going back to the issue of currency and short-term actions, which you mentioned, what can we take as positive?
I am not thinking about taking zeros out of the coin, which has to be done because this is already unmanageable. When I talk about monetary reform, I think of removing the forced tender of the peso and giving legal tender to other currencies so that people choose what type of transactions they can make, this has to be integrated into a reform of a financial nature where those who have money abroad they can use it to make transactions here without having to bring the money and that could generate a boost to activity quite quickly.
Obviously, if there is no legal certainty and everything else is not done, it makes no sense. The monetary reform that I am thinking of is not dollarization, but allowing people to make transactions in whatever currency they want, they will do so in dollars, that is obvious.
– Would we see the regularization of the economy?
We are going to leave that to the people, I don’t think the Central Bank should be dynamited or closed, I would simply put it to compete… if it produces a poor quality product such as the peso, nobody will want it and it will close only. Besides, it is not possible to dollarize because there are not enough dollars in the Central Bank to be able to remove the pesos from circulation.
– Tell me the end of the movie, a powerful Argentina.
I think that Argentina can have a per capita income similar to that of Spain today. Although Spain has problems, it is much better off than us. We would go from having US$8,000 to between 25 and 30,000 dollars per capita. This means doubling the per capita income. That would generate investments, jobs, improvements. I am not asking for the Nobel Prize for what I say, I simply see the evolution of other countries that do not have the natural resources that Argentina has, for example Ireland that does not have cows, nor the humid pampas, nor lithium, and today with a smaller territory than Formosa, with 4.8 million inhabitants, made structural reforms like the ones I mentioned in the late ’80s, and today has a per capita income of US$70,000. We have natural resources, and if we add the knowledge industry and other sectors to that, Argentina has phenomenal growth potential.
– What about mining?
It is a possibility, but it is an industry which collides with an environmental issue. I believe that taking care of the environment, you can mine and develop wealth. Now if we are to close everything, we will not be able to do anything.
– There is a difference between extracting minerals and processing them
The truth is that I’m not certain about what Argentina has to do, but on the other side Andes we they have the same minerals and are exploring them. Chile, as far as I know, does not have serious environmental problems. I don’t see why mining couldn’t be done on this side.
