Global Courant 2023-05-13 15:00:16
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Nonfiction Economics. With inflation out of control, there is more chance that alternative proposals will emerge.
Arm firm and extended forward, hand open, gaze fixed ahead and serious eyes as if lightning were coming from there or the Levitating Charm of Harry Potter, that magic trick from the movies to move objects through the air. But it is Javier Milei, presidential candidate in Argentina 2023, and the image of him on the cover of his recent book The end of inflation, eliminate the Central Bank, end the inflation tax scam and return to being a serious country.
The economist confirms there his interest in dollarizing. He says that the exchange rate for that operation would be between $300 and $3.50 (he mentions $300 first and then $350), which according to his “more purist” proposal would take at least two and a half years to take that step —first you would have to change the current banking system to one called ‘Simons banking’, the brainchild of a libertarian economist at the University of Chicago, Henry Calvert Simons, who proposed a 100% reserve banking system—and then launch a coin and only then, once the Argentines choose, “eliminate the Central Bank.”
It also offers another alternative to his “purist” one. It is one of the economist Emilio Ocampo “that can be done much faster.” It does not specify how long.
The candidate for Liberty Avanza deludes readers that, thanks to his plan, wages in dollars “will fly” (NE: refers to the fact that they will rise), “there will be a sharp drop in poverty and indigence” and “a huge welfare gain. All this, continues the candidate, “for the mere fact of having made a monetary change that ends the scam.”
Milei is convinced of liberal ideas and the reforms that are needed to apply them (three according to him: State, labor and economic opening). There are other economists who share similar ideas (such as Ricardo López Murphy or José Luis Espert) although they think differently from Milei regarding the political strategy to achieve the objectives.
In The End of Inflation, Milei criticizes —in addition to Kirchnerism and JxC— socialist ideas. She mentions Axel Kicillof.
“I remember Kicillof saying that the Soviet Union had fallen because it didn’t have Excel when in reality, along with the Americans, it had the best mathematicians in the world. They sent rockets to the Moon; look if they were not going to be able to invest the input-output matrix”.
Milei’s quote about the governor of the Province is interesting because the former UBA professor is another example of a convinced economist, although of course he has the opposite ideas to Milei. Kicillof was a professor of Marxist Economics. He is Cristina Kichner’s head economist and the one who best interpreted the vice president’s economic thinking.
For the governor, the main objective of large companies must be to meet the demands of the local market, export only surplus goods and there are no reasons why domestic prices are not aligned with international ones. He believes that the controls that can be carried out by the State on large groups suffer from imperfections -even through regulatory frameworks- and for Kicillof, then, the best way to act is for the State to have a presence or its representatives in the directories of major companies. Ever talked about regulating the rate of profit or benefits.
Kicillof justifies the intervention and planning of the economy by the State: avoiding crises of overabundance.
Milei, for her part, does not deny that the modern production scheme entails market failures and that there are fluctuations inherent in the system. But he believes that the State is not in a position to determine what levels prevent ups and downs in activity and employment.
“Socialism is a theoretical error —says Milei in his book—, the solution is always the free market. It is nonsense to determine, for example, the optimal amount of goods.
It is one thing to talk about economics and another to do economics. In the case of Milei, it is not clear —at least in the book— the practical application of her ideas (the same happens with those of Kicillof or those convinced of very rigid schemes). Milei accepts those limits. “The Central Bank is suppressed and the economy is dollarized. To be realistic, the formula to get this country off the ground is going to take many years, 35 or 40 at least. The first thing will be to substantially lower inflation. If the monetary issue were stopped today, within two years there would be no more inflation.
The economist Adolfo Canitrot said: “To lower inflation I am a monetarist, structuralist and everything that is necessary; and if you have to resort to the macumba, too ”.
Argentina’s problems may be so complicated that they require the invocation of a power that comes not only from earth but from heaven. In crises the convinced capture faith.