4/25/2023 - politics-and-society

Economy in Argentina: Who marks the course of this crisis?

By melina ferreira bravo

Imagen de portada
Imagen de portada

Economic crisis and political cycles in Argentina: Who marks the rhythm to whom?

The year 2023 is not a year like any other. As our democratic constitution stipulates, it is time to choose those who govern us for the next four years. Putting the vote in the urn is not a simple task when we see ourselves engaged in a political culture that is committed to seeking guilty and scapegoats before the economic disaster with which we live as a society. consecutive years of high inflationary rates, crises and levels of inequality that do not stop growing and debts whose balances are unattainable, are some of the conflicts that seem to characterize Argentina since immemorial times. It is as if it is not the 70 years of peronism, it is the change of economic model of the dictatorship, the depilfarres of the 90, or the eternal debt that has taken Macedonia. Assume we always meet with the speech of “the heavy inheritance.”Now it is time to rethink whether the economic context in which we see ourselves involved has a parallelism with the perpetence that policy is better, with its cyclical natures and actors seeking to maximize their own profits, which marks the pace of the economy.

Electoral Cycles and Economic Inefficiency

Polytological literature presents the phenomenon of the electoral cycle and its consequences on fiscal and monetary policy. The hypotheses, and the conclusions, are clear and are not for any others. Essentially, what we are told by multiple authors of the discipline, is that depending on whether we are in an electoral year or we will not see certain economic policy. It is thus that in electoral years an expansive fiscal and monetary policy is easily recognisable, i.e. unsupported emission, significant increase in public expenditure, job creation, fall in the international reserve, etc.The premise is simple: official politicians will increase expenses, especially the most visible expenses, so that the voter considers these candidates as capable and competitive. It should be noted that much of the literature, although it recognizes the voter as a rational actor, highlights the predominance of short-time preferences in it. Thus, while closer to choice, greater is the expense and advertising of it. Once the elections have passed, when the new government (or re-elected government), expenditure tends systematically to decline, since the first year of mandate always counts on an acceptable confidence index in which the manipulation of the electorate is no longer necessary. The father of this literature on economic political cycles, Nordhaus, makes it clear that these studies have a correlate with the obvious manifesto that voters care about their everyday economy while politicians care about power.Of course, at the moment, we're not raising anything new. It is usual for us to compare ourselves in elective years with a multitude of public buildings openings that promise us culture, sport and learning new technologies or streets that have managed to be asphalted after years of insistence on part of neighbors. However, the problem arises once the elections have passed, when we can see the consequences in the economic efficiency of policies that were thought to generate an electoral triumph. In this way, the unfinished projects, the works that have been photographed from all angles now already paralyzed, the political ones that have clearly not been drawn to have a desirable and lasting output in time, but above all, and even more pressing, we find ourselves with a pending macroeconomic situation of the finer thread of all.

The crisis situationCurrent

The current economic situation and the challenge of an electoral year

An acute shortage of dollars, an abrasive drought that reaches the agri-exporter sector generating currencies, causing losses that are estimated between $7,000 and $9,000 million compared with previous harvests, an inflation that in February exceeded the feared three homologous numbers, an excessive gap between the official dollar and the parallel that generate even more expectations of devaluation, pacts with promises that are inaborable to economic magnitude

Electoral cycles and economic policy in Latin America

In his study of electoral cycles in Latin America, Streb and Lema conclude that foreign currency reserves fall systematically in years of elections, in an attempt not to devalue and spend compulsively, and that, in post-election years, devaluation, and subsequent inflation, comes with greater brutality. In summary, tax expansions and expenses for the sale of an election to the electorate are corrected consecutively with an inflationary tax after the elections. Moreover, it is concluded that there is a fiscal area of monetary policy which, in turn, is crossed by electoral interests.

Institutional stability and manipulation of monetary policy

Making a bit of comparative politics, both authors note that these electoral cycles are especially in developing countries. What has our country, and so many others, who are prone to suffering this economic political logic? The answer lies in the weakness of our institutions and the lack of weights and balances, or also called institutional safeguards, among the different powers that make up the government. The discretionary power of which the Executive is worth is a key variable to explain the lack of limits to the time of subordinating economic policy to electoral desire. At the same time, the lack of independence of the Central Bank is another key factor in the cyclical manipulation of monetary policy.Trying to manipulate the economy inescrupulously in the current context is a double-filo weapon, and officialism, or at least the most rational part of it, you know. Not only do you know how it is watched by your creditors. For this reason, the Mass chose to carry out some unpopular measures such as the sale in ANSES' dollar obligations. However, the Minister's gradualist strategies are far from ensuring economic success or a solid foundation for the candidates of his party, or for himself. The hope of a low inflation trend is just a reminder. 9.8% of food inflation triggered the feared three digits. The idea of an annual inflation of 60% perez as it glimpses the inflation of these first months of the year. For its part, the kirchnerist government paw, although it recognizes the inocuity of the fiscal deficit and the lack of currencies, proposes already tested revenues that would only aggravate the state accounts and its consequent effect on the purchasing power of its citizens. The plan seems to be simply expanding the fall.The gravity of the current situation removes the margin for political play. The problem is not who heredees that or what ideology prevails in Casa Rosada, but the reality of being immersed in a cycle in which the economy is doubled to the struggle for power. The inertia in which the economy is falling is very difficult to stop, and what we can be sure is that a fictitious brake, a strong fictitious weight created by an electoral need, will only assure us more broken bones when we reach the ground.

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melina ferreira bravo

melina ferreira bravo

Hello! I am a Bachelor of Political Science and Government with specialization in Government of the Universidad Torcuato Di Tella. During my academic career, I made an exchange at Pompeu Fabra University, Barcelona. In the same I continued my training with respect to Genero Policy and Evaluation of Public Projects. I am currently serving in Human Resources in the public sector.
I enjoy a good interdisciplinary debate and any opportunity that offers the possibility of learning.

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