December 3, 2021

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After the official defeat, the question is how far economics bears art and how much politics supports science

After the official defeat, the question is how far economics bears art and how much politics supports science

Alberto Fernandez, Mauricio Macri and Cristina Kirchner on December 10, 2019, when the current government took power (Reuters / Agustin Markarian)

I start with my favorite story about proportions.

A peddler notices, on the side of the road, an inn advertising “empanadas de perdez”. With a mixture of hunger and curiosity, he stops, goes in, and orders a couple of pancakes. He tastes them and orders another couple. After lunch, the next conversation with the waiter.

The empanadas are very tasty, but I haven’t seen much partridge in this area.

– Yes, the truth is that there is very little.

– And then, how are they doing with the empanadas?

– And … we mix the filling with horse meat.

– Uh, 50% partridge meat and 50% horse meat?

– No. Horse, partridge. Horse, partridge.

It is necessary that monetary policy and exchange policy stop being the Frankenstein in which they have become and tend to a more rational scheme

Economic policy is always a matter of proportions, between ‘art and science’ or, to use more current terms, between ‘the intangible’ and science.

Among the intangibles are leadership, credibility, governance and managerial capacity. There is no good economic policy without these components. There is no good economic policy without good science. Only with art, this is not enough, without the support of these intangibles, even good science fails.

Unfortunately A large part of the ruling coalition has always believed that all that is needed to implement economic policy is “horse meat”.. That intangibles are sufficient, and that science is not required.

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And the problem with the last two years or the first two years of his reign is that they had bad intangibles and confused them with bad science. The result could not be different.

Economy Minister Martin Guzman
Economy Minister Martin Guzman

Although it seems counterintuitive, I suspect it wouldn’t have been so much different either, had the world not been stricken by the tragedy of the pandemic. They built a model of government with muddled leadership, with low credibility due to internal contradictions, its precedents and reputation, with difficult governance and without any administrative capacity. And to this narrative, they added a pseudo-academic shell to try to fix the debt problem and build a program to “reassure” the economy.

You already know the result. Also, at this point, you know the outcome of the election.

The million dollar question is whether this outcome modifies the intangible, if there is any room for improvement in science, and what proportions of art and science will emerge in the coming days.

Let me think of the answer.

To aspire to a fundamental improvement of intangible assets, and to define intrinsic improvement as that which can serve as support for a good scientific program, is impossible, because the ruling party is entering this new phase and is very weak.

There are those who still believe that with intangibles and bad science, it can pay off

With so much wind in our favour, we’ll be able to get the bare minimum terms so that the policy does not generate an institutional crisis and allow, with a little better science, the ruling coalition to complete its mandate.

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With regard to economic policy itself, As I told you earlier this Sunday, from the same column, the maximum we can look forward to is To prevent the rate of inflation from rising (in view of the certain impossibility of implementing a real program to combat inflation and support growth), although it must remain high to “help” monetize spending. It is necessary that monetary policy and exchange policy stop being the Frankenstein they have become and lean towards a more rational scheme, reducing the price gap between different dollars (massive export tax and import subsidies). And we achieve, in this context, a certain financial system, which includes a reduction in economic support, and with this “program”, an agreement with the Fund is closed that prevents us from getting out of the world, and it always tries to reduce the costs of the most vulnerable sectors of society, affected by the decline and waste in the allocation of public spending.

But even this minimal program, given the intangible, is not insured, far from it. It would take some science beyond what brought us here. (Details, I insist on re-reading my previous note).

But everything will depend on which tribe will dominate in the ruling coalition and what is their diagnosis of what is needed and its solution.

The dilemma, then, for the next few months, will be how much new science policy is tolerated and how much of this poor art the economics supports.

Because there are still those who attribute the failure of this two-year period to a problem of dosage rather than treatment, and that defeat is the result of overdosing too late.

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This means that there are those who still consider that with bad intangible assets and bad science, it is possible to pay off.

If this current prevails, we haven’t hit the bottom (the well, not the Washington well) and the total lack of control is right around the corner.

On the contrary, if a more pragmatic current prevails, with some minimal agreements, it will be possible to stabilize this bad balance and move through the next couple of years reasonably well.

In short, the two major political alliances need to stay together internally and reach some basic agreements with each other. But the problem is that each inner group has a different vision of the future and presents different intangibles.

The dilemma, then, for the next few months, will be how much new science policy is tolerated and how much of this poor art the economics supports.