“The mismatch began in the 30s, with the end of the fiscal consensus”

September 12, 2018 - By Joseph Taylor

Nothing seems further from the urgencies of the present than to review the pages of the past. However, for Roberto Cortés Conde, something more than an economic historian, it is a central effort to understand the phenomena of the economy of the present. A concept that justifies the appearance of the book New Economic History of Argentina, which he directed together with Gerardo Della Paolera and the active participation of Javier Ortíz Batalla. A text that gathers articles that, in their majority, were published first abroad.

Why should the economic history of a country be studied?

It is necessary to study economic history not only because of the natural curiosity about what happened before us, but because of a central theme: studying the past serves to understand, and study, the present.

And it shows an example: “For many years, Argentina was financed with import duties. That was a kind of basic agreement. But then that changed and began to be issued because the money did not reach. ” That is why he says that “the imbalance began in the 30s, with the end of the fiscal consensus on the financing of public spending”.

He argues that Argentina is not a photo or a static phenomenon: “It is a process and you can not know or understand what happens today without a look at what happened yesterday. It would be like arriving at a theater in the third act of a play and complaining because the plot is not understood. Here we see, always, a reiteration of processes, not exactly the same, but with the same background “.

Cortés Conde is professor emeritus of the Department of Economics at the University of San Andrés and honorary president of the International Association of Economic History.

He has a relevant example to illustrate the need to know the past. “Ben Bernanke, former head of the Fed, studied the Great Depression of the 1930s. And that knowledge allowed him to apply countercyclical measures, not those recommended by other economists, in the 2008-2009 crisis. That’s why the United States came out of that problem first. “

Repeated figurines Nothing seems to be totally new in the Argentine economy. “Export retentions appear as something new today, but in 1955 a right to ’emergency’ exports was imposed.” Remember, too, that the differential exchange rates were inaugurated in the 1930s and the income tax, today Earnings, was “temporary”, like the current check tax, among many other examples.

He assures that Argentina has two central problems, closely related: inflation and the fiscal deficit. And he maintains that it was not always like that. “In the nineteenth century there was a lot of inflation, in any case always for the issue of money. Almost all the provinces, especially that of Buenos Aires, printed currency. However, in 1890, with the debt crisis, the system changed. And until the 40s, Argentina was a country with very little inflation, less than the United States. For Argentines, saving was very important and possible, and the truth is that Juan Perón was right when he asked in Plaza de Mayo who had ever seen a dollar. The foreign currencies did not matter to the people and the peso served as a unit of account and safeguard of value “.

Cortés Conde is a member of the National Academy of Economic Sciences and the National Academy of History. He was also a visiting professor at the Robert Kennedy Chair at Harvard and at the University of Chicago.

The mechanism that allowed so many years of stability began to change with the end of the gold standard and the founding of the Central Bank in 1935, which monopolized the issue. “Argentina came to the Second World War with a good and a bad one: the good one was that it accumulated surpluses of gold, reserves, that could accompany the growth of the economy. The bad news was that the collapse of imports implied a sharp fall in fiscal resources, since the main source of income to the Treasury was for import duties. “

And this triggers the other side of Argentina’s macroeconomic failure: the fiscal deficit, since in the face of a lack of resources, the BCRA begins issuing paper money to finance public spending. “That’s why the stabilization plans fail, since the deficits are financed by issuance. And this is more political than economic. “

Regarding the present, he assures that “with the stability of the dollar, hyperinflation was avoided. That is why, in addition, the appeal to the IMF was essential. And when it comes to talking about the root of macroeconomic imbalances, Cortés Conde says that “there is a fundamental disagreement in Argentine society: everyone believes they have the right to everything. But nobody agrees on who should pay all those rights. “

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