Think about the weights, really | Opinion

President Macri in his debate on Instagram said you had to start thinking about pesos and not dollars. As a presidential candidate, he had already expressed this question, which is the center of possible economic trajectories for Argentina.

Beyond Macri, the question is simple: the Argentine economy does not have the ability to obtain by real economic means. trade, tourism, services, etc.) enough dollars to meet the expectations of its people. This is aggravated by the tendency to consume dollars earned abroad (travel, imports). Artificially, economic mechanisms were put in place that made these desires possible for brief periods, often through a heavy external debt.

These fictitious mechanisms destroy the livelihoods of most Argentines: their factories and their jobs. To access this model of external consumption, the peso is worth too much in terms of dollars. The counterpart of external expenses being accessible is that internal production costs are expensive. Not just for the domestic population. Also to export. They also have difficulty operating because, as the national currency is appreciated, their operating costs at international prices (dollars) are artificially high.

Thus, domestic manufacturers see their markets shrink and their sales fall. As a result, workers are fired and even closed. As the domestic market becomes smaller and recessive, it is more difficult to invest. And the economy is entering a recessional spiral as the logic of the free market intensifies.

If the Argentines measure their income by how many dollars they represent and refuse to receive less, the only way out is that the economy becomes almost instantly more productive than the United States … The other option would be to devalue.

But in this case, people should stop measuring their income in dollars. If trying to devalue generates economic chaos, it is obviously not a viable option.

"Think of the pesos", it is seriously measure the income according to the mode of consumption that they represent, and basically of the national production. This is not a "more open" economy or a "more closed" economy. It is to accept the place that belongs to the Argentine economy at a global level in a context where there is a national production and jobs.

Regarding the government, there are elements to discuss to achieve the goal stated by Macri For starters, it is not consistent to think that the objective to think in pesos will be reached with the leadership of officials who pride themselves on having dollar accounts abroad, let alone when they are presented as a creed for knowledge of economic aspects. This is not just a question of legality. The economic dimension is also at stake. It's a simple dilemma of conflicting interests: a person with dollar accounts, do you think in pesos?

In addition, it is one thing to "think in dollars or pesos" and another thing is to coexist with the instability of exchange rates. This instability stems from the policy of allowing the economy's dollars to run out with unnecessary expense – and then trying to reaffirm the search for exchange stability by introducing indebted dollars abroad.

This indebtedness harms "peso thinking" and harms internal activity because it results in an outflow of dollars in terms of payments and interest. It aims to reduce budget spending in the areas of internal consumption (consumption itself, wages and jobs) which are core areas for the creation and purchase of domestic products. In addition, the debt appreciates the type of change.

Another problem is that the variability of the exchange rate, combined with an external capital policy of free entry and exit plus political adjustment, arouses interest. It motivates speculative financial investments rather than productive investments, which generate jobs, discouraged in turn by the small domestic market and the high cost in dollars to support international competition.

It is stated that it must be adjusted because it is said that prices and wages must be lowered in order to be more competitive internationally. That is, the same effect as devaluing. What changes is the mechanism. The mechanism that is chosen is the one that was experimented in the 90's with convertibility, which should serve, for scholars or scholars of the time, that there is no rule foreign exchange or direct dollarization that would prevent price devaluation. and the dollar income actually.

Devaluing "thought in pesos" would really avoid the mechanism of life in a post-adjustment adjustment situation, which is inherent to "dollar thinking". It would not be a chimerical solution, because it does not exist. But the first step to preserve the jobs of the factories.

Q Professor of the Federal University of Rio Grande do Sul, [email protected]