Why is Argentina 4 times more poverty than Chile and Uruguay?

In 2006, Argentina and Uruguay experienced the worst moment of their diplomatic relations because of the conflict of Botnia, the Finnish paper mill located opposite the beaches of Gualeguaychú (Entre Ríos). Also in 2006, the Supreme Court confirmed that some 60,000 savers received – through private banks – repayment for every dollar affected by the "corralón" of 1.40 pesos (the product of the pesification of bank deposits in dollars, a measure granted in 2002 by President Eduardo Duhalde to put an end to the law on the convertibility of the currency). 13 years ago, Michelle Bachelet became the first woman to become President of Chile. In Argentina, the dollar started in 2006 at 3.08 pesos and in December at 3.10 pesos. Broadband users in the country reached 1.4 million. Diego Simeone made his debut as technical director and in his first year won a title with Estudiantes de La Plata. Argentina has experienced three consecutive years of economic growth. And poverty was 29.2%, almost similar to Chile (29.10%) and slightly lower than Uruguay (32.5%).

Nearly 13 years later, Chile has reduced poverty to 8.6% and Uruguay to 8.10%. And Argentina, on the contrary: it rose to 32%.

This almost unknown data was badyzed a week ago by the consultant Idesa and clearly show that in the last 12 years (9 under the chairmanship of Kirchner and 3, Mauricio Macri), in the image from its neighbors, Chile and Uruguay, Argentina has missed the opportunity to do things according to the rules of good administration and every day Argentina suffers enormously.

1. Inflation

Inflation breeds poverty. In the last decade, Argentina has doubled inflation, while Chile and Uruguay have reduced inflation. Chile and Uruguay adopted the system of inflation targets in 1999 and 2007, respectively, and succeeded in reducing it from two figures per year to one figure over an average of 10 years. Argentina implemented it in September 2016 and dropped it in September 2018. The inflation targets are a monetary policy in force around the world for almost 30 years , in which the Central Bank has a type of inflation for the calendar year and manages to reconcile it with the rise in real prices through changes in interest rates and other monetary instruments. It's an effective, but long-term solution. Argentina can not wait that long.

2. From surplus to deficit

In recent years, Argentina has been one of the three countries with the highest red numbers in the respective economies: from the surplus to the largest deficit in its history.

3 Public expenses

Although public spending (% of GDP) has increased in all three countries, in Argentina, it increased by 10.76 points against 3.62 (Chile) and 4.58 (Uruguay). In other words, in the last 13 years in Argentina, it has increased twice as much as in Uruguay and almost three times more than in Chile.

In its report, Idesa highlights the following: between 2006 and 2018, state revenue at its three levels (national, provincial and municipal) increased from 28% to 35% of GDP and public spending from 27% to % to 41% of GDP. PBI C, that is, a much larger and deficit public sector has been generated, deepening a trend of more than half a century. The main consequence has been the fallacious currency issuance and indebtedness, from which the high inflation which multiplies the poverty. Neighboring countries with a more responsible and professional public administration (public spending in Chile is 25% and Uruguay at 33% of GDP) have managed to avoid inflation and reduce substantially poverty.

And he adds that, as Chile and Uruguay teach, less public spending is compatible with poverty reduction as it is effectively managed.

For example, For the national level and most provinces, the pension system is the main source of fiscal imbalance. By eliminating duplicate coverage and privileged treatment, it is possible to moderate expenses without aggravating the social situation.

4. Unemployment

Although unemployment has increased in all three countries, Argentina has the highest level of labor force without work.

Although unemployment has increased in all three countries, Argentina has the highest level of labor force without work.

5. Minimum wage in dollars

There is no point in raising the minimum wage with devastating inflation. In dollar terms, in the last 11 years the minimum wage in Chile has increased by 33% and 19% in Uruguay. In contrast, in Argentina, 24% were reduced.

6. Public income

This is highlighted in the latest Idesa report: In Argentina, total government revenues (nation, provinces and municipalities) account for 36% of GDP. In Uruguay, at 30% of GDP and in Chile, at 24% of GDP. These data show that public revenues in Argentina are considerably higher than in neighboring countries.

Because?

According to Idesa's professionals, irresponsibility, opportunism and mediocrity are at the heart of Argentinian state management issues. As the experience of Chile and Uruguay shows, one must first look for an "attractive" explanation, such as blaming the IMF, for reducing poverty. increased professionalism in public management at all levels of government.