The economist Eduardo Levy Yeyati (Buenos Aires, 55 years old) is dean of the School of Government at the Torcuato Di Tella University. During Mauricio Macri’s administration, he directed the Argentina 2030 Program, which sought to draw lines of development in the medium and long term. The work of that program was truncated, evidence of the difficulty of the South American country to project policies that go beyond emergency solutions to its recurring crises. In this interview with EL PAÍS, carried out a few days before the mid-term elections on November 14, Yeyati considers that “two years of continuous deterioration and increasing economic distortions” will begin in Argentina on Monday.
Question. What is your description of the current economic situation in Argentina?
R. From a social point of view, we couldn’t be worse. The social situation has not been so bad for a long time and for so long. From the macroeconomic point of view, which is the other side, Argentina has been falling for a couple of years due to the crisis that began in 2018 and it will be difficult for us to recover the product lost by the pandemic in the coming years. We have an economy that invests less and less, so the potential growth is modest, if not tending to zero. It is also an economy hampered by temporalities.
P. What do you mean by temporalities?
R. We roll back policies every two to four years. That means that much of the little or much that was done during the Government of Cambiemos [la coalición de Mauricio Macri, en el Gobierno entre 2015 y 2019, hoy llamada Juntos por el Cambio] it was reversed almost immediately by the Government of Alberto Fernández, and vice versa. This pendulum nature of policies renders any ad lacking in impact. So, we have a state without money, which by itself cannot boost the economy, and announcements that have zero impact on the private sector because its reversal is anticipated. We are literally in a situation of economic stagnation, as when the car is in the mud and the wheels do not pull. We have no way to move forward, unless there is a political, cultural change, some announcement that is novel.
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P. And where does this pendulous nature originate?
R. In part, this is because we are a middle-income country stagnant over time, with a GDP 10% higher than in 1974. This generates a lot of political anxiety and a tendency towards short-plasmaism and polarization. Short-plagued by anxiety and polarization because one has to endorse failure on someone.
P. The model of elections every two years is then called into question.
R. Something was learned, and that is that a government does not have space to subordinate its reforms to a victory in the midterm elections. What you don’t do in the first nine months, you hardly do in the rest of the term. The Government of Cambiemos thought that the victory in the Legislative [de 2017] It opened the door to renovations and the door lasted a month and a half. Awareness is being gained that reforms must be ready at the beginning of the mandate and already discussed with the important actors.
P. But is there political space for such a discussion?
R. The problem with Peronism is that the Kirchnerist sector has a hegemonic vocation and will never negotiate with the other party. Its meaning is to displace the opposition and rule with total control. On the other hand, the non-Kirchnerist Peronism is a more traditional party that allows negotiation with the expectation of an alternation. Although there are many people who think that with Peronism you cannot negotiate, the only alternative that we will have in 2023 [cuando termina el mandato de Alberto Fernández] It is to find a part of the opposition that guarantees sustainability in the time of the reforms.
P. The Government has reacted to the defeat in the September primaries with an increase in social spending and more money for the middle class. Will this be reflected in the ballot box?
R. The primaries made it clear that the idea that I vote for the one who gives me social plans is no longer verifiable. If the results are confirmed on Sunday after this “consumption and joy” plan, we will be facing a change in attitude. People will say enough about checks, give me inclusion, work and services.
P. Poverty in Argentina is around 40% and annual inflation around 50%. Why are there no protests in the street?
R. Argentina has had the demonstrations that Chile or Colombia now have for 20 years. It had its peak of violence in 2001, with deaths. And many of the leaders of those protests are in the Government. Let’s change dialogue with the leaders of the grassroots organizations, the piqueteros, whatever you want to call it, but Alberto Fernández incorporated them into the Government. That helps to ensure that those episodes of discontent are not explosive, because there is a reference that leads and contains. To that you have to add that, unlike the rest of the countries, except Brazil, our social safety net is richer and bigger.
P. There are coincidences that this network cannot last in time.
R. Yes, even social leaders see that. We have a problem, because you have developed your social support network so much that today there is a temptation to think of it as a parallel economy, subsidized by a State that today does not have sufficient funds. Everyone understands that the only way out of this trap is with labor inclusion. They don’t know how to do it, they don’t know how to create genuine work for these people, but they are looking for a way. The challenge is to overcome inertia and look for multiple ways, because we are not going to create jobs for three million people.
P. What will happen on Monday if the government’s electoral defeat is confirmed?
R. My impression is that we will have two years of continuous deterioration and increasing distortions that the Government imposes on the economy to keep things more or less stable, but without any positive change. And to the extent that the opposition finds its way, it will anchor expectations for the future and businessmen will illuminate the possibility of a reversal. If Argentina did things well, it is incredibly cheap. Then something of the greed begins to operate to contain the fear.
P. He does not fear a radicalization of Kirchnerism, in case of a defeat
R. There will not be a collapse to the extent that the Government is committed to arriving and is not radicalized. I think that Alberto Fernández’s main ambition is to be a former president, he wants to get there. In the same way that the Government of Cambiemos said “we want to finish the mandate.” The situation is very bad and the Government is aware of its inability to manage, not just us. And I don’t think Kirchnerism will attempt a coup or extreme measures, because they never gave any signs of that. They had a chance and they didn’t. If you put this together with the other elements you will get there. You are going to arrive very badly and with a list of subjects heavier than the one you had in 2016, but you are going to arrive.
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