March 23, 1954 Juan Domingo Peron spoke in the Colon Theater. He gave a speech to the general secretaries of the unions grouped in the General Confederation of Labor. There were also the representatives of production, industry and commerce (the General Economic Confederation).
“Each union has the salary according to the performance of that activity”Perón said. “Companies cannot be made to increase beyond their possibilities, it would mean bankruptcy.”
The two-year wage freeze expired and collective bargaining was resumed. “They were rough And till violent”, The historian Pablo Gerchunoff recalled the other day on twitter. “In those days of 1954 the vandorism as a conception of the role of the labor movement in its relationship with Perón ”.
Perón at that time was looking Dollars. A few months ago he had approved a new regime of benefits for foreign capital and had received the president of the world Bank, Eugene Black, to negotiate Argentina’s entry into the Bretton Woods institutions, including the IMF.
Returning to the revenue-cost question, there is evidence in the economic theory that if wages persistently and imperatively beat prices, inflationary pressure increases. So, for example, the current one holds it central bank. In the article “On the determinants of inflation in Argentina” published on January 12 on your Central de Ideas blog, the monetary authority argues in favor of the idea that inflation in Argentina is a phenomenon as a result of “a conflict over income distribution”. The bank points out “the importance of designing agreements that allow containing the potential “Distributive conflict” and coordinate expectations, in order to induce a path of prices and wages compatible with stability ”.
The appeal of Peron and from central bank They would appear to go against the objective of stabilizing the inflation rate this year, which is expected to jump by at least 10 percentage points. The CGT proposed to the Government that the joint ventures that closed below 40% must be reopened. Martín Guzmán had set a goal of 29%.
In a model developed by economists Roberto Frenkel and Lorenzo Sigault Graviña, the rise in prices in the Argentine economy responds to several factors, the main ones being the inertia, the dollar and the wages. Ceteris paribus (constant changes in relative prices and monetary aggregates), the drivers of inflation are somehow 60% salaries and 40% dollars.
It could be said that taking the words of Perón, the Kirchnerism introduced the germ of inflation in the last decades in Argentina. Is that the country came out of convertibility with low inflation – with the exception of 40.9% in 2002 as a result of the devaluation. In 2003 there were 3.7% and 6.1% in 2004. With twin surpluses, one of the reasons that explained the increase in prices was that Néstor Kirchner inaugurated an era and a practice that would later be perpetuated: reopen parity and give increases above inflation.
The problem is that when you start with a dynamic like this, in a context like the one in which the product was below potential, it is difficult to put it aside because the economy He recovered its previous level but the demands of a conflictual society persist. It is like with taxes: they are put in emergencies and they are never taken away.
Once the contracts incorporate higher expectations, inflation does not stop and it is costly to return. “The increases that may occur in the future must always be without influencing prices, because otherwise we would not have reached a balance or a solution but we would have unbalanced the current panorama and created a new problem for the future“, Hill Peron in the Colón.