"Argentina should dollarize and thus eliminate inflation for 50 years"



Did you come to present your new book, what does it consist of?

-The book began to take shape a few years ago when I wrote an article in La Nacion in 2001 "The X of Poverty" that shows how poverty is going down in all parts of the world except in a few countries, such as Argentina where poverty increases. What we are trying to do is show all the cases in the world that have made structural reforms that have allowed them to get out of poverty with an unusual speed. In the last 40 years, poverty in the world has been reduced in an extraordinary way. In Chile, poverty fell from 47.5% to 8% in 33 years, which is an extraordinary success and happens on all continents.

Analyze what they used to reduce poverty?

-I do a very long term analysis. Poverty is uncaused, it is normal, what has cause is wealth, so the book by Adam Smith, the father of the Economy, was called "An investigation into the nature and cause of wealth in nations." And this book indicates what is the key to the wealth of nations, and is freedom.

How will the economic variables continue until the end of the year?

-Argentina is very bad. He had 100 years that was the country that grew the most in the world from 1810 to 1913, and we became number one in the world and we stayed in the first 10 years for 60 years. From 1913 until today it is the country that grew the least in the world and we are going down. Japan was three or four times smaller than Argentina until it is invaded by the United States, the Constitution changes, the emperor ceases to be the son of the sun and they have a liberal democracy and with that he flies and passes us the rag, and also the countries from Southeast Asia. We must see what is the key to the success of these countries, and the key is freedom, and that is the title of the book. In each country structural reforms are made to improve life, freedom and private property fly.

What are the measures that should be taken to get out of the crisis?

-The government of Cristina Kirchner left a fiscal deficit and a growing debt, the Macri government did not solve anything, kept the first years in deficit, the debt grew strong so that today we are in crisis and worse than in 2015. Argentina needs legal certainty, you need to eliminate inflation. Macri changed nothing, increased social plans, taxes. Argentina has 163 taxes, Macri created taxes, on financial income, on all exports not only to agricultural but also to software exports, which is absurd.

How will it arrive in December?

-Now we have an inflation of 3.4%, a little lower than expected. We are entering to repress the economy more, and it is not what I want but there will be more stocks. And over those stocks there will be control of prices and wages, and the social pact, there were four and none worked. The price and salary controls do not work, you can put one for 180 days and the 181 is a problem, a "rodrigazo". What Argentina should do is dollarize, if we do we eliminate inflation for the next 50 years.

But there are dollarized countries in Central America and they are not well …

-It's that dollarization is simply a monetary rule that ensures you have a healthy currency. In other words, you replace a bad coin like the peso with a relatively healthy one. And competition of currencies, that each one operates with the currency that wants. Inflation is theft to the employee. There are 190 countries that do not have inflation, that annual inflation is 1.5%, and the average inflation in Argentina since 1935 that the Central Bank was created is 56% per year, they steal a third of the purchasing power every year .

The president-elect stated that there is the possibility of issuing 40% more currency, what do you think?

– To believe that to issue currency to reactivate is an absurdity that we have committed a lot of years ago, are old ideas that we have already applied and that work badly. All these are things that are said, I do not want to anticipate what Fernandez is going to do, he has a very complicated inheritance. Governing Peronism without money is very difficult. They will control prices and salaries, stocks and monetary issues, and this ends in hyperinflation. When it ends in hyperinflation we will remember that we make the same mistakes.

So do you think that the stocks are not going to rise to the dollar?

-I immediately think that no, but most likely not or that a double exchange rate, a financial one and one for trade, so that the State keeps the difference in imports and exports, earns money and Loses the private sector.

What measures do you think should be done?

-We should make a program of structural reforms. Argentina is in position 148 of economic freedom has to go to position 20. It means reducing the State, eliminating 153 taxes, making the labor flexibility reform, because we have a third of the economy in black that does not have any type of labor protection. Here in Jujuy the private sector is essentially black, and 60% of registered employment is public, that does not work. We have galloping inflation, 50% per year. The next step is hyperinflation, we must cut this pre-hyperinflationary process. The provinces have to help Fernandez, they have to make fiscal adjustment, reduce public employment, social plans, progressively, facilitate the private sector.

Would that not generate more unemployment, greater chaos?

– If you do all the reforms no, because the labor reform is to create employment. When you do a job flexibility you will have a lot of employment, and a lot of people who can't hire people because they have labor lawsuits.

They do not take employment because they have a large tax burden, they cannot be sustained …

-You have to eliminate taxes, deregulate because excess regulation complicates creating a new company. To start blank you have to have low taxes, minimum regulations and progressively ask for things once they succeed and win.

And how does the state collect?

-A much larger private sector with much lower taxes and revenue will rise. Argentina has 163 taxes, 153 collect 10%, my bet is that if you eliminate those taxes the total collection goes up. In addition you will relieve people. In a country that works well, the concern is Afip, Rents, and it doesn't work. We must go to a simpler country that the State is not a permanent pressure and that people do not believe that the State is the solution, the public employee.

How are regional economies encouraged?

-Low taxes, deregulation and the opening of the economy. There is a huge opportunity that is Brazil, which, making structural reforms, has already made the labor, pension reform, now it will reduce public spending, it wants to lower the salaries of public employees by 25%. Argentina has to lower them, the salary of the public employee has to be lower than that of the private sector over the next 30 years, we need companies to multiply.

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