Federal Capital (Paco Urondo Agency, published in Buenos Aires Economico 06 / 08/2010)
neoliberal economists generally prevailed during the 90 associated the success or otherwise of an economic model to the growth of gross domestic product (GDP). In this sense, any model that generates output growth could be classified as successful.
With this vision, then the convertible model can be regarded as successful due to the fact that he had been an expansion of GDP. The same applies to the agricultural export model (1880-1930) which resulted in a strong expansion of output.
However, it is now clear that economic growth can be associated with greater social exclusion. In other words, the increase in GDP may occur while increases in unemployment, underemployment, poverty, homelessness and income concentration, as happened both in the agro-export model as in the convertible system.
Therefore, it is essential to distinguish three main pillars of the economic model: economic, intermediate objectives and ultimate goal of the model. Is the ultimate goal which ultimately determines the success or failure of an economic and not economic policy or intermediate objectives.
The policies can include, for example, nationalization or privatization of public enterprises, the fixed exchange rate or currency devaluation, trade liberalization or protectionism, deregulation of markets or price caps, among others. Economic policies should not be the objectives of the model but rather instruments for obtaining short-term ultimate goal.
also between intermediate targets can include, for example, the gross domestic product growth, increased investment, the increase or reduction of external debt, the growth of foreign ownership or nationalization of the national economy , increase exports or not and imports. Again, the success of the intermediate objectives or not depends on whether we approach or move away from the ultimate goal of economic model.
Therefore, the central question arises: what is the ultimate goal of any economic model? The answer is simple: the higher standard of living of the population. From the economic point of view this implies the reduction of unemployment, underemployment, poverty, homelessness, increasing wages and pensions and better income distribution. Then, the success or failure of an economic model depends on whether individuals live better or not.
For example, the convertible model was composed a set of economic policies such as low exchange rate and fixed, trade liberalization, deregulation of markets, labor deregulation and privatization of public enterprises. From this set of economic policies are produced, among other milestones, an expansion of the product. For orthodox economists GDP expansion allowed the successful holding of the model established in the late '90s, thus confusing intermediate objectives with the ultimate goal.
However, the convertible system resulted in a continuous and steady increase in unemployment, underemployment, homelessness, poverty and income concentration. That is, as a result of the convertibility model there was a deterioration in living standards of Argentines, which meant a distancing from the ultimate goal of any economic model. This allows us to say that the scheme introduced in the '90s was a resounding failure.
Since 2003 it established a new development model determined by the application of a new set of economic policies among which we highlight a competitive exchange rate, the steady increase in public spending, a strong policy of subsidies, increased regulation of markets since the return of the price caps the application of withholding, the nationalization of public services, the return to pension sharing, the establishment of collective bargaining agreements.
Milestones of the new accumulation model were, for example, increased investment, sustained economic growth, increased exports, trade surplus and tax, among others.
But the central question is: does the new economic model is successful? Asked another way: the set of economic policies implemented since 2003 and the milestones achieved allowed us to approach or not the ultimate goal?
In this sense, the data are compelling. First, there was a recomposition of the labor market tested in reducing unemployment from 20.4% to 8.3% from the first quarter of 2003 and the first quarter of 2010. Also during the same period there was a sharp reduction in underemployment applicant not happened from 12.0 to 6.6 percent. For its part, also experienced a decrease from 45.1% to 34.6% of employees without retirement discounts between May 2003 and the first quarter of 2010.
At the same time, there was an increase in income of workers and retirees. Under this point came in the first place a minimum wage increase of 650% between January 2003 and January 2010. Indeed, the minimum wage went from $ 200 to $ 1,500 during this period. Put another way, while in January 2003 the minimum wage covering 29.5% of the total basket in January 2010 amounted to 142.2 percent. For his part, having minimum pension increased from $ 150 to $ 895.15 between January 2003 and January 2010, which represents an increase of 496.8 percent.
Furthermore, between January 2003 and May 2010 there was an increase in the general wage level of 222.3%, which implies that the increase in wages was higher the inflation rate, thus resulting in an increase in real wages of workers.
From these results we experienced a sharp reduction in poverty and destitution along with better income distribution. With regard to poverty, while poor households fell from 42.7% to 9.0% in the first half of 2003 to the second half of 2009, poor people decreased from 54.0% to 13.2% during the same period. There was also a decline in poverty, from 20.4% to 3.0% of indigent households from 27.7% to 3.5% of people homeless.
Finally, there was an improvement in income distribution both at the population level, occupied, at home and in the functional distribution. First, with respect to income distribution of the total population according to the scale of individual income, while 40% of the poor participate rose from 11.2% to 13.4% and 40% medium population increased its share from 34.2% to 38.3% in the third quarter of 2003 and the first quarter of 2010, the richest 20% of the population decreased its share from 54.6% to 48.3% during the same period.
Regarding the employed population, the data are striking: between the third quarter of 2003 and the first quarter of 2010, 40% of employed poor expanded their share from 12.2% to 15.7%, 40% half of the employed rose from 36,% to 40.2%, and 20 % richest of the employed decreased its share from 51.5 to 44.1 percent.
Meanwhile, with regard to homes and taking the income distribution scale them according to total household income while 40% of poor households increased their share from 12.0% to 14.9% and 40% participation of households in the middle rose from 35.2% to 38.9% in the third quarter of 2003 and the first quarter of 2010, 20% of richer households decreased their share from 52.8% to 46.2% during the same period.
Finally, the economic model Kirchner led to an improvement in functional income distribution. Indeed, earnings from employment have increased their share of GDP from 34.3% in 2003 to 43.6% in 2008.
In all this we must add the most ambitious social plan in Latin America: the family allowance per child which means 0.58% of GDP allocated to the most vulnerable and lead to greater poverty, destitution and increase in better income distribution.
Therefore, build the new model introduced in 2003 and articulated from a set of coherent economic policies helped to reduce unemployment, underemployment, unregistered work, poverty and extreme poverty, improve income distribution of the total population, employed and of households and increase the share of wages in total output.
is, Kirchner economic model led to a better standard of living of the population and thus allowed us to approach the final goal of any economic model. In this sense, the current economic model is successful.
The author is Economist, Economics Study Group People's National (GEENaP). www.geenap.com.ar