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Macri’s Statist Policies Can’t Solve Argentina’s Poverty Crisis

By: Contributor - Jan 6, 2016, 2:39 pm
Eradicating poverty is one of President Macri's lofty goals, but his statist policies won't get it done.
Eradicating poverty is one of President Macri’s lofty goals, but his statist policies won’t get it done. (Taringa)

EspañolBy Alejandro Sala

Argentinean President Mauricio Macri has set three priorities for his new administration: defeating drug trafficking, overcoming society’s increasing polarization, and eliminating poverty.

Eradicating poverty is undoubtedly a noble goal, even more so because Argentina’s main natural riches come from its great capacity to produce. The fact that close to 30 percent of Argentineans can’t satisfy their most basic needs is an embarrassment.

Poverty in Argentina is no mysterious phenomenon. It’s the result of 70-80 years of systematic state interventionism in the economy. To put an end to it, as Macri claims, one would have to turn the prevailing political economy upside down and carry out deep reforms to replace the rotten statist regime with a market-based system.

The ensuing inflow of investors would create sustained economic growth, bringing about substantial improvements in the fight against poverty.

President Macri, however, has no intention to carry out such a reform. His platform boils down to maintaining and improving the state’s suffocating participation in the economy while making government more transparent.

Macri could apply such a policy if he wishes to. He never promised to carry out structural reforms. His platform was always a statist one. Whether or not Macri can legitimately execute his plan is not the issue at stake; what is questionable is whether statist policies are compatible with his stated goal of eliminating poverty.

To be sure, the Macri administration will probably reduce poverty in Argentina. But that kind of approach has a limit beyond which the government will not be able to advance. Reducing the number of poor Argentineans from 12 million to 8 million, for instance, would hardly be a solution. It would still be intolerably high, and Macri would not get anywhere close to “zero poverty.”

Why should we expect not substantial but rather marginal improvements in poverty rates during the Macri administration? Simply put, because there is no relation between means and goals.

If he wanted to eliminate poverty, Macri wouldn’t pursue a statist economic agenda. It’s a contradiction.

The upshot of this inconsistency is that it leaves the field open for libertarians to present their case. Eradicating structural poverty is a feasible goal as long as you enact vigorous free-market policies where spontaneous wealth creation results from incentives boosting productive enterprises.

[adrotate group=”8″]Of course, it is not easy to solve a complex problem ingrained in the country’s very fabric, since it involves social, cultural, legal, and geographical factors. But if we agree that “zero poverty” achieved through economic growth should be a top priority, the way to go is to substantially downsize the government, so as to free up resources now devoted to non-productive uses.

A political force in Argentina carrying the banner of libertarianism could aptly fill this void and make fighting against poverty their main agenda. Society demands it, but the problem is that most people are confused about the causes and solutions, which prevents the right policies being enacted.

To overcome this contradiction, we need leaders who point it out and dispel them so that people support the appropriate course of action. But this won’t be possible until a movement enters the political arena and presents an intelligent defense of the market economy.

There is no such movement in Argentina today, so the field is wide open. The libertarians who successfully introduce a program that tackles the urgent problem of poverty could very well garner support for future elections.

Alejandro Sala is a writer based in Buenos Aires, Argentina, and the author of El Espíritu del Mercado.

Translated by Daniel Duarte.