“The Monetary Fund, the European Central Bank and the European Commission implemented a plan in Greece which reduced the debt burden, but at the same time impoverished the country and destroyed human and economic capital. He forced Greece to sell islands, monuments and airports. Today, Greece is poorer than it was with high debt. I wouldn’t want the same thing to happen in Argentina,” warned French economist Jean-Paul Fitoussi, who took part in a videoconference organized by the University of Tres de Febrero (Untref). Fitoussi is professor emeritus of economics at Science Po (Paris) and signatory of two declarations in favor of the government in the renegotiation of the debt.
“We are plunged into one of the most serious crises we have known in peacetime and we already know that it is going to be more serious than the crisis of the 1930s. This crisis will involve more difficulties for those who already know difficulties,” said Fitoussi, who shared a virtual panel with Deputy Economy Minister Haroldo Montagú; Senator Martín Lousteau (Together for Change); former Aerolineas Argentinas President Isela Costantini; rector of Untref, Aníbal Jozami, and Silvia Naishtat, economic editor of the newspaper Clarín.
Near joseph Stiglitz, Fitoussi questioned gross domestic product as the usual measure in economics. “To say that growth is 5% makes no sense if we don’t say who benefits from this growth. But furthermore, growth should not be only material. Well-being must also be taken into account. For example, we ask whether people prefer a situation in which growth increases but precariousness also increases, or a situation in which economic security is maintained, precariousness decreases and growth decreases. And we will realize that the certainty that tomorrow we will be able to repair ourselves well allows us to reason and organize our lives freely and this can be more precious than general growth. A founding element of well-being is health, to which we have clung this time at a considerable economic price. The second element is education, which is correlated with health, social integration and decent employment. And all this constitutes the social capital, which is the network on which we can rely to develop our position and that of our families,” explained Fitoussi.
The French economist has supported the Argentine government in debt renegotiations with Nobel laureates Joseph Stiglitz and Edmund Phelps, and World Bank chief economist Carmen Reinhart, among other economists. In his speech yesterday, he went a step further than support for negotiation and warned against the adjustment processes used to pay down debt. “What matters is the nation’s wealth, which includes many other things beyond debt. There is economic, human, social, natural and immaterial capital, represented by freedom. If a policy managed by a government reduces these elements of capital but at the same time reduces the public debt, the result will not be good. There is the example of Greece, where the Monetary Fund, the European Central Bank and the European Commission implemented an economic plan which reduced the debt burden, but at the same time impoverished the country and reduced the capital Greece can transmit to future generations. . Today, Greece is poorer than it was with high debt. I wouldn’t want the same thing to happen in Argentina. The measure of GDP should be one year’s production less the capital lost, for example, due to the reduction of the social protection system,” Fitoussi said.
The Deputy Minister of Economy, Haroldo Montagú, analyzed that “the pandemic crisis has aggravated the problems of Argentina, such as the gaps in people’s access to essential services and goods, informality and the fracture The idea of emergency family income is to offer a palliative for those who cannot go to work due to quarantine, while the ATP wants that by paying up to half of the wages of the sector private, the organizational capital of companies can be maintained.Regarding the debt, he repeated that “the idea of sustainability implies that it is useless to reach an impossible agreement”.
Costantini, who ran General Motors and Aerolineas Argentinas and is now the managing director of the financial company GST, indicated that “my first concern is for SMEs, because a large company can give vacations and last, but small ones don’t have no oxygen even with the help of the ATP. Without consumption, businesses will not be able to sustain themselves.” Meanwhile, Senator Lousteau stressed that “it is a mark of good faith that the Argentinian government maintains a similar debt swap offer compared to the situation before the coronavirus. It would be extremely important for the renegotiation to end with a way to have more capital available to support the economy once the pandemic is over.