Approximate reading time: 4 minutes, 9 seconds
Ramon Lopez
, economist and academic, how would you characterize the economic situation of the country; What is the most relevant in this area, and how would you rate Mario Marcel’s economic leadership?
A. The country has experienced a period of stagnation with growth rates close to zero or negative and with increased unemployment, which can be considered a recession. This recession has been caused largely by the combination of an excessively restrictive monetary policy and at the same time a major fiscal shock that occurred, especially in 2022, with a cut in fiscal spending of 24%.
All this in the name of controlling inflation that mostly comes from 3 factors: 1. Increases in the international prices of our imports; 2. Depreciation of the exchange rate; 3. Increases in the profit margins of the national monopolies and oligopolies that control a large part of the economy.
Both the increase in interest rates and fiscal restriction are policies that have no impact on factor 1, and only a weak impact on factors 2 and 3. Hence the relative low impact on inflation, which has only decreased in periods in which international inflation has also been reduced. Despite the enormous fiscal and monetary adjustment, much more intense than in most countries in the world, inflation in Chile has not reduced more rapidly than in other countries in the Region or OECD countries.Most of the impact of these policies has fallen on economic activity, production and employment. In fact, if we compare, for example, with Brazil, we see that in that country economic activity and employment have increased instead of falling as in Chile.
.
What balance is imposed from a popular perspective of these two years of Boric’s Government with the Apruebo Dignidad y Socialismo Democratico coalition with respect to the major reforms in pensions, health and tax policy? A. The first and most fundamental thing is the political failure of the tax and pension reform. Without both, this government loses value, since only a very significant increase in the tax burden is what would allow urgent improvements in health, education, the environment and the provision of more and better public goods.
It appears there will be no significant tax reform nor pension reform, and therefore this government will go down in history as even less capable of making changes than the Concertación governments themselves.
The fatal mistake of this government was the delay in presenting the corresponding bills. It is known that it is in the first days when a government has the greatest capacity to carry out key projects, therefore waiting almost a year to present them, as the current administration did, is suicidal. And why weren’t the projects ready on March 11, 2022?Already in August 2021, the Jadue command had ready drafts of the key projects as a result of the long work of an interdisciplinary team of more than 120 outstanding professionals. This material was available to Boric’s command in September 2021 and there is no justification for not having had the bills in March 2022. . Perhaps the delay was caused by the Minister of Finance (the socialist Mario Marcel), who probably, being a net product of extreme neoliberalism, did not have much enthusiasm to carry out bills that would allow major transformations to the current economic system.
Is it worth mentioning the attitude of business organizations (SOFOFA and CPC) towards tax reform projects?
A. These organizations represent the most powerful elite in the country, which the current government has treated with apparent fear. They are powerful, they always have been, and they assert their power especially at times when they see even a remote threat to their economic power. A government willing to make changes of the magnitude that the FA said it wanted to implement obviously cannot expect to have the support of business elites and must certainly be willing to face them with the support of the people, with political wisdom and a sense of timing. This government had none of this, whose ministers have always been ready to ignore the people’s organizations and instead pay homage to the representatives of the financial and economic oligarchy.
If I remember correctly, from 8% of GDP tax collection in the government program with which Boric was elected, it has reached 1.5%… A. Very little remains of the original tax reform program. I believe that these figures reflect well the attitude of self-defeat and lack of political sense, courage and cunning of this government. Now they blame the fact that there is no support in parliament to propose something more ambitious.But as I said before, the political mistake was not having acted decisively in the first days of the government when the right was still in shock and willing to negotiate, and popular support was intact. Instead, they inexplicably waited until the right was emboldened and unwilling to budge on anything… Now, they are begging this empowered right to please let them pass up even a few “crumbs” of tax reform.
.
At the level of the accumulation of forces, is it too late to mobilize for these demands? Are they two years gained or lost for the project of a more socially just Chile?
A. It is late because the vacillations and contradictions of the Boric Government have made it lose credibility; In fact, the CUT and other unions have recognized that the government has not listened to them, that the government’s ear is much more open to the business elites than to the workers, which will even materialize in a national strike in the month of April.
The economist Ramón López
Does a non-orthodox economist like you think that there are people responsible for the poor political management?A. I already answered this above… There has certainly been political mismanagement in all areas and also mismanagement of the excessively restrictive fiscal policy. This is reflected in the government’s inability to use more effective measures than merely the monetarist policies dictated by the Central Bank, to reduce inflation without causing the large social costs that it has generated.
.
How do you see the global economic panorama in the world and in LA? (economies at the service of war in Europe, austerity plans and offensives against the living conditions of the working classes by the property-owning oligarchies; in the US, protectionism if Trump wins and increased public spending if Biden wins, but in context of war…) R. I see a lot of instability in general,and most importantly for Chile, the pronounced slowdown of the Chinese economy that may have negative effects on Chilean export prices.
. The trend towards income concentration in developed countries and China is also worrying.
By Leopoldo Lavín Mujica