The worst news is that we were tremendously stupid

There are things that even the most optimistic among us could not have imagined happening. The vast majority of Argentine and world economists, if on December 10, 2023, they had been told that this government would achieve zero deficit, would have answered that it was impossible. And they would have believed even less that this zero deficit would be achieved mainly by cutting spending and with little increase in tax pressure. Historically, tax increases have been the way deficits were reduced in Argentina. This is not minor, because it was the State that was overspending; but it forced those who produce the country's wealth to make the adjustment, making it harder to emerge from the recession.

I believe that the only ones who could have imagined something like this were those who were at that moment within the Government, the Ministry of Economy, and those behind that program.

I also don't think anyone would have imagined the number of deregulation and state reform measures that were implemented, considering the limited political power with which Javier Milei took office.

Milei came to power with political power far inferior to that of Mauricio Macri. He had no governors, no mayors, and had very limited representation in Congress. Despite this inferiority, there were reforms that managed to pass through Congress: The Bases Law may not have been as good as that first proposal that was attempted to be approved, but it still represented a phenomenal advance, achieved with limited political power both inside and outside Congress.

If one compares that political power with what Macri had and how little progress was made during his administration, it is really hard to imagine that everything that has been done so far could have been accomplished. In any case, it is fair to acknowledge the support provided by Juntos por el Cambio. We are talking about state reform, deregulation, and fiscal balance. And we must also add something that happened much faster than most expected: the deceleration of inflation. Only the most optimistic had predicted a drop in inflation similar to what ultimately occurred.

The independence of the Central Bank as an institutional guarantee

On the other hand, the reform of the Central Bank's organic charter is fundamental. Because it is very important that the Central Bank has true independence from the Executive Power. The problem arises when political power tries to impose decisions on the president or the board of the Central Bank that those leading the institution consider wrong and that may also be prohibited by the charter itself. That is precisely what the current organic charter does not sufficiently guarantee.

We must not forget that the Central Bank is the one that issues our currency. Therefore, every time its assets are degraded, as has happened so many times, the backing of that currency is also being degraded.

Some say that a law can be modified by another law. That is true. But a future government that wants to use the Central Bank again to defraud us with the inflation tax and finance excessive spending will have to change that law, and that will force a public discussion.

There it will depend on the civic maturity of Argentine citizens. If we massively defend the independence of the Central Bank and decide that we do not want to be defrauded again, the political cost that a government attempting to do so will have to pay will be extremely high.

Other countries also went through decline

But there is something deeper that we should understand: Argentines tend to consider ourselves the center of the world, and the truth is that we are a country lost in the south. We also think that everything that happened to us never happened anywhere else. And that is not the case.

Institutional degradation, including the degradation of economic institutions, has occurred in many countries around the world since the 1930s and 1940s. Some continued through the 1950s and beyond.

The difference is that the vast majority of those countries, during the 1970s and 1980s, even under socialist governments, began to realize that this was not the way to go.

New Zealand, Australia, Spain, Ireland, or Canada went down paths of decline similar to ours. Some of them were even considered powers at the beginning of the last century.

The difference between those countries and us is that we were much more persistent and creative in making mistakes.

The cost of postponing reforms

Their inhabitants, their citizens, and their governments, at some point said: “Hey, this is not the way” and decided to take on the sacrifice and effort of a generation to make the changes that needed to be made. Because when one makes a mistake at home or at work, a magic wand does not appear to solve it. It has to be resolved with effort, sacrifice, and time. The same goes for a country.

They decided to do it, and today they are precisely some of the countries to which our children went to seek opportunities for progress. The worst news is that this happens because we were tremendously foolish.

First, because we ended up paying for much longer higher costs and sacrifices for not having made the effort that those countries made at the time.

Decline is also a sacrifice and has an enormous cost. And crises are probably the maximum cost and sacrifice that a society can face. On top of that, all this, for nothing.

It would have been much more reasonable to make that effort once during a certain period to leave behind decline and impoverishment and start building a country that provided opportunities for progress.

We did exactly the opposite: we kept kicking the can down the road. And when one postpones a problem, and even more so when one feeds it as we did, that problem becomes bigger and bigger. It never shrinks. This happens to us as human beings and it also happens to a country.

The effort of a generation to leave behind decline

Now we have to face another period of effort and sacrifice; but now to turn this situation around and start seeing a country that progresses with more freedom and allows people to take advantage of the opportunities of that progress. And, above all, to leave a reasonable and normal country to our children and grandchildren after the horror we have lived through.

When did we start being more foolish than others? At least since the 1970s and 1980s; since most of the countries that today quadruple or quintuple our production in terms of wealth per capita understood during those decades that they had to change.

One only has to look at the distance that exists today between their opportunities for progress and well-being and ours.

If they made those changes during the 1970s and 1980s and we are only now trying to make them, we took more than 40 years to realize that this was not the way. Let us hope we have learned and that this will take us out of more than 90 years of abnormality and growing decline.