Pierpaolo Barbieri: belief

Transcript context

…As you know, there are other Latin American economies that have reformed. Mexico, fiscally, used to be a mess. Now the central bank, the fiscal authority, are reasonably responsible. What is special about interest groups in Argentina that makes fiscal consolidation infeasible for governments that really mean to do the right thing? That is also a great question, and one I think a lot about. First of all, I don’t have the magic answer. I wish I did. Historically speaking, I think that, generally, we have oscillated between these two models. It is not widely understood sometimes in Argentina by certain politicians that if you run persistently large fiscal deficits, you eventually have to monetize them. The monetization of those deficits leads to inflation in a way that it hurts the people who have the least in society. The rich are able to hold real assets that generally do well in an inflationary scenario. The losers of that are the people that end up voting for those policies. But we do have politicians that don’t really see that. Even just 10 days ago, there was one very prominent politician that is part of the governing coalition who said, “We need lower inflation for the elections, and we also need more pesos on the streets.” He literally said that as if the two things were not an oxymoron. The Peronista movement won in Argentina, right? Ruled for some time. The reforms in 2001 failed. The more recent reforms failed. Is it that Argentina —…

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