Sunday, December 11, 2011

Cristina Kirchner and Argentina's good fortune | Mark Weisbrot

12:12 PM | Posted by Free Game Zone | | Edit Post

under the governments of Kirchner, Argentina has achieved the highest growth in the West - after he left. Listen, Europe

Cristina Fernandez de Kirchner is expected to coast to reelection as president of Argentina on Sunday, despite the hostility of the media for most of his presidency, and a lot of powerful economic interests the country. So it seems a good time to ask why this could occur.

Yes, it's the economy. Since the Argentine default on $ 95 billion of international debt and stole nine years ago the International Monetary Fund, the economy did very well. For the years 2002-2011, using the IMF projections for the end of this year, Argentina scored a real GDP growth of about 94%. This is the fastest growing economy in the Western Hemisphere - about twice that of Brazil, for example, has also greatly improved on previous results. Since President Fernandez and her late husband, Nestor Kirchner, who preceded him as president, ruled the country for eight of these nine years, not surprising that voters will reward you with another term.

The benefits of growth are not always mesh, but in this case, the Argentine government has ensured that many did. Poverty and extreme poverty have been reduced by two thirds of its peak in 2002, employment rose to record levels. The government social spending has nearly tripled in real terms. In 2009, the government launched a program of cash transfers for children who are now arriving in the homes of more than 3.5 million children. It is probably the most important program in relation to national income in Latin America.

Inequality has also decreased significantly in Argentina during this remarkable expansion. This is in contrast with most rapidly growing economies in the world (and some of the slower growth as the U.S.), where inequality has increased in the last decade. In 2001, Argentines, 95 percent of the income distribution was 32 times the income of people in the five percentiles. Last year, this proportion had fallen to almost half, to a multiple of 17.
  • I can already see the comments I have for this room: people will scream about the inflation rate in Argentina, which, according to private estimates, running between 20 and 25% at current. Yes, it's too high, and is likely to narrow in the coming months and years to come (which was much lower during most of the last nine years). But it is important to remember that the real income (adjusted for inflation) and employment and income distribution, which determine the standard of living. If inflation is high, but your income is rising faster than inflation, you are better off than if inflation is much lower and their income not keeping pace with inflation -. Or if you do not work at all
  • Experience
  • Argentina over the past nine years, has important implications for the way we look at economic policy, especially the myths that are being used to justify the miserable economic performance of the United States Most of Europe and other countries since the crisis of 2008-2009 and the global economic downturn. A recent theory popularized by former IMF chief economist Ken Rogoff and Carmen Reinhart says that recessions caused by financial crisis must be followed by slow and painful times. This is widely accepted in much economic information, and served as an excuse for governments that are incompetent or special-interest debt (sound familiar?) To avoid the blame for presiding over years of high unemployment and stagnant economy.
Argentina, however, provides a convincing refutation of this theory. Financial crisis in Argentina in late 2001 and 2002, was the mother of all financial crises. The banking system virtually collapsed. However, after Argentina's default on its debt in late 2001, there were only one quarter of economic contraction before the economy began its remarkable turnaround. In three years, the country returned to its pre-recession level of national income.

If you look at the economies of countries in the lowest zone (Greece, Portugal, Spain, Ireland), for example, is difficult to see when they will ever return to normal levels of employment - especially if they follow follow pro-cyclical policies demanded by the European authorities (European Commission, European Central Bank and the IMF). Argentina quickly recovered and was released not only unsustainable debt, but also the destructive policies imposed by creditors and their allies.

Greece, in particular, whose economy is contracting at an annual rate of 5% until the European authorities to restructure its debt, would have to consider that it might be better to follow the path of Argentina. Sure worked for Argentina.


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