Argentina went from being a thriving country and exporter of knowledge, raw materials and energy to a country that only dedicated itself to manufacturing poverty. The latest data released by INDEC of 38.9% is absolutely fictitious and in the next 12 months we will see how poverty will exceed 50%, making our country one of the countries with the lowest per capita income and the greatest poverty in all of Latin America.
Many of us wonder what could have gone wrong. How could it be that our country ended up in this black hole with no way out. The reality is that this status quo in terms of economic policy did not work and the only thing that did grow was poverty, indigence and ignorance. Probably, part of the political system endorses this format that systematically impoverishes society and allows governance based on civil parsimony.
However, a desperate cry to get out of this status quo has been emerging for some time now. That cry can be seen in the streets, at tables and in coffee talks. “We want something different”, “We want to live in peace and stability”, “We want an economic future for our children”. These messages simplify an urgent need of the Argentine middle and lower classes for a drastic change in economic policy.
Dollarization, which used to be a taboo subject since the end of convertibility, has emerged in all social strata. We no longer only hear the wealthy classes talk about dollars or dollarization of their savings, but everyone who has some capacity to save decides to dollarize their monthly effort. For those who do not have that ability, inflation has eaten them up. The systematic rise in food prices sailing at 10% per month ended up burying the hope that with these economic measures one could live better.
Versus Because of this bewilderment and anger, society is looking for very profound economic changes. Along this path, dollarization has taken on a leading role. This role grows systematically because in Argentina employment has not been generated in the private sector in the last 10 years. Inflation has not been resolved either and the systematic loss of purchasing power has deepened. Added to this is the housing deficit for thousands of people who live in extremely precarious conditions.
To all those needs that are claimed, dollarization may turn out to be the initial kick to change that reality. Mention has already been made on repeated occasions that a dollarization or convertibility plan would be the most effective in rapidly lowering inflation over a period of two years. If we add to this that in the face of a country without credibility and without investment, dollarizing can provide that amount of confidence so that the private sector can, in part, begin to invest those dollars in the real economy. This would ultimately help to generate new jobs and not just the generation of jobs in the public sector. Finally, the only way to attack the housing problem in depth is to have long-term credit that allows developers to bet on projects for a sector that has never been prioritized: the middle and low sectors. Dollarization would be the optimal way to build the capital markets necessary to provide the private sector with long-term credit.
For all the reasons stated above, in the face of an Argentina that is consumed by its historical economic recipes, dollarization comes to break that status quo and finally allows the projection of an economic program focused on those most in need.
*Alfredo Romano is the author of the book dollarize and president of the economic consultancy roman group.
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by Alfredo Romano*
