Saturday, January 26, 2013

Cristina Fernández and the reindustrialization of Argentina

In this speech, Argentine President Cristina Fernández discusses a new national program to construct or renovate around 17 thousan residential units, of which 13 thousand are to be new. It is expected to benefit 160 cities and generate 25 thousand jobs. She emphasized that this was part of the larger program that began with Néstor Kirchner's Presidency in 2003 of reindustrializing Argentina. 25 de ENE. Anuncio Plan "Más Cerca: Más municipio, Mejor país, Más patria". Casa Rosada 25.01.2012:

Página 12 reports on the speech in CFK: "Es básico seguir con el proceso de reindustrialización" 25.01.2013.

She calls the new residential construction plan, "Más Cerca: Más municipio, Mejor país, Más patria" ("Closer together: more city, more country, more homeland.")

The "kirchnerismo" policy pursued since 2003 involves promoting diverse economic development. This comes after a nearly 30-year period of neoliberal economic policies, first imposed by the military dictatorship of 1976-83 and continued through the Presidency of Eduardo Duhalde (Jan 2002-May 2003). Allowing the "free market" to operate according to the principles favored by the IMF that eventually came to be known as the "Washington Consensus," Argentina's export industries (agricultural exports, natural gas) and financial speculation prospered, at the cost of vastly increased financial instability, falling real wages, vastly increased public debt and a major loss of sovereignty to foreign capital and international agencies like the IMF following austerity policies like those currently doing such enormous damage in Europe.

Part of the challenge in maintaining the policy of balanced, diversified development has to do with the currency effects of exports at times when exports are doing particularly well. If the Great God Free Market is allowed to manage this process unguided by government, export items like energy-related resources will increase in price domestically because they are more in demand in the world market. This can create "imported inflation."

Rising prices for major exports is a good thing, up to a point. They can also become too much of a good thing, especially in a developing economy like Argentina's. Because as they become more profitable, they begin to attract more foreign capital, again something that can be a good thing in itself. This creates pressure for the currency to appreciate. But that first hits the newer, developing industrial exporters that the country is actually trying to develop for the good of long-run national performance and for the immediate employment opportunities they create.

So the Argentine government is attempting to optimize benefits from prosperous exporting industries while not sabotaging their own policy of balanced, diverse development and reindustrialization. That and their on-going disputes over Argentine debt held by vulture-capital funds also requires the national treasury maintaining a certain supply of dollars and placing limits of the amount of currency exchange into dollars, as well as other kinds of export controls.

One immediate result of that balancing act has been a significant amount of inflation the last few years. Inflation can be very damaging, and not just to the wealthy, as Argentina itself experienced under Duhalde when he drastically devalued the peso under conditions that maximized the inflationary impact. But where, say, 10% inflation sounds like the end of the world to many affluent Americans, it doesn't necessarily sound like such a catastrophe to people in a developing country like Argentina that has seen tangible benefits from steady, sustained economic development since 2003.

One tangible result that Cristina mentions in the video above that would also sound good to most Americans is a 233% increase in supermarket sales since 2003. Ordinary people being able to buy a lot more groceries sounds like a palpable increase in well-being for the country. Even though the Argentine oligarchs might have preferred greater opportunities for financial speculation for themselves over that benefit for the majority of the country.

Diego Rubinzal, citing earlier periods of sustained, relatively rapid development in Argentina, Brazil and South Korea, notes that significant inflation can be concurrent with strong growth of GDP. (Puja distributiva Página 12/Cash 13.02.2011) He notes that the conventional solution that orthodox economists would recommend to control inflation would be to put a damper on economic growth. But that solution also has very real downsides, although it should be noted that the inflation problem in Argentina is generally recognizing as being real, though there are ongoing disputes about its actual severity, which is likely worse than the official statistics indicate. It's not the situation we currently have in the US, where not only is inflation low but long-term indicators of future inflation like US Treasury bond rates show no immediate inflation danger, but conservatives have been issuing hug-inflation-is-just-around-the-corner jeremiads every since 2009.

But Cristina's government isn't adopting the austerity route, though Argentina's limits on access to credit markets does mean they have to pay particular attention to budget balancing. Though contrary to the austerians in Europe and America, that does not have to be done by measures that directly damage workers and the poor.

The text accompanying the video at the official Casa Rosada Presidential website is as follows:

Viernes 25 de Enero de 2013, Buenos Aires: La Presidenta Cristina Fer[n]ández de Kirchne[r], encabezó un acto en Casa Rosada, para anunciar la construcción de viviendas. Allí, llamó a "seguir avanzando en el proceso de reindustrialización del país". Además, vía teleconferencia, inauguró obras en Campana, Rosario y Mar del Plata.

Durante el acto, la jefa de Estado anunció el inicio de obras para la construcción de casi 17 mil soluciones habitacionales financiadas con fondos nacionales. Además, se firmó el convenio para la Comisión de Seguimiento del Plan Integral para la Promoción del Empleo.

Las obras de vivienda que anunció la mandataria se desarrollan en el marco del Plan "Más Cerca: Más municipio, Mejor país, Más patria" y abarca 160 municipios de 14 provincias, que implicarán más de 25.000 empleos. La mayoría serán casas nuevas, además de mejorar algunas ya existentes.

Al respecto, se firmó un convenio entre los actores sociales de la construcción (Uocra, Cámara de la Construcción, Estadística y Registro de la Construcción) el ministerio de Planificación Federal, ministerio de Trabajo y los distintos gobernadores de las provincias en donde se realizarán las obras de vivienda.
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