May 21, 2022 8:44 pm

“Argentine economic miracle”. Stiglitz’s response to criticism: “Maybe it was too strong a phrase”

The economist and mentor of the Minister of Economy, Martín Guzmán, Joseph Stiglitz, who 12 days ago had defended the management of Alberto Fernández when assuring that “it seems to have achieved an economic miracle”, said today that “perhaps it was too strong” to speak of a “miracle”. In addition, he said that he did not talk about inflation and unemployment because he had little space in the article.

in a communication telephone with the agency Bloomberg, Stiglitz recalled that three decades ago he had used the same term when speaking of the “East Asian Miracle,” referring to booming economic growth in that region, and that he too had been criticized.

“Maybe that was too strong,” Stiglitz replied. to the international agency, adding: “If you use that word, you are inviting criticism.” In addition, he responded to other criticisms he received, by ensuring that he did not address the issue of inflation because he was limited in space and wanted to focus on the real economy.

In the chat with Bloomberg, Stiglitz also said he was concerned about the credibility of the US Treasury as part of Argentina’s talks with the IMF, saying he hoped the Joe Biden administration would do more to support Argentina.

In addition, he said that he did not consider it necessary to mention his friendship with Martín Guzmán, whom he advised for years at Columbia. “It’s not a secret, I’m not going to reveal all the friends I have. It would take up the entire article,” he justified.

Finally, he crossed the former head of the Central Bank, Federico Sturzenegger, and recalled the policy errors at the BCRA in the government of Mauricio Macri. He said Sturzenegger resigned in 2018, at the start of a currency crisis, when he lost credibility with investors, who saw too much policy seeping into monetary policy.

“Although Covid-19 has been difficult for everyone, it has not been an ‘equal opportunity’ disease. The virus poses a greater threat to those already in poor health, many of whom are concentrated in poor countries with weak public health systems.. Furthermore, not all countries can spend a quarter of their GDP to protect their economies, as the United States did. Developing and emerging economies have had to face tough financial and fiscal constraints. In addition, due to the nationalism of vaccines (accumulated in rich countries), the rest of the economies had to beg to get a vaccine”, wrote the American professor in Project Syndicate.

In defense of the performance of the Frente de Todos in the government, he stated: “Given the mess that the government of Argentine President Alberto Fernández inherited at the end of 2019, it seems to have achieved an economic miracle.. From the third quarter of 2020 to the third quarter of 2021, GDP growth reached 11.9%, and is now estimated to have been 10% for 2021, almost double what was forecast for the United States, while the employment and investment have recovered to levels higher than when Fernández took office”.

Regarding the criticism received by both the President and his team, Stiglitz pointed out: “When countries have acute pain, officials tend to be blamed more than they deserve. The result is often more fractionalized politics, making it even harder to fix the real problems. But even in an adverse context, some countries were able to bounce back strongly.”

On the other hand, the academic had pointed to former President Macri as responsible for the country’s situation. “Let’s keep in mind that Argentina was already in a recession when the pandemic hit, largely due to the economic mismanagement of former President Mauricio Macri.”, he questioned.

Stiglitz also analyzed the results of the two years of management. “The country’s public finances have also improved, even implementing a countercyclical recovery policy, given by strong economic growth, higher and progressive tax rates on wealth and corporate income, and the 2020 debt restructuring, “he explained.

He also highlighted the “significant export growth” after “the implementation of development policies designed to encourage growth in the tradable sector”. And he continued: “Despite this important advance in the real economy, the financial media have chosen to focus entirely on issues such as country risk and the exchange rate gap”.

In closing, Stiglitz said: “In recent years, the IMF has gained new respect for its effective responses to global crises, from the pandemic and climate change to inequality and debt. If the course were reversed with outdated austerity requirements for Argentina, the consequences for the Fund itself would be serious, including the less willingness of other countries to engage with it. That, in turn, could threaten global political and financial stability. In the end, everyone would lose.”

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