You are currently viewing The key to the conflict between CFK and Alberto

There is a political crisis in the government coalition because there is a crisis in income policy (inflation and wages), and progress cannot be made in solving the latter because the former cannot be overcome. In this labyrinth is the current economic-political situation, with an uncertain auction.

Since history does not repeat itself identically, despite the existence of the same actors (IMF) and problems (inflation), because local and international conditions are different, An outcome like 1989 or 2001 is unlikely.

This does not mean that if this is not remedied double crisis there are no unpleasant consequencesonly they will be different, one of them being possibly political growth and the consolidation of economic proposals from the extreme right.

This advance may not end with one of its representatives in the Casa Rosada (Javier Milei), but it does finish socially and politically legitimizing regressive shock strategies of an eventual new right-wing government (macrismo-radicalismo) in 2024, with consequences equally as dramatic for the popular sectors as hyperinflation or a mega-devaluation accompanied by a default.

The core issue

Some members of the sectors that participate in the political force of the ruling party think that a conversation between the President and the Vice President would be the first step to begin the search for an exit. It seems that the issue is more complex than just a meeting to exchange ideas, overcome personal differences and take some photos together, in case this happens. It may be the first step but obviously insufficient.

The changes in the national cabinet planned for after Easteras they comment in the Casa Rosada, they can be a starting point for that recomposition or one more piece of the clash.

The central question of this double crisis is essentially political. If the latter can be accommodated, then the challenge of leading the progressive distributional challenge of economic growth will remain.

Not a few assess that this double crisis could extend to the next presidential electionmoment in which it would end up deciding which of the two was right.

Others, on the other hand, consider that the accumulation of tensions that are dragging on will end up triggering coexistence in the Frente de Todosleaving the ground paved for the return of the right to power, or worse, the advance of the extreme right and the consequent shifting of economic proposals towards very unfavorable areas in terms of the general well-being of the majority.

The debate is about the intensity of the intervention of economic policy

If shared efforts do not appear to travel paths towards the exit of this political labyrinth, any of the economic measures that are presented will have low density. This means that those that can be good will end up in insignificance and those that can be bad will have a disastrous result.

At this point, who is occupying the Ministry of Economy ceased to be fundamental, despite the fact that Martin Guzman it is in the eye of the hurricane, since more than names what is under discussion is the intensity of the economic policy and, especially, the leadership capacity and management orientation in terms of income distribution.

Cristina Fernandez de Kirchner He expressed in the act of April 2 in Congress that governing consists of confronting the interests of economic power and directing them in favor of vulnerable sectors. Therefore, measures to address economic emergencies must necessarily affect privileges.

For its part, Alberto Fernandez He stated in his speech on March 18, when he announced “the battle against inflation,” that agreement and dialogue between price makers, unions and the State constitute the central strategy to slow down price increases.

This is the main conception that Guzmán has regarding how to attack the problem of inflation, in addition to ordering the fiscal and monetary accounts accompanied by the stabilization of the exchange market with the increase in reserves to reduce devaluation expectations with this combo.

Cristina Fernández de Kirchner thinks that governing consists of confronting the interests of economic power and settling them in favor of vulnerable sectors.

Growth without distribution

Members of the economic team are surprised by the virulence of the political crisis because they say that the main macroeconomic variables show a very strong recovery. Officials from the national cabinet close to Alberto Fernández think the same. Therefore, they assess that, in addition to being unfair, the questioning of the management of the economy is disproportionate.

Here is a situation of some analytical complexity which requires circumventing black/white positions.

There is no doubt about the substantial improvement in general economic activity with two-digit GDP growth, the recomposition of registered employment, a decrease in unemployment and poverty, the significant advance in exports, the persistent and substantial increase in tax collection, the registration of positive balances in the trade balance, the relief in the fiscal accounts in the area of ​​interest payments after the restructuring of the public debt in private hands, among other macro variables. In addition, it is a rapid and intense recovery not expected by locals and strangers, and which was achieved after the shocking global economic and health crisis due to the coronavirus pandemic.

However, it is also incontrovertible that this very positive macroeconomic balance was not reflected in improvements in the progressive distribution of that growth, leaving that recovered wealth in few hands. Thus, although global employment increased, it did so with insufficient wages to improve the quality of life, expanding the universe of poor workers by income.

The main difference between CFK and AF

Inflation, in its expression of distributive bid, had the business sector as the clear winner to the detriment of the income of the popular sectors (workers, retirees, holders of AUH and social programs)

It is true that one double-digit unemployment rate and informality close to 40 percent of the labor force, as registered in the last two years, disciplines the bargaining power of workers and, therefore, the possibility of defending the purchasing power of wages becomes more difficult.

This is where it breaks in the fundamental political difference within the governing coalition, which exceeds the names of people. Cristina Fernández de Kirchner postulates that in critical moments the State still has tools to strengthen the income of the most affected social groups and that they are, at the same time, a large part of its electoral base, while Alberto Fernández rests on the idea that the negotiation between the parties allows this objective to be achieved.

Alberto Fernández thinks that agreement and dialogue between price makers, unions and the State constitute the central strategy to slow down price increases.

How growth is distributed in the exit from the crisis

Two experiences of serious crises and their subsequent exit allow us to observe that the current one has a marked fragility in terms of the distribution of immediate growth among the less favored sectors.

One of them is the hyperinflations of Raúl Alfonsín and Carlos Menema chaotic economic scenario that had its abrupt stop with the convertibility of the exchange parity 1 to 1. The anti-inflationary strategy of fixing the exchange rate is one of the most basic in the economic management manual.

In addition to causing social relief by stopping uncontrolled price increases, the rapid fall in the rate of inflation initially led to an improvement in income in real terms. Although it is a short-term mirage, the economic growth after the devastation of a hypermarket together with the reduction of inflation had a redistributive effect towards the vulnerable sectors. This result had its electoral counterpart in the re-election of Carlos Menem. Not leaving convertibility in 1995, after that victory, when the economy was still dragging the consequences of the external shock due to the Mexican crisis, was the trap that culminated in the explosion in 2001.

The other experience was the way out of the crisis caused by the fall in convertibility and the debt default. The subsequent economic growth was consolidated with an economic policy of deliberate strengthening of domestic demand, with an income policy that promoted salary and retirement increases by decree and opening of joint negotiations (frozen during the ’90s). In this way, economic growth after the very strong recession that lasted for four years (August 1998-August 2002) was accompanied by a progressive redistributive bias.

These two cases and the comparison with what is happening now facilitate the understanding of what is the basis of the political conflict that the government coalition is going through.

Minister Martín Guzmán thinks that one of the ways to lower inflation is through consultation between companies and unions to align economic expectations.

what about income

The spectacular growth of the economy (10.3 percent in 2021)exceeding the forecasts of the economic team and establishment consultants, It was hardly reflected in substantial improvements in income distribution.

One of the graphs that the consulting firm PxQ distributed this week was the real wage index by sector which serves to show this behavior in numbers.

The table is accompanied by the following text: “Taking as a starting point December 2016=100, it is observed that total wages in the economy accumulate a loss of 20.2 percent of their purchasing power. By category, unregistered jobs are the ones that have suffered the worst consequences (-31.9 percent), followed by public jobs (-20.5 percent) and, lastly, registered private jobs (-15.3 percent). hundred). Although in the annual comparison wages have shown signs of recovery, in the monthly variation of January 2022 against December 2021, only the private wage managed to be above the general price level (+0.7 percent).”

The electoral base of the Frente de Todos has not been able to register that the fabulous growth of the economy last year was reflected in the recovery of its income and, therefore, in the quality of life, which has already accumulated six years of deterioration.

Total wages in the economy accumulate a loss of 20.2 percent of their purchasing power compared to December 2016.

The key to the conflict

The very high rate of inflation is a serious macroeconomic problem but the central knot of the political conflict is the distribution. The Government promotes the update of income of the popular sectors but without achieving that the average can sustainably exceed the poverty line due to the regressive distribution pattern.

Is not that the management of Alberto Fernandez has not promoted increases via bonuses (retirees), increases in social programs (Food Card) or joint negotiations and release of the payment of Income Tax for a large part of the workers in a dependency relationship. What happens is that it did so with such intensity that it only served to offset the rate of inflation on average, thus always running behind price increases.

Thus, the important growth of the economy was concentrated in a few although without lowering the income of the popular sectors from the depressed levels left by the Macri government, but without being able to recover them in real terms.

This is the basis of the political conflict that has trapped the government of the Frente de Todos. It is not because of the personality of the protagonists because one is “bad” and the other is “lazy”, as they define each other. The key to this labyrinth is political and is found in the fact that economic growth at the end of this crisis did not have redistribution towards the sector of the electoral base population of the ruling party punished by the double pandemic macrismo + coronavirus.


Disclaimer: If you need to update/edit/remove this news or article then please contact our support team Learn more


The News 24 is the place where you get news about the World. we cover almost every topic so that you don’t need to find other sites.

Leave a Reply