The The proximity of the elections forces the candidates to refine their economic policy proposals. Especially in terms of price stabilization, since solving the inflation problem appears as the first demand of society. Beyond the differences of the opposition group regarding dollarization, both the economic referents of Together for Change and those of Milei agree on the need to advance in the reduction of the State, apply a labor reform and in the commercial opening.
Based on these apparently unconnected measures, they plan to discipline the distributive bid within the framework of an anti-inflationary program that, however, depends crucially on the ability to stabilize the exchange market and dismantle price indexation.
The policies of adjusting public spending, privatizations, reduction of social programs that, with nuances, support the main references of the opposition, have two objectives. On one hand, the shrinking of the State allows them to propose the reduction of social and tax charges to companiesa clear request from the red circle to its political referents.
On the other hand, they are measures that tend to increase the unemployment rate, whether state or private, given that lower public spending means, on the other side of the counter, less income for its suppliers, as well as for those who sell products to the mass of public employees and beneficiaries of adjusted social programs.
A high level of unemployment, as shown by the experience of massive dismissals of workers from state companies in the run-up to convertibility in the early 1990s, is the best tool to weaken unions. A working class with its organizations weakened will not be able to oppose a labor reform and, especially, the an end to the parities that, in a low voice, the economic referents of the opposition deem essential to put an end to inflation.
The other leg of price discipline is the commercial openingwhere the massive income of imports imposes a ceiling on the possibility of transferring cost increases to prices by businessmen, under penalty of losing market to imported products.
The use of the import opening as tool of disciplining of prices must be accompanied by an exchange regime that avoids the devaluation of the currency (dollarization, currency board, or an appreciation of the exchange rate policy), since otherwise the price ceiling imposed by the opening may be displaced through nominal devaluations.
But there lies one of the main difficulties that the opposition program will have to face: the availability of dollars to stabilize the exchange market. The other is to break the de facto or contractual indexation of numerous prices in the economy, such as rents and financial costs, without which the liberal program generates a exchange rate delay in coexistence with inflation, similar to the one that produced the failure of the “little table” of Martínez de Hoz in the last dictatorship.