December 6, 2013
Some ideas from IDEA
The IDEA colloquium in Mar del Plata in the last three days of last week was obviously influenced by its proximity to the midterm elections this coming Sunday, especially on Friday when some of the main candidates for Buenos Aires province spoke, while the agenda also extended to social problems as well as the economic issues which are the usual mainstay of this seminar — thus the situation of around a million youths “who neither study nor work” was given especially close attention as a potential time-bomb. Complaints about corruption were also aired more openly than usual although there was a certain hypocrisy here — graft might enrich certain politicians but the big benefits accrue to the businessmen paying out the bribes. But despite these political and social condiments, the core business remained business.
Not for the first time a critical note was predominant — indeed it might have been almost total if the government had not worked out its agreement with the World Bank a few days before the symposium whereby loans were renewed in exchange for acceptance of CIADI international arbitration rulings against Argentina, a development sparking considerable enthusiasm among businessmen as the seeds of a return to global capital markets. But they were generally negative about the current macro-economic situation with a swelling fiscal deficit, fading Central Bank reserves and uncontrolled inflation (as admitted by Buenos Aires Governor Daniel Scioli, who is widely seen as the temporary government leader in the absence of a convalescent President Cristina Fernández de Kirchner) — and even gloomier about the medium-term future in 2014-15 with growth forecasts of under two percent for next year and all the uncertainties of the lame-duck period almost universally expected until the 2015 presidential elections now almost exactly two years away. As for micro-economics, a large minority of companies pinpointed falling profitability as their main concern. For once wage claims and management-labour disputes did not rank as the main threat to profitability — a rising tax burden and an exchange rate lagging well behind inflation were seen as bigger factors contributing to pushing up dollar costs faster than peso profits. Even within the labour front many businesses seemed more concerned about the lack of skilled labour than about wage demands.
Although many of the criticisms were valid (even as solutions were few and far between) more self-criticism from the business community would be welcome, especially considering the failed forecasts of previous talks. At the end of the day, things didn’t go too badly for many of them.