Back to basics
Many economists are asking how after over a decade in power a Kirchnerite presidency can come up with something new to dig itself out of the fiscal hole which is at the heart of all economic difficulties. But perhaps the answers do not necessarily lie in anything novel — all that needs doing is to put the clock back to 2006 when another Kirchnerite presidency with the same ideological premises boasted a strong fiscal surplus without fudging any statistics. To be sure, that is easier said than done because, for example, the 2006 budget included the same range of transport and utility subsidies which were a trifling sum back then but now amount to fully four percent of Gross Domestic Product. Yet a good basis for restoring fiscal sanity would still be to take that 2006 budget and review everything which has been added since — this extra spending doubtlessly includes some worthwhile social programmes alongside various dubious extravagances but then the revenue base has also expanded considerably since then with the renationalization of the pension system in 2008. When rolling back subsidies, the government might also stop to think that an energy sector which leaves it in the red puts other countries fiscally into the black because of the taxes levied to counter the negative environmental impact. If a Kirchnerite presidency could boast a fiscal surplus for four years running, there is no good reason why it cannot do so again.
If other countries tax energy consumption instead of subsidizing it, they also tend to subsidize their exports (especially from the farming sector) instead of taxing them. While there were grain export duties all this century, they were never important until they were sharply increased in November, 2007, just four months before the introduction of the politically disastrous sliding scale of 2008. This is another aspect of the pre-2007 landscape which the government could usefully ponder — roll back not only this perverse habit of penalizing dollar-spinning exports but also all the recent import and currency curbs which hamper free trade and prevent Argentina from making the most of a globalized world. The youth deserves concrete job opportunities for the future, not just the Progresar subsidies.
It is surprising how many concessions to orthodoxy Kirchnerism has already made in this still young year of 2014 but perhaps this conversion is not the only way out — all Kirchnerism needs to do is to go back to being itself.