[PEN-L:30386] RE: lula and the imf

["Forstater, Mathew" <forstaterm@xxxxxxxx>]

One of the problems in Argentina is that there is no Lula (not to say
that that is all they need).  Unless something is going to change, none
of the Argentine Presidential candidates is really proposing to tell the
IMF to take a hike.  They may give some lip service to the IMF policies
causing their problems, but that is because this is the popular
sentiment right now.  But they are afraid to piss off the IMF, to
undertake policies that would increase the deficit or government
spending, e.g.  They also still have the corralito, which is unnecessary
and hampering things.  Unemployment is 25% (official rate, which doesn't
include many), 53% of the population is below the official poverty line
which is way too low), and the indigency rates are rising.  Homeless,
mostly women and children, line the streets of Buenos Aires like never
before.  Even under these conditions, petty politics continues to
prevent bolder policy approaches.  For example, there is not enough
cooperation between the Ministry of Labour and the Ministry of
Economics, so macro policy and employment and wage policies are not
being coordinated.  There is also a resistance to any policies involving
significant state participation, e.g., a large public works program or
even significant government spending.  This is not due to faith in
markets, but skepticism about the state's ability to successfully handle
large or complex administrative tasks, as well as corruption, patronage,
etc.  So one of the only proposals on the table is to increase in the
minimum wage from 200 to 300 pesos per month.  No that this is a bad
thing, but it won't get at the larger macro and monetary problems or
lift the economy out of depression.  Since there was already a temporary
increase in wages of 100 pesos per month for many workers, the minimum
wage increase will only keep low wage workers where they already are.
And since the peso has lost a lot of its purchasing power since going
off the peg, it will just make up for a little of the purchasing power
that was already lost.  The task is to anticipate IMF and related
objections, such as that the minimum wage hike will cause unemployment,
decrease competitiveness, or cause inflation.  But it is also necessary
to get some bolder approaches circulating should there be a political
opening.  The problem right now is that looking at the current
candidates, there is no one that inspires hope like a Lula.

Mat