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Good Morning,
I’m a student at the Polytechnic of North Buenos Aires looking at austerity locally. We have had a small government surplus for each of the last two years which means the government is destroying by taxation more money that it creates and spends. The difficulty we have is that after initial progress inflation is not reducing anymore and has been stuck at just over 30% for over a year and a half.
The local debate is what policy change is needed to get inflation down to around 3% from the current 30%. Some are arguing that the timescales for surpluses to fully act on inflation are in the 2 year+ range, much the same timescales as people claim for interest changes to become effective, and therefore no policy change is needed, just hold the line.
Whether this is a cruel policy is subjective opinion and it’s up to the public to decide at the next election.
Thank you for your comment.
I think the first thing to recognise is that a government surplus does not necessarily mean that inflation will fall. It means that the government is withdrawing more money through taxation than it is injecting through spending, but inflation is not determined by that balance alone.
Argentina’s inflation has many causes, including exchange rate movements, import costs, expectations, the structure of its economy and the distribution of economic power. Running a government surplus does not necessarily address any of those problems.
That is why I would challenge the suggestion that Argentina simply needs to wait another two years. What is the evidence that maintaining the surplus will reduce inflation from 30% to 3%? What mechanism is supposed to deliver that result? And what happens if the policy continues to suppress economic activity without resolving the underlying causes of inflation?
MMT does not suggest that government deficits are always desirable, or that surpluses are always wrong. It requires us to examine what is happening in the real economy and to design policy accordingly.
I would also disagree that whether austerity is cruel is simply a subjective matter to be settled at an election. Its consequences for poverty, employment, public services and people’s ability to meet their basic needs can be assessed. Democratic choices matter, but they do not make those consequences disappear.
The fundamental question is whether the policy is working, for whom, and at what cost. A government surplus is not, in itself, evidence of economic success.
Neoliberalism’s friend, austerity, is cruelty. Too true.
The Spanish pensioner, an elderly woman whose eviction led to protests over Spain’s housing crisis has died.
Maricarmen Abascal, 87, was forcibly removed on a stretcher from her apartment of more than 70 years on 23 September after she was unable to afford steep rent increases.
https://www.bbc.co.uk/news/articles/c6e3x21ev9wwo
Evicted after 70 years, and dies as a result.
That is neoliberalism in action.
Appalling as the death of Maricarmen is, the opposition parties voted down Spanish government proposals to legislate to improve housing issues. SO the PM has called a general election. The result will be interesting, although I think the election is a little more about saving the PM longer term than a principled reaction.
For over 70yrs you live your life as best you can with as much integrity as you can muster then one day the inhumane searchlight of profit and acquisition finds its way past your curtains.
I despair….. but not enough, like most of us here I hope, to give up the fight.
10 out of 10.
Thank you
A cardboard placard!!! I nominate your AI agent for a Rev Sue Parfitt anti-state-terror award, with love from Bristol.
So what, indeed. With an energy-limiting condition, AI is what lets me keep campaigning and blogging at all.
love it! It’s going straight out there to everyone I know and beyond
🙂