The new consensus of Washington and Argentina

The new consensus of Washington and Argentina
The new consensus of Washington and Argentina

We must consider three facts to understand the new directions coming from the country chosen as Argentina’s strategic partner.

First, the words of Treasury Secretary Janet Yellen at the Stanford Institute for Economic Policy Research Economic Summit. In her presentation, she made clear concepts of the rethinking of the policy of the United States and its relationship with the world. For this key American power official, the problem of social asymmetries must be addressed with “specific investments” that are aimed at “mitigating growing inequality,” as well as “promoting sustainable macroeconomic growth.”

This will be possible by expanding “the productive capacity of the economy while promoting more inclusive growth.” Despite his undeniable realistic liberalism, he understands that it is the link between greater equity and stronger growth aimed at “correcting inequalities” that will strengthen the most promising growth strategies.

Second, National Security Advisor Jake Sullivan’s speech at the Brookings Institution last April, who stated that recent decades have “revealed cracks in the foundation” of the post-war liberal order. For this reason, it is necessary to build “a new Washington consensus” that promotes a domestic and international policy that “pursues a modern industrial and innovation strategy, both in our country and with partners around the world.”

For the official, this has a clear normative horizon: “to build a more just and lasting global economic order, for the benefit of ourselves and people around the world.” The challenge is to dismantle two assumptions of the past. The first, that “markets always allocated capital productively and efficiently.” The second, “the idea of ​​tax reduction and deregulation, privatization over public action and trade liberalization as an end in itself.” This will be achieved with a strong role in public investment that “overcomes inequality and its harm to democracy.”

Third, a recent IMF report “Industrial policy is back, but getting it right is not easy” by experts Anna Ilyina, Ceyla Pazarbasioglu and Michele Ruta, focuses on the inability of markets to “allocate economic resources”. efficiently” and “correct” the problems of economic development.

This brought a concrete and empirical reaction which is that “governments were pressured to adopt a more active orientation in their industrial policy” to help correct “market failures”.

Based on another IMF report “The return of industrial policy in data” they empirically record more than “2,500 industrial policy interventions around the world”, most of them in China, Europe and the United States.

What is the reason for this return of industrial public policy? The evidence-based answer is compelling: “Industrial policy guides the reallocation of resources toward national companies, sectors or activities that market forces fail to promote in a socially efficient way.”

Once again Argentina faces the challenge of harmonizing with history or decoupling from it with the already known economic and social costs.

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