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OPINION AND ANALYSIS | 18-12-2021 08:30

20 years on from 2001, society has yet to find a balance between state and market

Social demands multiply in a scenario like the present day and might reach that level of social fatigue before reaching the 20 percent unemployment then.

The economic model of the 1990s seemed to be a success after stabilising the nominal variables and achieving real stability from that point. Nevertheless, a lesson also applying today is that macroeconomic stability is not enough by itself.

Unemployment had systematically topped 15 percent, the productive fabric had broken down and there were major social demands in an economy which had stagnated since 1998.

We are currently two million unemployed short of entering into a similar situation. Quantitative distance alone is not a determining factor for feeling far from that situation of chaos. Solidarity at that time was only to be found in the market while today the state has tools to contain those sectors left behind. But, of course, state abuses can conspire against macroeconomic stability and that is what is now happening.

This country has not succeeded in finding that balance between state and market permitting development with social inclusion. The latter was preached by the Kirchnerite governments. A model with inclusion is highly desirable but where is that inclusion with current poverty levels? Instead of inclusion, there was social protection.

Social demands multiply in a scenario like the present and might reach that level of social fatigue before reaching the 20 percent unemployment then. State and market condition each other mutually and now it is civil society which is making more social demands but they are fragmented between those who want more market (less taxation and state) and those who want more state (more welfare).

Not having found that balance in 20 years makes us reflect about facing a new kind of explosive situation, which any kind of event might detonate. Suffice it to see what happened in other countries of the region where conflicts arose from minor events exposing all the discontent – a discontent magnified by over a year of confinement.

The worst consequence of the 2001 crisis was the yardstick it left for the following years. Many are now asking ‘When will all this explode?’ when 40 percent poverty and double-digit unemployment seem enough to say that it has already exploded. All the more so in December when everything seems better after having to mourn deaths, suffer the collapse of presidential leadership and undergo a double-digit slump in economic activity. ​

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Guido Lorenzo

Guido Lorenzo

Economista. Director LCG Consultora.

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