PhD in Economics
31 January 2022
Hypocrisy, bad ideas and half-truths
The speech delivered by President Arce on January 22, during the celebrations for the anniversary of the Plurinational State, was a true display of hypocrisy, bad ideas, and half-truths. Probably the only redeeming feature was that it lasted only 40 minutes instead of the usual two hours of endless boring speech.
Let’s start by saying that there was nothing to celebrate here. The conversion of the Republic to the Plurinational State is a historical absurdity that does not deserve any celebration. One thing is multiculturalism, which one welcomes, but another thing is to establish nations or groups that, as the new Constitution says, have “the right to exercise their political, legal and economic systems according to their worldview.” This is nonsense because it means that a group that defines itself as a “nation” (and supposedly predates the “Spanish colonial invasion”) can have its own laws and apply its own justice as it sees fit. At this point, and when we are all mestizos and citizens of the same country, granting privileges to some and not to others is simply unfair and discriminatory.
Let us now turn to the speech. The 40 minutes began with a treacherous hypocrisy. The President said that in the “Colonial Republic” there was a “kind of social apartheid” in which there were “first-class and second-class citizens” with a “State that represented and benefited only a few.” Is such nonsense possible? Is it not now, in the multinational era of the MAS, that the true “social apartheid” is being experienced? Aren’t those with a blue card, the members of the party, those from the environment, the true “first-class citizens”? Don’t the MAS members do what they want with justice and put anyone who dares to contradict them in prison? Don’t they have a rule that obliges every public servant to be a member of their party? Make no mistake, President, now we have a State that represents and benefits only a few, you, the familiar faces, those who raise their little fists and persecute those who think differently. The rest of us, “second-class citizens,” can only tie shoelaces and see how the country is being divided.
Shortly after, the bad ideas start. The President mentions and praises socialism several times. He says that “socialism is being reborn in new soldiers of the process of change,” that his Government is based on the redistribution of wealth, that we must close the gap between rich and poor, and that we must fight against capitalism. For now much of that is rhetorical. For now, we are not a socialist country, although we are a country in which the State has an enormous and perverse influence on the economy and society. Bolivia is a repressed country in which there is no institutionality that generates economic freedom. We are ranked 172 out of 178 countries in the Heritage Foundation’s index of economic freedom, very close to countries that are socialist such as Cuba (176), Venezuela (177), and North Korea (178). The enormous influence of the State in society translates into a mountain of regulations and bureaucracy, and the absence of legal certainty. This pushes the country into the informal sector (80% of the economy) in which we survive with very low productivity and no hope of generating a solid production network. Instead of praising outdated ideas like socialism, the President should have to worry about moving us in the other direction. The most capitalist countries, that is, those that embrace economic freedom, are the ones that have been able to develop the most and have lifted the most people out of poverty. Ideas matter and it is time to tell the Government that its socialist rhetoric sucks.
Speaking of outdated ideas. The next blunder of the President (and of the Economic and Social Development Plan) is the announcement that Bolivia will develop using “import substitution industrialization.” Something crazy. ECLAC sold the story of import substitution to the region during the 50s, 60s, and 70s, and the only thing it achieved was to generate a deep crisis that lasted a decade (the lost decade of the 80s). Import substitution is a Chinese tale that has never worked and will never work because it ignores the fundamental law of international trade: countries must specialize in what they have a comparative advantage, that is, in what they can produce at a lower cost than the rest. If you do not have a comparative advantage in a certain product, it is rational to import it from countries that do. Do you think, perchance, that we should produce Quipus computers to replace the computers of China, Japan, or the US? Or that we should produce cars or cell phones to replace the ones we buy abroad? It wouldn’t make any sense to do so. It would be very expensive and we would use resources that are better used in what we can compete in.
And now we turn to the half-truths. The President proudly said that the growth of the third quarter of 2021 was 8.9%, somewhat less than the also bombastic 9.4% of the second quarter that appears on giant billboards next to his face. 8.9% seems high, but it is a lie. All growth is great if the starting point is the bottom of the well. Let us remember that in 2020 the country decreased by almost 9%. After such a strong drop, the recovery will always be high due to a statistical rebound effect. Note, for example, that Chile grew more than 17% during the same period, Colombia more than 13%, Peru more than 11%, and Argentina more than 10%. As you can see, our 8.9% is not as impressive as it is made out to be. According to Arce, we will grow 6% in 2022, but ECLAC and the World Bank expect only 3.2 and 3.5%, respectively. In an external context in which all variables are adjusting downward, it is much more likely that international organizations will be the ones to get it right.
And, of course, the President forgot to say that the country’s sources of growth do not come from a solid production network, but from the art of inflating the famous “internal demand” through deficits and debt. He did not say that we have had deficits for 8 consecutive years at an average of 8% of GDP, that our internal and external debt now comfortably exceeds 50% of our production, that the gas era is over, and that in a couple of years our hydrocarbon imports will be higher than our exports, that our international reserves have suffered a brutal setback and are now barely USD 4.6 billion when they were more than USD 14 billion in 2014, that the vast majority of public companies are in deficit, that we have more than half a million public employees, and that this year’s budget plans to spend 80% of the GDP! No, none of that, just hypocrisy, bad ideas, and half-truths.
Source: https://brujuladigital.net/opinion/hipocresia-malas-ideas-y-medias-verdades
