How much austerity is possible?  |  Article

Lhe economic forecasts for the United States of America and for Mexico are not at all rosy. The rise in interest rates, inflation, and the turbulent and uncertain international scenario have already led several analysts to take the scenario for the world and, of course, for Mexico, for granted.

What is the response that our country should give to this possibility? Beyond government rhetoric, what is urgent is to open spaces for dialogue and exchange of ideas between the government and all possible actors, in order to broaden the routes of imagination and make better public policy decisions.

Faced with the recent announcement by the Bank of Mexico, regarding the increase in the interest rate to 8.25%, through which it is sought, resorting to the neoliberal economic orthodoxy, to try to control inflation, what must be measured very carefully is the the impact that this has on the increase in public and private debt, in addition to the additional restrictions on consumption by the middle classes, especially in the segment of durable goods.

In this administration, time of enormous value was lost before the arrival of the pandemic. It was minimized and the scenarios of the magnitude of the health and economic emergency were very poorly considered. Now, in the face of the alerts that are lit up on different boards, running the risk of proposing erroneous scenarios again and maintaining the course of action, can condemn us to a new, but this time deeper crisis that would be nothing short of devastating for the people of fewer resources.

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It is understood that in these scenarios the message from the authorities must always be measured and call at all times to avoid paralysis. But there is a huge difference between that and making decisions lightly or assuming that the critical conditions that exist at the international level, for some providential reason, will not reach us.

Faced with these types of projections, rather than appealing to ideological discourse, what should happen is a critical review of how to get out of the problem structurally and how to take advantage of the context to turn 180 degrees on the conditions that have led us to a prolonged and unwanted period of economic stagnation that led us to a mediocre growth of 2% annual average for the period 1988-2018; and that threatens to be, in the current administration, close to zero or, in the face of the scenarios we have, even negative.

Until now, what is known from the statements of the Federal Executive is that new “austerity” measures will be taken, which he called “a higher phase of Franciscan poverty.”

Beyond the lack of seriousness of the expression, the truth is that in strict terms what is being prepared is a new budget cut; and that even when the presidential commitment is given not to cut support programs for the poorest people, what is required, and urgently, is a much greater investment in infrastructure for health, education, housing; but also in the generation of decent jobs and the universalization of social security, with the aim of facing the growing needs and demands of the national population.

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The foregoing is relevant because even maintaining the amounts of support, a new cut, depending on its magnitude, can lead to new levels of institutional paralysis, and increase the dysfunctionality of various agencies that are at risk of not continuing their proper operation due to due to lack of budget.

What should happen in the following months is a thorough review of how to prioritize in the narrow budget margins that exist; and to that extent, direct resources towards the protection of the most vulnerable, without this implying a return to the idea of ​​recovering the path of growth with equity and with sustainability criteria.

What was expected of this administration was, for example, to return to a new era of industrialization in Mexico, based on clean energy, a much more powerful scientific and technological development, which would allow our production plant to be reconverted to stop being an attractive country. for investment mainly because we have very cheap labor.

A comprehensive tax reform was also expected. What has been done so far is not minor, managing to recover the mega debts generated by the abuses of business groups and government corruption; but it is clear that this was a necessary condition, but not sufficient to overcome the fiscal anemia of the State.

So now, when the President of the Republic maintains wide levels of popularity, and maintains the greatest amount of power in the national political spectrum, there would still be room to move towards a reform that is gradual, but that allows for a progressive and with much greater distribution capacities via a policy of broad guarantee of human rights recognized in the Magna Carta.

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If progress is made in this direction, Mexico would have many more possibilities of successfully confronting the dangers that are already knocking on the door and that, if something is not done differently, threatens to have unpredictable effects in what they would mean in terms of more disease, poverty and also death; because what should not be forgotten is that inequality and poverty literally kill.

Until now, the Bank of Mexico maintains annual GDP growth at 2.2% for this 2022, but it remains at levels that are far from what Mexico needs to reduce the disgraceful inequalities that have been maintained for centuries.

Until now, the country has managed to maintain minimum functionality that also guarantees relative levels of “normality” of daily life; however, the cuts that are coming may once again acquire the draconian character that characterized those implemented in the worst moments of neoliberalism, and that threaten to return, this time presented under the “friendly face” of the figure of the Saint of Assisi.

We must not forget that the Mexican State has an inescapable responsibility and mandate: to guarantee, from the widest possible perspective, the wide range of human rights that are recognized in the Constitution; and that this, beyond goodwill, requires resources, infrastructure and institutional and human capacities; and only by advancing towards them will we be ready in case the recession that is already foreseen arrives, but others that could occur in the medium term.

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