Common sense

According to the popular saying, common sense is the least common of all senses. It is not that simple: for some, it represents the knowledge accumulated through experience and learning; for others, it is a conceptual tool used to impose personal beliefs as dogma.

We are living in times where common sense challenges long-held assumptions. This is the case with tariffs, once considered a useful economic policy tool. After World War II, the prevailing doctrine argued that their adverse effects outweighed their benefits for trade. As a result, multilateral organizations (WTO, GATT, World Bank) emerged as guarantors of globalization, leading to one of the most significant periods of economic growth in history—though not without imbalances and much to be corrected, of course.

The newly elected American government challenges this concept, leading a political movement that is expanding on an international scale. However, it presents a strange contradiction with 20th-century classical liberalism, which upheld two essential values: market competition and the rule of law—open markets with equal conditions and legal security as fundamental principles. The dominant idea now is different: direct state intervention to transform the global order, channeling power through this trade-restricting tool. A striking step backward in history.

The foreseeable changes are significant. If protectionist policies lead to rising prices, the U.S. Federal Reserve may take a more cautious approach to lowering interest rates—knowing the impact this would have on emerging market currencies and commodity prices. More importantly, on a structural level, it could mean a new global order with segmented, harder-to-access markets and lasting price imbalances.

The new common sense presents challenges for Argentina. The current scenario, marked by legal instability, affects investment flows in a country that needs them more than ever. Argentina's investment rate stands at just 16% of GDP—far below the level required to boost employment and productivity. Meanwhile, per capita income has declined by 12% since 2011, with persistently alarming levels of informality and poverty.

This shift also directly impacts the dynamics of Argentina’s export markets: agricultural commodity prices are falling, as are those of critical minerals essential for the energy transition, such as copper and lithium. These two, along with gas and oil, form the three pillars of the country’s development and could be significantly affected.

In economic matters, the government has shown determination: the primary fiscal surplus, the trade surplus, and inflation below 3% per month are no small achievements. What is concerning? That, in addition to negative external shocks, there may be a bear hug toward an authoritarian version of common sense, leading to institutional regressions. Examples of this include proposals to fill seats in the Supreme Court, the decision not to submit the budget to Congress during extraordinary sessions, and an increasingly intolerant discourse challenging acquired rights.

February, 5th 2025

February, 5th 2025

15 de enero de 2025

15 de enero de 2025