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Macri bets on Freud rather than Keynes

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The economy will dominate Argentina’s political agenda in 2017. On the first day of the New Year, when the newspapers had been printed and hit the newsstands, it became all too clear that the country’s editors believe, just like most of the public, that the government has to move fast if it wants Argentines to go to the polls in August/October with healthier pockets then they had last year. The next day, Tuesday, the new Treasure Minister Nicolás Dujovne confirmed that thesis. He spent his first official day and a half in office giving press interviews.

But beyond the speed of any change, the question remains as to whether the government is moving in a right direction to muster an economic recovery. Ever since the 2015 campaign that surprisingly catapulted him to the Casa Rosada, President Mauricio Macri has worked under the assumption that good vibes and expectations would get the country’s wheels going after an on-and-off stagnation that started in 2012. He first placed his bets on his once fellow business leaders, who he thought would invest their bank accounts at the mere sight of a pro-market government taking the reins of the government. They didn’t.

Now Macri and his multi-headed economic team is placing the same sort of hope on the belief that Argentines will start spending more than they did last year, and that the economy will therefore grow in 2017. As someone who has recently had vast experience as a television and newspaper columnist on economic issues, Dujovne will now largely serve as an economic spokesman for the administration.

Javier González Fraga, a former Central Bank governor who supports the Macri administration, said that the country needs a minister “goes out and convinces people” and “generates enthusiasm” among business leaders. Dujovne started off immediately with the job: in one of the many early-bird interviews, he said “all the conditions were set” for 2017 to be “a great year.”

A matter of believing

But Dujovne has also left many people scratching their heads at the idea that he would promote a reduction in the government’s deficit — but without trimming spending. “We will look at the fine print of how the government’s money is being used,” he said.

The new minister might soon be trapped in the dilemma of the government’s so-called economic “gradualism,” which critics say only leads to contradictions in policy. It is an attempt to introduce reform at a slow-moving........

© Buenos Aires Herald