Will Paraguay Follow Argentina’s Economic Decline?
By Marcelo Duclos, courtesy of Panampost
Although there was a moment in history when there was talk of the “Argentine miracle” (after the Constitution of Juan Bautista Alberdi) or the “German miracle,” after World War II (in one part, of course), I think we should mention another contemporary miracle: the Paraguayan one.
It must be clarified and recognized that Guarani growth has been slow and that the country still suffers from several problems. The prevalence of poverty in places that are still lagging or the lack of major infrastructure is some of the main concerns of the country, which has been moving in the right direction. Reasonable taxes, a modest debt, and a meticulous macroeconomy have consolidated an almost constant humble growth. The galloping corruption, the poor level of political debate, and the general lack of interest in the discussion of public policies, until now, have not managed to break the successful worker ant of this economy.
Paraguay “put its life on the line” for the last time in the debate over constitutional reform when former President Cartes was tempted to reform the Magna Carta to remain in power for one more term. The “Paraguayan miracle” ensured that the circumstantial debate and the bids for power ended up burying the proposal. The crisis and the protests at that time, unfortunately, took the life of a young opposition activist.
But the bill was miraculously discarded even though there was no appreciation for the institutions, and there was an absolute lack of understanding of the incentives that the constitutional reform would generate. Only the Authentic Radical Liberal Party (PLRA), which has little left of it, made any reference to the need to “not return to the dictatorship” by associating the Colorado Party with Alfredo Stroessner. But nobody in mainstream Paraguayan politics who argued against the former president’s attempt was thinking about the institutions of the Founding Fathers who warned about these issues.
At that time, the ball hit the crossbar, bounced on the line, and went out. However, many questions set off alarm bells and suggest that Paraguay cannot live with the same fate forever. Tax reform has already been approved to increase tax collection, and now there is a debate about the possibility of increasing government debt, two of the things that have had a lot to do with Paraguay’s modest but concrete and sustained growth.
As an Argentinean, I find it curious and alarming to hear these debates from the leadership and opinion-makers of the neighboring country. Although it sounds incredible, on more than one occasion, the supporters of the big state argue that “in Argentina, the debt is higher” or that “taxes are higher”… in Argentina, as if this were an example of something.
Recently, statements by former minister César Barreto, who warned that “the country could end up like Argentina,” reopened a much-needed debate. The former official’s words drew the attention of local business owners and traders in the border areas and in the capital, Asunción, who are used to dealing with the Argentine peso (and its debacle) and with the reality on the other side of the border, which often affects them directly.
But we must magnify and focus on a belief that affects a sector of Paraguayan politics and public opinion. Unfortunately, many people believe that, for example, if in Argentina agricultural exporters pay high tax deductions, that may not be so bad: “But if in Argentina…” is an argument that is usually heard in mainstream politics.
Although at first glance, Argentina still seems to be the regional power that Paraguay can envy, but the picture should not be confused with the film. The curve is apparent: our past is glorious, but the present is continuous fall and decay. Their starting point is much more precarious, but the trend is upwards. Of course, in the modern world, the inequalities seem more scandalous, but we must not lose focus on what is important. The arguments about “concentration of wealth” and “inequality” are slowly gaining momentum in the Paraguayan political debate. The temptation to resort to redistribution is growing, and so is the search for magic solutions. Unfortunately, the Argentinean example does not seem to be clear enough.
I was honestly moved to hear many Paraguayan brothers express their anger at Barreto’s words, which point to us as a total disaster. They continuously remember that Argentina was an escape route for many excluded Paraguayans who found in the neighboring country a job opportunity and a dignified life. But although the current scenario is that there are still many more Paraguayans in Argentina than the other way around, the truth is that if we look at the big picture, we see that the trend is starting to reverse.
If there is one thing that Argentina can contribute, it is to show the example of what definitely should not be done. Far from being annoyed by the realistic criticism and warnings that many Paraguayans offer about our situation as neighbors and partners, it is not in our interest that other countries in the region join the club of decadence — quite the contrary.
Marcelo Duclos is a reporter for the PanAm Post from Buenos Aires. He studied journalism at Taller Escuela Agencia (TEA) and went on to pursue a master’s degree in Political Science and Economics at Eseade.