I always remember that the first thing Will Ury taught in the Harvard negotiation program was to learn how to do it separate “positions” from “interests”. He exemplified this with the case of a mother who, seeing her daughters fighting over an orange, broke it and gave half to each of her. But as it happens, if he had investigated his daughters’ true interests, he would have known that one wanted the orange to make candy and the other to eat, so the optimal solution would have been to give one the whole peel. peeled orange to another.
From another perspective, something along the same lines is suggested by Chris Voss, former chief negotiator in FBI hostage cases, in his book “Never Split the Difference”. As you might imagine, I pull out these references from the failed path of the so-called Omnibus Law to Congress. As for references, friend Voss defines a negotiation as “communication with results”.
Making a free synthesis between the two experts, we could say that the communication between the Executive, the official benches, the friendly benches and the governors was unable to distinguish the positions of interest and, therefore, did not obtain results.
What are the interests behind the positions? Without direct information, risk.
President Milei has three objectives:
1) Obtain a fiscal package that allows you to replace the size of the inflation tax in the fiscal adjustment. In jargon, trading the blender for real taxes and a part of the chainsaw which, I understand, also requires a law, or delegated powers, such as the management of trust funds.
2) Obtain the delegation of powers to apply their “libertarian” program without having to go back to Congress for every point, at least during this year and thus be able to attack jobs, villas and other bureaucratic “anomalies”, with public sector reforms.
3) Symbolically, demonstrate that you have governability and the ability to impose a profound regime change. I could add a change with irreversibility, but given the history of an Argentina that privatizes and renationalizes with the same characters and arguments, in Argentina irreversibility depends more on results than on institutions.
Governors and friendly groups, for their part, also have three objectives:
1) Recover the tax revenue lost when Peronism, Kirchnerism and the LLA dismantled the fourth category income tax.
2) Remove from law and prevent some conflicting issues from entering the window of delegation of powers for some business sectors that predominate in their provinces. (with real lobbies or not).
3) Don’t appear to public opinion as the “bad guys” of the film, voting together with Kirchnerism and the left.
If these were really the interests, the terms of the negotiation would be clear.
The President should give up some of his superpowers and less important regime changes, reintroducing a fiscal package that, including the personal income tax, allows the national government not to abuse recession and liquefaction as a “stabilization” mechanism, while governors recover co-participation. funds. And the governors give the President the ability to carry out the structural changes he proposes, with minimal sectoral limitations, given that Argentina needs this profound regime change, after two decades of destruction and stagnation.
Include the reform of labor relations and agree in the ordinary session on an overall design of the tax regime and a Country-Province fiscal pact, seriously, which begins to leave room for the generation of private investment and employment.
I insist, if this were the case as I describe it, leaving aside the extreme positions, a deal doesn’t seem that complicated. However, and because of this predominance of positions and the lack of will to negotiate, we are faced with a “game of chicken”.
The President prefers to put popular support for his macro program at risk, making the adjustment less bearable with further recession and liquefaction to close public accounts, waiting for governors to “give up” due to lack of funds. Under the motto “I don’t negotiate with the caste, they continually push me away” (by the way, I add, as they did with President Macri, whose backs were not only pushed, but, in exchange for governability, they permanently has withdrawn funds, effectively emptying that governability).
And on the other hand, the governors and friendly groups are betting that they can “blame” the President’s intransigence for the internal adjustment of their provinces, and to “block” the libertarian program, forcing the President to negotiate, and to relax, given his need for tax reform that cannot escape Congress, with the motto “he is an authoritarian, he wants all or nothing, hiding behind the fact that he owns the votes.”
And while awaiting the outcome of this conflict, we are the other Argentines who voted, in the first round of elections, above all for a change of regime. In this context, Policy failure leaves us in the worst of all worlds.
Without a fiscal package, or much of one, labor recycling and other labor relations reforms, we are facing a deeper and less credible adjustment as regards its sustainability. And the less credible the fiscal adjustment, the greater the recession. Furthermore, the lower the short-term results, the lower the chances of imposing substantive reforms by the DNU and the greater the uncertainty in the private sector when making investment decisions.
We are so forgotten that it is essential to remember that the public saving that the government seeks to impose, both nationally and provincially, must be offset by “private dis-saving” in order for the economy to change its downward trend.
Postponing serious political negotiations, which go beyond the Omnibus law, will make everything more difficult. I conclude with the central issue, namely short-term results.
For now, disinflation relies on recession, on the deferral, in some cases for regulatory reasons, of rate and other price increases, and on an exchange rate policy that raises doubts about its possible continuity. It is one thing for the real exchange rate to fall for good reasons, the inflow of capital to invest, but it is another thing to use the adjustment of an “unbalanced” exchange rate as an anti-inflationary tool.
Nor should we confuse the reduction of the Central Bank’s balance sheet with the improvement of its net worth. As for the inflation rate, two vectors will be faced in the coming months: disinflation due to adjustment and recession, with inflation due to changes in relative prices. (Including the exchange rate?).
Which carrier will prevail? You know, that’s… another price.
Source: Clarin
