The deterioration of the social situation is profound. It is not the responsibility of the current government but the consequence of having persisted for decades by applying bad policies. In this context, the majority of the population is demonstrating its willingness to continue making an enormous effort to give this administration the opportunity so that, by changing its strategy, this time Argentina will emerge from decadence. In the meantime, and even if impoverishment is widespread, there are sectors that suffer greater urgency and less room for resistance to the worsening of their reality.
Pensioners are a particularly vulnerable group. This is why the activation of tools that At least reduce the damage. Always with this objective, and as has happened several times in the past, the formula of pension mobility. That is, the rule to which ANSES must submit for the purposes of update the amount of pension assets.
What is mobility for? In well-organized countries the main objective is to give pensioners the peace of mind that the purchasing power of their income will be preserved over time. That is, avoid (or minimize) the risks that inflation substantially alters the amount of assets. We must keep in mind that it is always important for people to have predictability and economic certainty. But this need increases when you are in a phase of life where it is much more difficult to find other sources of income to compensate for the consequences of economic fluctuations.
What is mobility for in Argentina? On repeated occasions, governments of different political orientations They used mobility as a fiscal adjustment tool. The mechanism is relatively simple: manipulate the formula so that the assets are updated below inflation. How pensions represent a high share of total public spendingreducing the purchasing power of pensions public spending is reduced and the pressure on public finances is significantly alleviated. It is the most frequent and rapid route followed by successive governments reduce the fiscal deficit.
The tax adjustment based on liquidate pensions It is questionable for several reasons. Some more subjective aspects such as ethical and social which tend to subject those who are retired to a sudden loss of income. Others that are more objective and less taken into consideration, such as financial inconsistency which is the basis of the fiscal adjustment based on the liquefaction of pensions. The fact that many economists, more or less strongly, recommend this strategy does not mean that it is a path that contributes to solving the chronic fiscal deficit from which Argentina suffers.
The reason is mobility is expressly provided for by the Constitution. This high legal hierarchy and the frequent propensity of governments to violate it have given rise to extensive jurisprudence. There is no ambiguity on this issue. The strategy of reducing public spending by liquefying pensions it generates lawsuits that the state always loses. Bread for today, hunger for tomorrow.
If public accounting (unlike private accounting) did not suffer from the weakness of do not record the provision for trials as an expenseliquefaction it would not serve to show the fiscal balance. But since the processes in the state do not have an accounting record, many economists “do not see them” or fall into the temptation to show rapid improvements in public finances in the short term, even if fiscal sustainability has not improved if the processes are considered. .
So that It does not work Mobility? The heated and persistent debate on mobility leads us to lose sight of the fact that the pension system faces many complex challenges. It is a diagnostic error to expect this a new mobility formula all the problems of equity and financial sustainability that the Argentine pension system accumulates are solved.
From a less simplistic vision emerges the need to address a global pension system. In one of the chapters of our book A vaccine against tooth decay We explain the need to do this redesign and what its direction should be. We did this convinced that the overall organization of the pension system, where the change in mobility is an important but secondary issue, is one of the institutional transformations more transcendental that Argentina has ahead of them.
This is why it is pertinent and encouraging that the President has included the organization of the pension system among the 10 topics on the agenda of the May Pact. Without downplaying the importance of what happens in the meantime, solutions depend on this approach being taken with the seriousness it deserves. It’s a huge challenge but doable if we’re willing to do it share information, studies, actuarial projections and proposals within a framework of sincere dialogue and a constructive attitude.
Source: Clarin
