Lower Inflation Bodes Well For Argentina

15.02.2017 • Central Banks

By Iván Carrino – El Diario del Lunes (Argentina) –
On Friday of last week, I took my dog to the vet. In the midst of the conversation about vaccines, anti-parasitics etc., the state of the economy came up. The vet was outraged.
“Are you an economist,” he asked me. “This is a mess!”
We get along really well, so I didn’t want to contradict him. Instead I tried to explain that what was happening was what normally happens when you have an adjustment after twelve years of wasteful spending.
Okay, he replied, “but who will take care of me?”
I kept thinking about what he said…
Many people believe that responsibility for one’s own success or failure depends on someone protecting, defending, or helping them. And when this idea spreads and becomes part of the popular discourse, that “someone” who has to “give support” is none other than the state. It all ends with an interventionist government.
Is that really how it works? Does the government have to ensure that we all do well? Even if we accept this as a fact – can the government really fulfill this mandate?
I suggest a different way of looking at it: to help us, the government should do nothing to interfere in our progress. As Alberdi said: “what does wealth require of law to be produced and created? What Diogenes demanded of Alexander; Stand out of my light.”
To my friend at the pet shop, I said that he knew how to protect himself. He had inventory, customers, and provided a valuable service to everyone in the neighborhood. The government should not get in the way of his progress.
And one way to do that is to lower inflation.

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