The philanthropic ogre

In 1979, the Nobel Prize for Literature, the Mexican Octavio Paz, wrote a book entitled El ogre philanthropic, which shocked the political class of the Aztec country. At that time, the PRI had been in government for more than 50 years.

In the book, Paz denounces the use and abuse that PRI politicians made of the Mexican State, granting enormous benefits to public employees, friendly businessmen and their millions of supporters.

Any similarity with our country is not purely coincidental. The power scheme that has allowed for a hegemonic Colorado Party in the last 70 years has many similarities with the scheme that allowed the PRI to govern Mexico from 1929 to 2000.

In our country, in recent days our “philanthropic ogre” has been more active than ever, granting an absolutely irrational fuel subsidy and approving in the Chamber of Deputies an insane salary increase of 63.6%, to a group of government officials. Power of attorney.

The granting of subsidies is in itself an extremely difficult political decision because some are taken away to be granted to others and their implementation must be carefully elaborated so as not to distort the functioning of the economy and not generate greater social problems in the future.

The law that approved the fuel subsidy was approved “between roosters and midnight”, without any rational analysis for its implementation and without evaluating its impacts. The approved law has flaws from every point of view, from the constitutional to the economic and social.

From the constitutional point of view because said law flagrantly violates article 107 of our Constitution, which literally says: “The creation of monopolies and the artificial rise or fall of prices that hinder free competition will not be allowed.”

From the economic point of view, because said subsidy does not have a clear source of financing, which will lead us to further increase our already large fiscal deficit.

From the social point of view, because instead of approving a subsidy focused on the most vulnerable people, a general subsidy has been granted that clearly benefits Petropar’s private operators, some carriers and some car owners, which may even be high-end .

But the salary increase of 63.6% for judicial clerks approved in Deputies is potentially even more harmful than the fuel subsidy, because it creates a disastrous precedent for all employees in the public sector and even in the private sector to ask for a raise. Similary.

If this astronomical salary increase is granted, the beneficiaries would be the public and private employees, who have the luck or the privilege of working formally.

But this group represents less than 30% of the total economically active population, while more than 70% who work on their own or informally will not have access to this benefit.

Last week I was participating in a panel held at the Central Bank of Paraguay, where the 70th anniversary of its creation and its great achievement, macroeconomic stability, were celebrated. At that event, I had the opportunity to reiterate a warning that former Uruguayan President Julio María Sanguinetti had given me: “Take care that politicians do not throw the economy off a cliff.”

This is an extremely difficult year, with internal drought, international wars, and global inflation, and we are facing it with a very weak government, with a political class involved in the electoral struggle, and with rampant populism.

The risk we run is that our macroeconomic stability, achieved with great effort and over many years, will be “overturned” by this “philanthropic ogre.” Civil society must be vigilant and organized to prevent decisions from being made that increasingly compromise our already problematic future.