To emerge strengthened from the crisis, national sovereignty must be reinforced, drainage of the country’s wealth should be closed, and the economy ought to be orientated towards general wellbeing and protection of the environment.
Many and diverse are the challenges to address for emerging strengthened out of the double crisis, economic and health. We will consider the economic challenges, but first it is worth recognizing that every construction is subordinated to the political support that might exist to transform the cascade of negativity that subdues and overwhelms. At the same time, in democracy, political support is based on the social clarification, introspection, and organization that grow with the determination of peoples or move backwards with their alienation.
Political economy teaches that some economic relations which are technical in nature need to be considered but the course and way of functioning of the economic system are always subdued to the correlation of interests that prevails in each society. A correlation of forces that tends not to be democratic, in the sense that votes, ideas, longings and proposals of majorities do not prevail, but rather the power that different actors have. When minorities concentrate a country’s wealth, they take over their main assets in complicity with sectors of politics, the media, and judiciary. They are able to control markets, foreign trade, communications and whatever allows them to alienate or numb wills; they impose a common sense that favors their domination. Popular needs and interests are left out, as well as individual political and spiritual freedom, the search for a fair and sovereign development. The following lines deal with the latter.
Why is it necessary to reinforce national sovereignty?
National sovereignty talks about a country’s ability of making decisions in favor of protecting the territory and interests of the entire population, and not those of foreign representatives and local groups that impose their privileges. Thus, it is necessary to change the course to turn away from the current concentration of country’s wealth and towards equity, justice, and protection of the environment. That is, as Andean cultures describe it, re-orientate efforts of the entire society and its results towards the good living and protection of Mother Earth so that she continues providing shelter for us without destructive fury.
Sovereignly deciding does not mean isolating from the world or disregarding the global circumstances in which we live. It is about exercising our own will considering the context of opportunities and restrictions that the world opens and closes.
Where should we concentrate the efforts?
Although priorities need to be established, transforming action aims at covering all spheres and dimensions of social future while respecting the valuable that has already been accomplished. It must be pointed out that it is a major priority to make way for a country that, with the mechanisms it can establish, completely eradicates misery for good part of its population. There cannot exist one single family, one single individual that has no dignified roof, health, education, work, drinkable water, environmental and citizenry security. It is not true that there are no resources to accomplish that: it is one of the many deceits that concentration imposes. Resources exist, they are generated productive cycle after productive cycle. There is a stream of income that does not stop, but it has been diverted so that it does not reach the entire population but rather a few from the country and abroad.
With that already clarified, there are still many fronts in which to work. It is an essentially collective work, impossible to address in isolation. Each contributing its own. Thus, in these lines we chose to address certain areas of major strategic relevance, such as: (i) recuperating the control of domestic savings, (ii) how to apply it in productive investment around the whole national territory, and (iii) aiming at catalyzing talent and energy that nest in popular economy, which has always been punished with poverty and all kinds of scarcities.
- Recuperating control of domestic savings
In the region, good part of domestic savings is appropriated by a minority that sends it abroad. Those who flight the largest capitals tend to be the subsidiaries of international corporations together with local concentrated groups. These actors extract extraordinary profits that they do not declare; either they obtain them for the oligopolistic power they have in the local market pressing suppliers and consumers, or through controlling main exporting businesses, under invoicing their sales to partners in other jurisdictions. The amount of resources they evade is huge, year after year, relentlessly. Evading maneuvers can count on the complicity of sectors within the financial system that, in doing so, become co-responsible of committed crimes. The profit they obtain from these criminal maneuvers sterilizes large part of domestic savings generated by the effort of the whole society; it is stealing resources that could be reinvested in the country in social and productive infrastructure. Capitals flight prevents counting on a genuine source of national funding.
Difícil salir reforzados de la crisis sin desmontar todos los mecanismos que posibilitan el drenaje de recursos. Habrá que hacer cumplir la legislación vigente sancionando a los que delinquen, junto con ajustar el andamiaje regulatorio para eliminar inconsistencias utilizadas para eludir responsabilidades.
It is hard to emerge from the crisis strengthened without dismantling all the mechanisms that enable the drainage of resources. Current legislation must be enforced by sanctioning those who commit crimes, together with adjusting the regulatory framework to eliminate inconsistencies used for eluding responsibilities.
Overseeing action must start with large evaders and then ordering the entire fiscal system. It will be necessary to go from current regressive tax system to a progressive one, which is no other than establishing that those who have the most pay the most, and not popular and middle sectors. At the same time and of equal priority, the allocation of public spending should be enhanced targeting the double bottom line of solving social debt and promoting strategic sectors for national development.
It is impossible to ignore the need for enhancing the financial system which should concentrate in financing productive activities while abandoning financial speculation. Monetary authority has instruments to orientate the allocation of resources (part of domestic savings) that banks manage but which does not belong to them. It makes no sense that the bank sector decides which actors and initiatives to finance and which not, apart from national development objectives. Their bylaws and boards demand banks to maximize profit pondering the risk that they estimate it is inherent to each eventual borrower. With this criterion, they tend to prioritize large economic groups that may or may not be a priority for the country but have larger repayment capabilities. Thus, economic concentration relentlessly increases. It would be better, as described in the following paragraph, to finance what better serves the country’s interests. Monetary authority can guaranty depositors’ savings, as it is already doing, and also eventual repayment difficulties of loans it might have induced to materialize.
2. Allocation of recuperated savings transformed into investment
Complementing the previous point, it is of strategic importance to decide how it is better to orientate the allocation of the recovered savings, which initiatives and actors will be indispensable to promote. Actually, the initiatives the country requires are multiple and the actors are varied; there is no way of listing this universe. Instead, some selection criteria can be formulated and that are worth abiding by, among many, the following:
- Investing in activities and promoting actors that contribute to correcting existent disequilibrium in productive matrix that generate recurrent bottlenecks (as those of the external sector or scarcity of foreign currency).
- Dismantling inequities that prevail in value chains where leading enterprises abuse their power to concentrate larger results at the expense of the rest of participants (small and medium enterprises that cede incomes and capitalization capacity) and those of the consumers of their products.
- Distributing investments throughout the national territory not to concentrate and saturate metropolitan areas. This includes establishing processing industries in areas of agriculture and mining production, lines of family agriculture surrounding small and intermediate cities and, among many others, comprehensive programs of building houses and social infrastructure in these cities and towns. Of course, metropolitan areas cannot be forgotten but they require more complex and differentiated treatments.
3. A firm strategic support for popular economy
Another priority for allocating recovered savings is fully transforming popular economy by assigning it the strategic role it was always denied. No more handouts but rather political, economic, and technological support of excellence. Talent, energy and, positively encouraged, determination of going for the best abound in this space. A brief, thus certainly incomplete, summary of how to establish an effective support system for the popular economy can be found in Popular Economy, a strategic space for a more equitable economic order and in Trusts specialized in popular economy.
Exploring better paths, not repeating failures
This double economic and health crisis shakes the course and way of functioning that has been imposed onto us. We remember that in the 2008 global crisis, governments assumed the rescue by injecting public resources to restore, not to transform, the existent economic framework. The result was that large speculators increased their patrimonies by dramatically accelerating the process of concentration of wealth and decisional power that lead to more inequities, poverty, indigence and environmental destruction. Is it worth repeating such a disastrous experience or explore other options? Hopefully, peoples’ pulse will be able to choose leaderships that can lead us through better paths.
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