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Social panoramic
Low inflation is really so important?
cash
Who has around thirty-something years old, like me, will remember how painful life was in the 80s and early 90s, when inflation reached stratospheric numbers and liquidated sweaty economies of Brazil. It was around this time that a number of factors coincided in the world to foster the emergence of neoliberal economic policies in Latin America, and the conclusion that low inflation was the top priority for the financial health of a country. In that moment of despair, everyone seemed to agree. But is that low inflation is necessary as well?
Neoliberal campaign begins
The former US President, Ronald Reagan, tried to create the bogeyman that should scare during the following decades politicians and economists in developing countries, the report, in the late 70s, such a negative idea about inflation we can almost see it in his speech: "Inflation is as violent as a thief, as frightening as an armed robber and as deadly as a professional killer." 1 For neoliberals, achieving inflation targets to zero or near zero became an obsession. Between 1 and 3 percent, is even tolerable; More than that, it connects to the warning signal.
IMF lends, if you follow the playbook
Know when some religious unscrupulous take advantage of our moment of greatest difficulty and emotional vulnerability to present us the wonders of their faith? Well, in times of greatest financial suffocation of developing countries, fell to the IMF, in recent decades, giving financial support to save their economies. The problem is that with the passage of time, the International Monetary Fund has subjected its loans to some adjustments that poor countries should do - in fact, the IMF acts to the "backward" countries, in their moment of greatest vulnerability , suited to neoliberalism - and all that it represents. Among the numerous adjustments imposed by the fund, maintaining very low inflation rate is a top priority because, according sends the neoliberal orthodoxy, "as the lower the inflation rate of a country, the greater its economic development." And to ensure that it can achieve these targets, the Central Bank must be "protected" from political influence and have the highest possible degree of autonomy to implement measures that voters may consider "unpopular". These were not exactly the most listened to proposals in this last election?
Brazil: high inflation and high growth in the 70
But it seems that there is a major discrepancy between what the IMF and neoliberal economists domainstream preach and the results they generate. For example, in the 60s and 70s the average inflation rate in Brazil was 42 percent per year (very high by today's standards). But despite this, the Brasilfoi the country with the highest growth in the world during this period (and many critics have deep disagreements with the military regimes, but we can not say, at least they were adherents of non-intervention in the economy). Moreover, between 1996 and 2005, religiously following the recommendations of tucana neoliberal doctrine - that PT declined to break in their governments - the inflation rate was 7.1% per year in the country. However, the per capita income grew only 1.3% in this period, the second shows the South Korean Cambridge economist, Ha-Joon Chang2.
Of course, in that we do not advocate that we return to the era of shaking and crumbling of the late '80s economy until 1994, when inflation reached the milestone of achieving over 700 percent per year. That's not it. Not to say that inflation itself is a wonderful thing - the economic crisis in Argentina in the mid 90s with Carlos Menem and Domingo Cavallo gives us no illusion about that. But there is a colossal difference to admit the destructive nature of hyperinflation - which are, in fact, the cases of Brazil from the 80s and 90s in Argentina - and argue, as neoliberals, that the lower inflation is better for the country, which is not true.
Hyperinflation yes, it really is harmful, but moderate inflation at around 40 percent per year, is not necessarily bad - on the contrary, can be compatible with the rapid growth and job creation, as Chang shows in his work3.
For neoliberals argue that low inflation
If neoliberals are obsessed with low inflation, the justification they give is that it hits more heavily workers on fixed incomes. Okay, but that's only half the truth. The other side of that coin, never mentioned, is that low inflation can protect workers' earnings, but the policies of cuts and austerity needed to keep it at that level can reduce what they would earn in the future. According to Ha-Joon Chang
Restrictive monetary and fiscal policies needed to lower inflation, especially a very low level of inflation also lead to a reduced level of economic activity, which, in turn, will lower the demand for labor and thus increase unemployment and reduce wages
The truth is that the neoliberal model, inflation control targets are not made to ensure the welfare of workers; they are designed to provide stability to large businesses. Investors do not like uncertainty, and the government comes to creating a safe and supportive environment for their profits. Take for example the case of the BC as advocated autonomy. All eyes are directed to the bank to control inflation, much more than a more robust growth or a lower rate of unemployment. Still say that the Central Bank officials are technocrats and non-partisan. We know very well that they seek to listen very carefully to the opinion of the financial sector and implement policies that appeal to the business tycoons, if necessary at the sacrifice of the whole country, as many, many examples throughout Brazil and the world. So when these sectors claim the autonomy of the Central Bank with the government's policies are in verdadeexigindo independence of the institution that allows them to implement policies that benefit their own businesses freely without it appear that this is occurring - for example, control obsessive inflation. It is non-partisan? This is democracy? This is in fact, neutrality and independence? Obviously not.
_______________________
1 The Los Angeles Times, October 20, 1978
2 Chang, Ha-Joon, Bad Samaritans - The Myth of Free Trade and the Secret History of Capitalism. Rio de Janeiro: Ed. Elsevier, 2009 (146 p.)
3 Op. Cit. pp. 147-48
Inflation is a national obsession with indicators released 29 per month
Brasil.gov.br: economy
http://panoramicasocial.blogspot.com.br/2013/08/inflacao-baixa-e-realmente-tao.html
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Aprendizado
Social panoramic Low inflation is really so important?
Social panoramic
Low inflation is really so important?
cash
Who has around thirty-something years old, like me, will remember how painful life was in the 80s and early 90s, when inflation reached stratospheric numbers and liquidated sweaty economies of Brazil. It was around this time that a number of factors coincided in the world to foster the emergence of neoliberal economic policies in Latin America, and the conclusion that low inflation was the top priority for the financial health of a country. In that moment of despair, everyone seemed to agree. But is that low inflation is necessary as well?
Neoliberal campaign begins
The former US President, Ronald Reagan, tried to create the bogeyman that should scare during the following decades politicians and economists in developing countries, the report, in the late 70s, such a negative idea about inflation we can almost see it in his speech: "Inflation is as violent as a thief, as frightening as an armed robber and as deadly as a professional killer." 1 For neoliberals, achieving inflation targets to zero or near zero became an obsession. Between 1 and 3 percent, is even tolerable; More than that, it connects to the warning signal.
IMF lends, if you follow the playbook
Know when some religious unscrupulous take advantage of our moment of greatest difficulty and emotional vulnerability to present us the wonders of their faith? Well, in times of greatest financial suffocation of developing countries, fell to the IMF, in recent decades, giving financial support to save their economies. The problem is that with the passage of time, the International Monetary Fund has subjected its loans to some adjustments that poor countries should do - in fact, the IMF acts to the "backward" countries, in their moment of greatest vulnerability , suited to neoliberalism - and all that it represents. Among the numerous adjustments imposed by the fund, maintaining very low inflation rate is a top priority because, according sends the neoliberal orthodoxy, "as the lower the inflation rate of a country, the greater its economic development." And to ensure that it can achieve these targets, the Central Bank must be "protected" from political influence and have the highest possible degree of autonomy to implement measures that voters may consider "unpopular". These were not exactly the most listened to proposals in this last election?
Brazil: high inflation and high growth in the 70
But it seems that there is a major discrepancy between what the IMF and neoliberal economists domainstream preach and the results they generate. For example, in the 60s and 70s the average inflation rate in Brazil was 42 percent per year (very high by today's standards). But despite this, the Brasilfoi the country with the highest growth in the world during this period (and many critics have deep disagreements with the military regimes, but we can not say, at least they were adherents of non-intervention in the economy). Moreover, between 1996 and 2005, religiously following the recommendations of tucana neoliberal doctrine - that PT declined to break in their governments - the inflation rate was 7.1% per year in the country. However, the per capita income grew only 1.3% in this period, the second shows the South Korean Cambridge economist, Ha-Joon Chang2.
Of course, in that we do not advocate that we return to the era of shaking and crumbling of the late '80s economy until 1994, when inflation reached the milestone of achieving over 700 percent per year. That's not it. Not to say that inflation itself is a wonderful thing - the economic crisis in Argentina in the mid 90s with Carlos Menem and Domingo Cavallo gives us no illusion about that. But there is a colossal difference to admit the destructive nature of hyperinflation - which are, in fact, the cases of Brazil from the 80s and 90s in Argentina - and argue, as neoliberals, that the lower inflation is better for the country, which is not true.
Hyperinflation yes, it really is harmful, but moderate inflation at around 40 percent per year, is not necessarily bad - on the contrary, can be compatible with the rapid growth and job creation, as Chang shows in his work3.
For neoliberals argue that low inflation
If neoliberals are obsessed with low inflation, the justification they give is that it hits more heavily workers on fixed incomes. Okay, but that's only half the truth. The other side of that coin, never mentioned, is that low inflation can protect workers' earnings, but the policies of cuts and austerity needed to keep it at that level can reduce what they would earn in the future. According to Ha-Joon Chang
Restrictive monetary and fiscal policies needed to lower inflation, especially a very low level of inflation also lead to a reduced level of economic activity, which, in turn, will lower the demand for labor and thus increase unemployment and reduce wages
The truth is that the neoliberal model, inflation control targets are not made to ensure the welfare of workers; they are designed to provide stability to large businesses. Investors do not like uncertainty, and the government comes to creating a safe and supportive environment for their profits. Take for example the case of the BC as advocated autonomy. All eyes are directed to the bank to control inflation, much more than a more robust growth or a lower rate of unemployment. Still say that the Central Bank officials are technocrats and non-partisan. We know very well that they seek to listen very carefully to the opinion of the financial sector and implement policies that appeal to the business tycoons, if necessary at the sacrifice of the whole country, as many, many examples throughout Brazil and the world. So when these sectors claim the autonomy of the Central Bank with the government's policies are in verdadeexigindo independence of the institution that allows them to implement policies that benefit their own businesses freely without it appear that this is occurring - for example, control obsessive inflation. It is non-partisan? This is democracy? This is in fact, neutrality and independence? Obviously not.
_______________________
1 The Los Angeles Times, October 20, 1978
2 Chang, Ha-Joon, Bad Samaritans - The Myth of Free Trade and the Secret History of Capitalism. Rio de Janeiro: Ed. Elsevier, 2009 (146 p.)
3 Op. Cit. pp. 147-48
Inflation is a national obsession with indicators released 29 per month
Brasil.gov.br: economy
http://panoramicasocial.blogspot.com.br/2013/08/inflacao-baixa-e-realmente-tao.html
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