Sunday, August 31, 2014

The state once again:Is it part of the problem?

It is a paradox that those Politicians who sustain their proposes on a more active State, and interventionism in the economy , have the more complex situation in terms of public opinion approval. Next Presidential election chances in Brazil (October 2014),and Argentina (2015),do not look well for candidates prone to more State in the economy. How come that citizens expectations, are not fully represented by those who believe in the state as the solution for better opportunities and welfare improvement?.As always there are a lot of answer , but these days citizens are more aware about choices available for them because of connectivity , better information, and a keener sense of what they deserve. Thus, it is not just the discussion about more or less state, but it is the issue of citizens more empowered what make the difference, to get acceptance and validation or not .Therefore, politicians face a different kind of citizens, and the sooner they realize about it, the better for changing their proposal.- Latin American citizens do not want more promises and experiments, they want solutions. They do not trust in the state because it is associated with corruption, mismanagement ,nepotism ,and lack of principles. It is hard to find a Latin America economy, whose State qualifies as benchmark for private business, or alternatively a State driven by Social responsibility criteria, like increasing number of firms do .Everywhere in Latin America, there are complains about the quality of public health and education, politicians out of touch, lack of effective and efficient public policies, and bureaucracy . Thus, it looks like the state is part of the problem, instead of being part of the solution. The difficulty with this reality is that markets and private firms, needs complementary policies, reliable institutions ,strategic orientation and forward guidance , which should be provided by the state. If it is not, then it is necessary to modernize it. Keep in mind that markets can fail, but this failures may be avoided or corrected ,by efficient institutions and well designed policies. So, the real problem is that the State is still well behind both markets needs and citizens expectations. It follows that what it is needed is a better state, no more state. It is interesting to mention that a better state, means by association a better markets, which make both a guarantee for stable economic growth and prosperity .Markets do not reject the State, but it rejects its rigidity and its lack of fast adaptation, to changing and evolving scenarios. This lack of adaptability, arise because the State is captured by special interest, no matter which sector they come from. But once they get in, there is no connection with the citizens, policies, and welfare needs . It only matter, the rents It provide to those who are in charge.-