They criticize Stiglitz for talking about an Argentine economic ‘miracle’

Joseph Stiglitz, a renowned Nobel Prize-winning economist, is facing a wave of criticism from his peers after he claimed that crisis-prone Argentina is witnessing “an economic miracle.”

Stiglitz wrote a column for Project Syndicate in which he argues that the President’s administration Alberto Fernandez has implemented pro-growth policies that led to a recovery in the context of the pandemic. As a consequence, the economy expanded an estimated 10% last year, nearly double the rate expected for the United States, he said.

“The government of Argentine President Alberto Fernández appears to have achieved an economic miracle after the mess it inherited at the end of 2019,” Stiglitz, a professor at Columbia University in New York, wrote last week.

Economists, including a colleague at Columbia, sharply criticized Stiglitz’s column, saying he had missed the mark when it came to the South American nation. Although economic activity is recovering rapidly, it is doing so from a depressed base. And much of that rebound is simply the result of the reopening of some sectors of the economy that had been closed when the pandemic hit.

Stiglitz also did not delve into other parts of the real economy. Inflation exceeds 50%, poverty and informality are skyrocketing, foreign exchange reserves are declining, the government imposes strict currency controls, and it has no access to international debt markets.

“In our view, the country is headed for another economic disaster,” wrote Willem Buiter, an economist and visiting professor at Columbia, along with Anne Sibert of Birkbeck, University of London, in an essay aimed at debunking Stiglitz’s column. . “His recovery has barely been strong enough to make up for other shortcomings.”

Some local economists and analysts echoed his comments.

“We have read your article with bewilderment,” Federico Sturzenegger, a former central bank president in the previous government of President Mauricio Macri, tweeted on Wednesday, saying that Stiglitz’s “false arguments” do not help.

‘Very strong’

Stiglitz, who was contacted by phone Thursday night, said the use of the word “miracle” may have sparked the controversy surrounding his comments. He helped coin the term “East Asian miracle” in the 1990s, referring to booming economic growth in that region, and recalled the criticism he received at the time.

“Maybe it was too strong,” Stiglitz said when asked about his description of Argentina’s economic performance. “If you use that word, you open the doors to criticism.”

The Nobel Prize winner, a frequent critic of the International Monetary Fund, said he did not refer to Argentina’s inflation problem in the article because he had limited space and wanted to focus on the real economy.

Argentina faces a crucial moment in its negotiations with the IMF to reschedule the payments of some US$40 billion of a loan granted to the Macri government in 2018 that failed to pull the country out of recession.

Stiglitz commented that he was concerned about the credibility of the US Treasury as part of Argentina’s discussions with the Fund and hoped that the Biden Administration would do more to support the country.

He also indicated that he did not see the need to mention in the column his friendship with Economy Minister Martín Guzmán, whom he advised for years at Columbia and is now in charge of negotiations on the Argentine side.

“It’s not like it’s a secret, I’m not going to reveal all the friendships I have,” Stiglitz said. “It would take up the entire article.”