By what they know more than by what they believe

Since April—and somewhat before—consumers have received a tax that is not minor; in reality it was the withdrawal of a subsidy (Mepco), but for them it was equivalent to a levy, multiplied by the rise in the exchange rate, applied without anesthesia. As the current Nobel laureate in Economics Robert Hall—a professor at my "Alma Mater"—would say: a shock to the consumer, with real effects. Add to this the "tariff hike" that strikes our engine of growth: exports. Lower sales, lower returns, higher CPI, and "consequently" a recession. Not easy with a monetary policy that cannot be lax, even less so with international interest rates rising, a fiscal deficit that is difficult to manage, and a fiscal budget where 80% cannot be corrected; and where "acquired social rights" cannot be touched either. On the other hand, investment (the tail that wags the dog, according to Paul Samuelson) is weak. I have heard several opinions: weak because there are no sales; because the world is in turmoil; or because it is not certain that the next government will be pro-business. These are the facts of the case, and they are undeniable. Public investment could be the answer, but it will not increase dramatically in the current budget; imaginary red lines limit debt and therefore infrastructure investment. "Inefficient" public spending is certainly scandalous, but reducing it (an unavoidable ethical and economic obligation) at the macroeconomic level does not move the needle much. This is a country problem. There is no room here for pettiness, nor for red lines. Public investment in infrastructure—and concessions—increases productivity, delivers measurable returns, can support debt, generate employment and activity when the private sector hesitates. But there are ideological problems on both sides, with imaginary red, blue, and yellow lines; and scarce patience, as the polls show. There was a time when net external debt was zero, and no one thought of carrying out a pension reform, a PGU, or a nursery-school one. And because we did not do it in time, we earned ourselves an uprising. What we did think of (we are geniuses) was a bad tax reform, another terrible educational one, and a dismal political one. To crown the picture, a deranged constitutional process. Now, with no room for public investment, little in monetary policy, and high unemployment, we cannot "do anything," or very little, waiting for something (I cannot imagine what) to happen. And on top of that, unexpected natural disasters come our way, like last week's. And not a few people laugh at those affected with memes of incredible odiousness, spread as jokes—even by the wealthiest—without thinking of their corrosive effect on a country beset by many internal and external difficulties. What we face we should tackle as on 2/27/2010: united, seeking a common response. And Chile knows how to do it; it is just that it still hesitates, each in their own trench. I call on my economist friends to act on what they know, not on what they believe. Finding common ground on public investment, on concessions, and on debt backed by productivity is indeed possible. By César Barros, economistNEWSLETTEROpinionSaturday, AMTense ideas, opposing views, and a clear analysis: elements to unravel the issues that divide opinions and will set the agenda. By subscribing you are accepting the Terms and Conditions and Privacy Policies of La Tercera.