The state manages nearly half the GDP

The public sector never had so many resources and, paradoxically, never accumulated so many questionings from society about the quality of the services provided.  There are families migrating to private education, health and security and even self-defense organizations or the self-generation of electricity with the use of generators. Posing the size of the state as a ideological principle is pointless.  Citizen’s quality of life depends on intelligent, transparent and professionalized governance.

International experience shows that the progress of a country does not depend on the size of the government but on the quality of governance. Proof of this is that the size of the public sector in most developed countries is highly variable. The most prosperous societies are distinguished from the more backwards in the sound allocation of public funds and the use of modern management techniques. In other words, the success of societies doesn’t depend much on the amount of resources appropriated by the State through taxation, but on the quality of services through which taxes are returned to society.

According to recent estimates by the International Monetary Fund (IMF), the total Argentine public sector, this is, federal, provincial and municipal governments, manages approximately 45% of the Gross Domestic Product (GDP). This implies that from the total revenue generated by society, a little more than half is kept by the private sector, while the rest is managed by the three levels of government. In 2003, total public expenditure represented 30% of GDP, therefore in the last decade the growth of total public spending in terms of GDP was of 50%.

IMF estimates also permit homogeneous comparisons with other countries. In this regard, it is interesting to note that between 2003 and 2013:

· In Chile, public expenditure grew from 22% to 24% of GDP.

· In Uruguay, public expenditure increased from 33% to 35% of GDP.

· In Brazil, public expenditure rose from 39% to 40% of GDP.

These data show that there was a trend in the Southern Cone toward greater allocation of resources in the public sector. But the intensity of the process was very different. In neighboring countries, the increase in the size of the public sector was explained by the growth in economic activity and a moderate rise in its share of GDP.  In these countries, the public sector grew between 1 and 2 percent of the GDP during the whole decade. In Argentina, however, this level of growth happened each year throughout the decade, accumulating an increase of 15 points of the GDP. From a size similar to Uruguay and smaller than Brazil, Argentina is currently the country with the largest public sector in the Southern Cone. 

Nevertheless, there are highly developed countries, like the Nordics, where the size of the public sector is larger than in Argentina. The big difference is that, in Argentina, the overwhelming enlargement came along with its decay in management. This explains the frustration and the legitimate demands of the population.

One demonstration of the decay of the state is the growing use of inflation as a means of financing. Even though tax burden grew to reach record levels, it has not been enough to finance total public expenditure. So, the solution has been printing un-backed money to which the provinces would later join issuing quasi-money. The consequence is that for 5 years inflations rates in Argentina have been higher than 20% per year, when in neighboring countries they were between 4% and 8%.

Another manifestation of the decay is the poor quality of services provided by the State. Testimonials are widespread and in many cases dramatic. The flight from public education is vertiginous, to the point that 8 out of 10 new primary and secondary school students chose, in the last decade, privately run establishments. On security issues, the hiring of private services continues to grow and part of the population is starting to be armed for self-defense purposes. Insufficient investment in infrastructure has generalizes the self-generation of electricity, even for household consumption. The greatest paradox is that the high proportion of the population still lives in poverty, even when the state handles almost half of society’s resources.

The ideological debate over the size of government is sterile. It's not lack of resources but lack of management that makes the state fails to provide education, security and infrastructure and cannot eliminate poverty. Therefore, the relevant discussion is to introduce intelligence, professionalism and transparency in public administration.