By Camila Barletta 

In the first edition of the new Lord Acton Chair, sponsored by UCEMA and the Acton Institute USA, Daniel Lacalle, considered one of the 10 most influential economists of the world according to the Richtopia ranking, gave a lecture. The theme of this meeting was “Un Panorama de la economía de Europa y el mundo” (A Panorama of the economy of Europe and the world). Lacalle was introduced by Alejandro Chafuén, managing director international of Acton Institute. 

Lacalle began by talking about world economy in a context prior to that of Covid 19. He considers that “many governments use Covid 19 as an excuse to cover-up structural problems that already existed before”. 

 
  
"If we were to take a photograph of the world in mid-2019 we would find an economy centered on the United States. It was operating at full capacity, on par with the potential Internal Gross Product, in full employment and with nearly non-existent unemployment. On the other side of the world, the economy of China was booming but slowing down. Here the economy was oriented to meet global demand through exports of manufactured goods. China at this time was heavily indebted in foreign currency", he said.  

 
According to Lacalle, by the end of 2019 it was possible to see how certain economies were out of balance. This is why Lacalle considers that it is a mistake to believe that all the problems of 2020 on a global scale, are due to the health crisis caused by Covid 19. The structural problem had already been brewing for some months. 

 
“The European dirigiste policies coming from the European Union have been aimed to perpetuate the excesses of public spending at any cost, taking advantage of the ultra-expansive monetary policy.”, said the speaker. 

 
 
On the other hand, Lacalle mentioned another mistake that is often made when talking of the current problems of world economies. This mistake, said Lacalle “is to talk about monetary policy as if all central banks were doing the same thing”. He remarked, “what would appear to be exactly the same is not the same”.  

 
 
In turn, in the emerging markets things manifested themselves differently during the years 2018 and 2019. Lacalle commented that the history of those two years was a history of two models, very evident in Latin America. On the one hand, countries like Colombia, Brazil or Chile and on the other, economies as that of Argentina, Venezuela or Mexico. The main difference between these two groups of countries is that, the former, maintained a remarkable economic openness to the world, which in turn permitted them to develop high economic growth.   

 
given this context on the global panorama prior to the Covid 19 world, the speaker mentioned what he considers “The fallacies of Covid 19”. The first of these is “life or economy”. It is not about choosing lives or economy but of choosing lives and economy. “It should not occur to any leader that completely shutting-down the economy does not have long-term social and health implications.”, said Lacalle. Some time has already passed since the landing of Covid 19 worldwide, the evidence shows that, the countries that have preserved the productive fabric and at the same time taken measures to prevent the transmission of the pandemic - simple and not oriented towards repressing the population with completely aggressive confinements - are the ones that will come out of the crisis sooner. Not only are they the ones that fell least but they will be the first to get up. 

Finally, Lacalle mentioned that, the defenders of freedom are those who understand that the economies must not be rigidly directed by the rulers, but rather that “economic agents should be allowed to breathe in order to recover and become stronger”. It is not a surprise for the to see that countries founded on these pillars are those that have been able to come out of the crisis with less damage to the population, both in terms of health and economy.