Manuel Marfán: “I am more of a socialist in heart and mind than many others who are telling the time, forgetting rationality”

Perplexity. That would be the precise word to define the state of mind of the former vice president of the Central Bank, Manuel Marfán.

Perplexity when observing Congress, which does not hesitate to describe as a “band of opinionologists” for approving a second withdrawal of 10% of pension funds without considering the consequences on future pensions, versus a more empowered, more active citizenry, eager to participate.

Perplexity because the political parties have decided not to listen to technical opinions. He himself has been ignored when he expressed his intention to be a constituent before a party (PS) that did not respond to him, and when he agreed to join the tax group called by the Treasury, he declared that “Marfán did not represent them.”

In economic matters, how does the engine come from the outside, considering the euphoria that there was this week in the markets for a possible vaccine and for Biden?

-I hope the vaccine works, because according to The Economist, its effect would be an increase of 2% in growth in the world economy and that would be good for Chile. Meanwhile, the signals are not very good. In the US we have a very weak economy and Biden’s problem is that he will not have a majority in the Senate; Europe, after the first wave of the coronavirus, had a rapid rebound in activity that slowed down to a square root, below pre-pandemic levels, and the medium-term projections for China are below the goals of the five-year plan.

But doesn’t Biden’s election raise expectations for an improvement in relations with China?

-I have the impression that China has plans that go beyond the US elections and will not change depending on that result. It is not a fatality what is happening, but it is mediocre, or regulate, as some deputy would say, and therefore I do not see an engine yet in the international economy that helps us to reactivation, but, on the other hand, I do not see a collapse as was the fear at the beginning of the pandemic. In addition, our foreign trade indicators are very erratic, like an EKG, and exports stopped being a driver in 2010.

Do you project a recovery for Chile?

-I see an economy recovering slowly, with even slower employment. So I have a slightly more pessimistic feeling for this year, and I think the two-year average will be lower than the projections, around a 2% drop. And this is subject to discovering a more effective way to combat the coronavirus, because Chile today does not have structural strengths to cling to, on the contrary, we are eating some of them.

Which ones are you referring to?

-This of the retirement of 10% of the pensions is to sell the house to be able to eat today. With the first 10% there was a one-month spurt when sales of new cars, purchases of durable goods, the CPI rose, but they were a flower of a day.

Did you have a different opinion regarding the first withdrawal versus this second one that is being discussed?

-I feel that our discussion is very provincial, in the sense of not learning from what is happening in the rest of the world. I do not know of any country where the pension system is not financed mainly by workers’ contributions, which are nowhere voluntary. The only ones who are insured everywhere are the armed forces, and for the rest of the population it is not possible to finance good pensions using exclusively tax collection. In Chile there is a pension problem, there is a bill that tries to raise contributions, and on the other hand they are returning them.

Doesn’t the argument that people need that money because of the economic crisis caused by the pandemic make sense to you?

-I know that everyone would like to get their pension money back, but I’m thinking from a more systemic point of view. In Chile there is no overall vision when making these decisions. In the short term, people happy to get 10% and more approved it without taxes, with which the richest are going to do the cuchufleta again of saving in account 2 taking a good part of the tax benefit, while those who they have less accumulated they will end up without funds, and with non-contributory pensions.

In other words, the State will have to finance them.

-But these pensions are normally low and extremely expensive for the State, although it finances a smaller percentage of all pensioners. When this retirement project is approved, there is an implicit promise that “the State will have to take charge later,” and I tell you that no country can take charge of that to the extent that it is played in Chile.

Do you doubt that if the mass of pensioners to be financed is now increased, the basic solidarity pension (PBS) will be maintained at around $ 160,000?

-The level of irresponsibility of Congress, which wants to please everyone, has reached the limit of putting the health of future fiscal finances at very high risk. There are implicit promises here that are true wagon wheels. The pension system has many problems, but the solution is not to make it even worse, it is necessary to make decisions with long-term criteria based on technical proposals, but not by a band of opinionologists, which is what Congress has become. the last time.

You speak of irresponsibility, and is there no responsibility of the AFPs that also have low legitimacy?

– I am not defending the Chilean system, I like the Swedish system where there is no AFP and the State manages the individual accounts and subcontracts financial management and insurance. What I am saying is that there is no overview, because reasoning is based on illusions and that bothers me deeply. If the return of contributions is allowed, our pension system, which is bad, will be even worse. The system must be changed to improve pensions, to solve the problem, not to make it worse.

Do you see an exit or do you think this second recall will be approved as is?

-As this project got more votes than the first withdrawal of 10%, it means that later a third withdrawal will be approved. If the purpose is to improve pensions, then let’s not use the Easter tree funds.

But these projects are rather trying to end the AFPs, don’t you think?

-If that is the intention, first it should be said, and secondly, I do not think that the AFPs are harmed, but the affiliates. It’s easy to destroy, but you can’t do that if you don’t have an alternative agreed. This destructive drive is usually not very democratic.

But if a contributor calculates that his pension would be $ 180,000 and the PBS is $ 160,000, he has the incentive to withdraw the resources now, because there is a similar PBS insured.

-It’s not insured! Because if everyone makes the same bet, it is not enough to pay that minimum pension. Those are willful questions. In Brazil they began to play with their system and today they have a practically bankrupt system and in many states – starting with Rio de Janeiro and Sao Paulo – there is a special tax for pensions that is approaching 50%, because there are no resources to finance them . So, maybe the pension can continue to be $ 160,000, but if there are no resources from contributions, the pensions will be lower and we will have older poor people. I believe that with these types of decisions the current generation will not be able to pass a better country to their children. You can be upset with your pension system, and what are you going to do? Is it going to make them even worse? That is not a solution. But here nobody listens to the arguments that one gives, they are not of interest to the political class, something happens that it is more profitable politically to decide on the basis of illusions.

Why do you think that the political class is disdaining the technicians, since the approval of 10% is transversal?

-Of course, if nobody wants to be unpopular today. It is a deterioration that has been taking place little by little in Chile because there have been bad governments, nobody can say that this is a good government, but neither was the previous one. Public discussion is heavily polluted by social media.

In that sense, how do you see the Minister of Finance, Ignacio Briones? Do you think it ends with this government?

-I hope so. It is rare to see a minister who has empathy with people -and this is the case-, but the rationality that the Ministry of Finance tries to put in does not have much arrival in Congress, which I deeply regret. This indication of annuities, which must be returned 10% to the people, nobody understands. Well, in the discussion of the new Constitution we are going to have a good opportunity to greatly improve the things that are happening, but the way to get there is a minefield, full of traps, false starts, short-term views.

If so, how do you see the country coming out of this discussion: good or bad?

-The problem is that the Constitution is the only law that is discussed without knowing how much things cost, and although it has a minefield component at the same time, it is also an opportunity to resolve other issues to the extent that it is rationally thought about, because This situation we are in has already been experienced by the developed countries before us. We have a lot to learn from other experiences.

In other words, better to look at other experiences than to invent the wheel?

-But in a provincial country that thinks that Chilean solutions must be made, that 10% of life annuities must be returned, that is more difficult. We have to learn from the experience of others to think about the type of State we need and how we can achieve institutions that can accommodate legitimate demands, but we must put head and knowledge on it, and parliamentarians should be respectful of those who have that knowledge and distrust opinologists who have covert agendas and who want to destroy the system for often very confusing reasons.

Would you like to be a constituent?

-I would like to, but there is no interest in sponsoring me from the Socialist Party.

They also say that they do not feel represented by the tax group called by the Ministry of Finance.

-I am more socialist than them. And I am going to speak in a very left-wing language by saying that when you govern, you have to worry about the conditions of reproduction of the system, that is, that the solutions for today are sustained over time. That concept was invented by Karl Marx, not by me. And when decisions like the latter are made, it is not a problem of being a socialist, it is a problem of not thinking. The political class has to plan, render an account to society of the mistakes and successes, but here in Chile and in Latin America, the left believes that the important thing is to start and what happens next? It is not known, the State will worry . My political sensibility is socialist yes or yes, and I assure you that I am more socialist in heart and mind than many others who are telling the time, forgetting about rationality.