How to really finance development

In its almost 4 years, this blog has presented the theme of development and its financing; In those days of 2016, with all the optimism about Peruvian growth, the increase in foreign investments, the fruition of the old public investment projects, and the inclusion of Peru in the Chinese development initiative of A Strip, a Route.

After all this time, the reality was far below the expectations.

I. The bio-oceanic railway corridor project with Chinese funding was rejected by a jailed PPK president;

II. The Lava Jato case, with Brazil's Odebrecht, had the effect of a bomb on infrastructure projects, some of which were delayed, and others were canceled.

III. Foreign investment slowed down, due to social violence (Tia María), world recession and the commercial war between our two main partners, China and the US,

IV. Public investment plummeted at historic levels;

However, the regional potential remains, even in the midst of geopolitical destabilization.

The recipe to finance our development remains the one we proposed in 2016: the original North American model of the first secretary of the Treasury, Alexander Hamilton (1757 - 1804), masterfully expressed in his institutional work, the First National Bank of the United States, and its Reports: on the National Bank, Public Credit and On the Subject of Manufactures.

But, to answer any objection to anachronism, we must refer to the current proposal (2014) for the United States, formulated by the late economist Lyndon. LaRouche, the Four Fundamental Laws consisting of:

(1) the immediate re-enactment of the Glass Steagall Act of Franklin D. Roosevelt (Separation of commercial banking from investment banking).

(2) The return to a precise and meticulously defined National Banking system (public control of monetary issue).

(3) The purpose of the use of a Federal Credit System is to generate patterns of high productivity in the improvement of employment, with the complementary intention of increasing economic-physical productivity and people's living standards (Public financing of physical infrastructure)

(4) "Adopt an 'emergency program' oriented by fusion (nuclear)" (long-range scientific program).

In our country, these measures would have an optimal result, with the care that their application requires given their very weak institutionality and their dependence on foreign investment. For example, Peru is traumatized by the great hyperinflation of 1987-90 regarding the public (Executive) control of the monetary issue.

But also for traumas there is treatment. Meanwhile, the constitutional changes of the case and the performance of a true Development Finance Corporation are enough, not the tiny COFIDE that we know today, which "lent" it to Odebrecht.

All the life the State in the developing countries asked the people to borrow, as in the case of Treasury Bonds. And that money always funded the big projects.

It is a complete fallacy to say that we cannot do it. The infrastructure, financed nationally and with government-to-government agreements, as China offers, is the guarantee of the well-being of our children.

2.3.20