The Hidden Cost of an Inefficient State

CERES’s latest findings renew the debate over how inefficient public spending and chronic deficits ultimately burden every Uruguayan taxpayer.

The Hidden Cost of an Inefficient State
By Dr. Nelson Jorge Mosco Castellano

While most of us try, with greater or lesser success, to ensure that our income exceeds our expenses in the real economy, the Uruguayan State seems to have embraced a very different philosophy of life: that of a lottery addict who, after losing an entire paycheck at the casino, insists the problem was simply that he did not bet enough.
Last Tuesday, Ignacio Munyo and the CERES team held up a mirror to the country with a presentation that looked less like an economic report than an autopsy.
The conclusion is as obvious as it is discouraging: Uruguay’s State has become such a fragmented, inefficient structure, so willing to lose money in the most absurd places, that claiming there is “not enough budget” is, quite simply, an insult to taxpayers’ intelligence.
The Art of Throwing Away 550 Million Dollars — and Then Borrowing It
CERES confirmed what anyone with a liberal understanding of economics had long suspected: roughly 550 million dollars disappear every year into a black hole of inefficiency.
And do you know what is most astonishing?
The State does not lose that money because of unfortunate accidents, but because it persistently insists on doing things badly.
It continues producing cement through state-owned Portland operations, competing against private companies with all the elegance of an elephant in a china shop, while paying for dredging projects that never materialize and maintaining overlapping subsidy programs through a maze of public agencies that sometimes no longer seem to know why they exist.
Colonization as Social Policy: Poverty, Mate and No Return
And then there is the National Colonization Institute.
Munyo’s presentation illustrated how the State continues pouring resources into land that, under public administration, ends up becoming a cemetery of productivity.
The State’s vision reaches almost poetic levels of inefficiency: instead of encouraging competitive agricultural enterprises, it has chosen to finance countless small farms condemned to stagnation, where productive activity often appears limited to settlers drinking mate outside modest rural homes while opportunities for development slowly disappear.
It is the utopia of the permanently subsidized small producer: a model carefully designed to prevent growth, discourage innovation and, above all, preserve dependence on the State while making any rational relationship between spending and investment impossible.
Ultimately, it institutionalizes poverty under the noble label of “social justice.”
The Budget as a Convenient Excuse
This disorder is justified by the modern notion that a budget is merely an “estimate.”
What an elegant expression for saying: if we overspend, taxpayers will cover the difference.
It is the oldest debt trap in politics.
Those managing public resources behave as though the State had no real financial limits. They promise benefits to win elections and later spend other people’s money, financing deficits through endless borrowing.
When spending spirals because priorities were never established, the solution is never to close what no longer works—state-owned Portland production, poorly managed Colonization lands or countless overlapping public offices—but simply to borrow even more.
After all, future generations cannot vote today, while “social spending” always sounds attractive during election campaigns.
The Agentic Revolution as the Only Way Forward
If Uruguay wants to stop depending on inertia and external debt, the solution is straightforward: the State must stop doing what it demonstrably does poorly.
Unfortunately, restraining the political system’s appetite depends on politicians themselves, making meaningful reform unlikely.
Why would they suddenly listen to the reality reflected in economic data or embrace the discipline of prioritizing essential public services?
CERES’s proposal is only a starting point.
As long as the public sector insists on acting like a mediocre business manager, trying to control everything from ports to cement production and farmland, Uruguay will remain trapped in institutional mediocrity.
Uruguayan citizens pay taxes comparable to those of far more developed countries while receiving public services that rarely meet those standards.
If the State stopped wasting those 550 million dollars on activities it should never have undertaken, perhaps—just perhaps—we could begin discussing meaningful tax relief and genuine economic growth.
But first, someone must have the courage to turn off the lights in ministries that have lost their purpose and stop subsidizing unproductive landholdings that perpetuate inactivity instead of development.
The diagnosis is already on the table.
The real question is whether Uruguay has the courage to stop subsidizing inefficiency or whether it will continue choosing the comfortable illusion while public debt quietly does the dirty work.

P.S. A message for both government and opposition: we now live in an era in which everything remains permanently exposed on platforms such as YouTube, and artificial intelligence agents are becoming capable of measuring something politicians have rarely wanted to quantify: the true cost imposed on citizens.

State inefficiency
Public spending
Citizen cost

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