Argentina's Problems

[toongeorges]

Hi,

while reflecting about the situation in Argentina, I think there are 2 major cultural problems that cause the bad economy.

The first one is the zero sum thinking of people. Like in Mediterranean countries, people seem to think that one can only benefit at the cost of others. In Italy there is a saying that there are only three ways to get rich: you steal, you inherit or you marry. A consequence of this is that people do not trust each other or have no respect for public institutions. In Northern Europe on the other hand, people think more along the lines that 1 + 1 = 3. People respect each other more, because they believe in value creation.

The second problem, which is typical for most undeveloped countries, is that there do not seem to be well established interest groups. In Western Europe and I guess the US as well, the power of the government is rather limited, because if a politician takes a drastic initiative, a lot of people start shouting. You can argue about the lack of transparency of some interest groups in Western countries, because typically the ones who shout the loudest are the ones who would need the least support. Though all these interest groups balance each other and the government so that most of the times governments are not able to make too big mistakes. This balancing force seems to be absent in Argentina, because there do not seem to be well established interest groups and thus the Argentine government is able to destroy the economy at full force.

What do you think about my observations, do they make sense and how would you fix these problems?

 

[willwright]

I think this is a good start as any in explaining why Argentina is the way it is. The government is the cause of the bad economy but again that's just a reflection of the culture and the people that make it up. I think Northern Europe/North America have strong institutions and the people are generally satisfied and don't want big changes to the status quo. In South America you have generally people who are not satisfied, lots of corruption, poverty, bad government, and weak institutions. It makes the people more susceptible to politicians that come along promising to fix all the problems but in reality make them worse. I think the only thing that would help Argentina would be a complete discrediting of the entire political class, not likely. Another solution would be a benevolent dictatorship for about 50 years, again not likely. So my guess Argentina will continue on its current course for the foreseeable future, i.e. going from governments that are incompetent and corrupt to ones that are corrupt and incompetent with inevitable economic crises every few years and continued long term decline. The country that seems to have best addressed these problems is Chile, but I doubt few in Argentina would be willing to take lessons from their neighbors to the West.

 

[james p]

Be cautious when you say the benevolent dictatorship......Most dictatatorships in Latin America started as such,,,,,,and had the full support of the USA, but all too soon realized there is money to be made!

 

[chris]

The government WAS completely discredited at the peak of the crisis when they had riots in the Plaza de Mayo and people were killed. De La Rua was forced out. A politician's house in Junin was burned down; politicians were physically attacked in public places, some wore costumes to disguise themselves. Then the people started to forget and they voted again for the same politicians - or worse ones!

 

[jreznyc]

I was actually contemplating this exact thing the other day...the lack of interest groups, and I was wondering why. I mean, say what you will about some groups that operate in the US, but at least if the government or corporation does something that incites that group, you can almost be certain that they will generate tons of awareness, activism, and in many cases actual change in policies. It's something that I haven't really seen since I've here.
I get the general feeling that people here maybe are just used to bending over and taking it from every which angle, and don't feel they have the power to do anything about it. Or, there is a general lack of giving a f**k here about various issues. Many things that would get tons of people PISSED off in the U.S.

 

[Amargo]

People respect each other more, because they believe in value creation.

Value creation is a big lie of capitalism (I am not a communist!). ALL industrialised countries profited/profit from their own resources first (if they had any) and then of those of poorer countries. There is one Earth, there are limited resources, probably the only one exception -more or less- being the energy we get from the Sun.
Coming from rich countries we are just too spoiled and believe it is our right to buy whatever we want. But we don't pay nearly as much as needed for our goods, which is a shame.

 

[ElQueso]

I employ programmers here in Argentina. I pay my programmers fairly well in relation to the local salaries, but for a highly experienced programmer here compared to the States, I probably pay about 1/2 to 1/3 of the going rate in the States.

My best programmer and I had a discussion one day about two years ago. He was all bent out of shape by people somewhere in Asia (I'm thinking it was Indonesia, but I may not remember correctly) being paid something like ten dollars a day and living in small rooms in communal buildings provided by their employers. These particular people were not IT workers, although I have heard of similar conditions in India for IT workers.

He was outraged at the exploitation being committed upon these people. They were paid so little and lived in such small places.

My programmer is in the upper middle class here. He lives with his girlfriend in a 65 square meter apartment. He makes about one third of what a programmer in the States at his comparable level makes, and maybe even less depending on the company with which we are comparing.

The same programmer in the States may live in a 3000 square foot house in the States (close to 300 square meters) in a nice neighborhood, with a much greater buying power than my programmer has access to. BTW - that is how I lived in the States, with roughly the same position my programmer here has...

I asked my programmer if he felt exploited. His answer was resoundingly "hell, no!" In fact, he lives quite well by Argentine standards. He owns a new car as well as his apartment, has many "toys" that he wants to buy, etc.

I pointed out that these same Indonesians who accepted jobs at what seems to him a very low salary, and a place to live that to him seems quite sub-standard, are almost certainly living well above what many people in their country experience. It's all relative. I'd be willing to bet many of those people were living in conditions similar to how my wife's family currently lives in Paraguay, maybe even worse.

So I asked him - what should the companies hiring these guys do? Should they pay the same wages that are paid for the same work in the States? (BTW - I don't know that the company in question was from the States, it was just an example). What would that do to these people?

Well, first, it would raise their standard of living to among the highest in their country, if that were to happen. A relatively small percentage of their population, then, would be raised to a much higher class in an artificial manner. What would happen when the company pulled out, for whatever reason?

Also, let's think about this: why would the company relocate its business to that country in the first place if it paid wages to employees there that are the same wages they would pay to someone in the US? Answer: they wouldn't. It doesn't make sense. Any savings, say, in US taxes of operating a business in the States would be completely offset by the expense of operating abroad. There's no reason to do it.

What does happen? People are paid better than they would otherwise be paid. They live in better conditions than they would otherwise live.

What else would you have happen? Ignore the plight of people living poorly in other countries because you don't want to pay them the same as you pay your own countrymen?

Like most things in this world, Capitalism is far from perfect. But it is the best means that has been demonstrated to date to share more wealth and raise more people from poverty than has been demonstrated with other systems.

Capitalism and exploitation are two completely different things. Just about any economic system ever invented in this world has also exploited people. Exploitation is the result of idiots doing everything they can to make huge profits off the backs of others without regard to anything else. That is not the definition of capitalism, but a function of greed and politicians who help it take place.

Eploitation should not be encouraged in any manner. Most exploitation that is currntly discussed occurred in colonial days and continued too long into modern times and yes, does still happen. Recently the civilized world has recognized this and is starting to change quite a bit.

I've been to India in the 90's. I saw at the time how poor the vast multitude of people lived, with no hope of wealth creation. The Indians have realized that capitalism does indeed work and are using their advantage of lower standards of living to bring money into their country in fine capitlistic tradition, in the meantime raising a large number of people to a higher standard of living than if the government just tried giving everyone money. Do you think the Indians would be happy at having the rest of the world pull out of India because they still live lives at a lower standard of living than developed countries? Do the Indians feel exploited, or do they feel that they are taking advantage of their trading situation to provide a service that has a value outside of their country and allows them to raise themselves as well?

The same can be said for countries like South Korea, Vietnam and China. Capitlism doesn't have to be based on exploitation, but should be based on trade and the differences between one group and the next as to what can be offered and traded at a profit, often a very important concept being capital itself. "Exploitational capitalism" used the resources of other countries without their permission (in the most simple terms) and turned that into capital - THAT is wrong.

 

[toongeorges]

Value creation is a big lie of capitalism (I am not a communist!).

Well... one could argue that. Yet my point is not to proof whether value creation exists or not.

My argument is that when people seem to believe that they can gain from cooperation, they tend to cooperate and respect each other more easily. This belief appears to be stronger in Germanic countries in Europe than in Romanic countries and Argentinian culture appears to be mostly influenced by Romanic culture.

If value creation is a big lie, then please explain me the purpose of banks. How is it possible that if you put 10000 peso on a bank account, the bank can give 8500 peso of it to someone else as a loan, who can again put this 8500 peso on a bank account, of which the bank can again give 7000 peso as a loan. How is it possible that a bank can make 10000 + 8500 + 7000 = 25500 peso from 10000 peso?

 

[HenryNisental]

A pollster was doing some research in the streets of Bs As:
"Excuse me sir, ¿do you think that apathy and ignorance are our main problems as citizens?"
The man answered: "I do not know and I do not care anyway!"

 

[surfing]

I was actually contemplating this exact thing the other day...the lack of interest groups, and I was wondering why. I mean, say what you will about some groups that operate in the US, but at least if the government or corporation does something that incites that group, you can almost be certain that they will generate tons of awareness, activism, and in many cases actual change in policies. It's something that I haven't really seen since I've here.
I get the general feeling that people here maybe are just used to bending over and taking it from every which angle, and don't feel they have the power to do anything about it. Or, there is a general lack of giving a f**k here about various issues. Many things that would get tons of people PISSED off in the U.S.

Or another way to look at that is that it results in a government completely overrun by special interest lobbyists, total regulatory capture and legislative gridlock. In other words, affecting change in either scenario is nearly impossible; but people (in both countries) mostly see things as they choose to.