Don't Worry About Inflation

[nicoenarg]

Oh yes! That happy place when you smoke up that inflationary and economic joint of agreement!

 

[Matiasba]

Rooney can you address in your views why Chile, Peru and Uruguay grow with inflation below 2% and Argentina is 25% second highest in the Universe....?

One of the reasons is because markets in Argentina are very concentrated, so they can put the price they want. It is very difficult for the government to regulate. It happens with the milk, as I said once here, it happens with the prepagas (which are not concentrated, but they act all at the same time, de manera carterizada), the problem also, is that we argentines, in particular the people who has money in this country, never had and never will believe in this country, so they dont invest, so they re always speculating against the interests the country has.

 

[Matiasba]

Oh yes! That happy place when you smoke up that inflationary and economic joint of agreement!

Yes.

 

[notebook.fix]

Go on Matias, tell me the Peronists have NO connection to the Montonero terrorists who bombed & killed police, civilians & political targets.....No? Si? Left, right ? Peronism? ...NILDA GARRE anyone????

Quien era Nilda Garre?
http://www.taringa.n...nte-teresa.html

Back to inflation...where were we? Oh. That's right...Nilda Garre attacked the Argentine journalists who are overseas filing a complaint against the K regime for it's abuses against the free press & the shut down of Clarin ...oh yes..INFLATION news?...we won't be getting to hear much about that soon..thanks!

 

[EdRooney]

Rooney can you address in your views why Chile, Peru and Uruguay grow with inflation below 2% and Argentina is 25% second highest in the Universe....?

Rich,

Chile and Peru I can talk about; Uruguay I'm not as well versed.

A key to remember is never to look at growth figures without also taking wealth distribution (GINI) into account. Chile and Peru are both very similar in that they are very top heavy on commodities, but the commodity income never really activates entire sectors of their economy. So while that does show up in the growth figures (which are just a year to year GDP comparison), it says nothing about how well the country is using its potential, or how healthy the economy is for most people.

A classic example of this is South Korea, which followed the same model as Chile and Peru up until the early 70s, but then made a focused decision to switch to encouraging internal demand and industrialisation. Around 1972ish they started to see huge inflation numbers in the 20-30% range, and overseas investors started to flip out, but they kind of ignored the warnings and continued to industrialise, and as you know they are now one of the top internal markets in the world and have a huge export economy. Looking back at it now I'm sure many Chilean economists envy their inflation, since Chile (or even worse Peru) is still stuck with horrible poverty statistics... people who don't even enter into the economy.

Maybe you know something about Uruguay? I don't even know of any economists who specialise in it.

 

[camberiu]

. Looking back at it now I'm sure many Chilean economists envy their inflation, since Chile (or even worse Peru) is still stuck with horrible poverty statistics... people who don't even enter into the economy.

Huh? Chile has the highest human development index of all of Latin America. And in 2010 Peru surpassed both Brazil and Colombia in terms of HDI. It it used to be a major laggard and now it is already ranked #9 on the list.

 

[EdRooney]

Camberiu,

Why do you prefer HDI to straight GINI? HDI, in addition to not being purely economic statistics (it's GINI mixed with education and life expectancy), it's also been shown to be erratically inaccurate.


Edit: I just realised that link is behind a paywall. Try this one instead.

 

[camberiu]

Camberiu,

Why do you prefer HDI to straight GINI?

Because income distribution does not necessarily indicate anything, other than income distribution, which is not the same as standard of living. And you end up with Greece having a better Gini coefficient than Australia or Poland with a better Gini coefficient than Canada, which is not reflective or quality of life, income or poverty.

Also, the way Gini is survey across countries is not unified either and the methodology fails often when dealing with regional variations, so you end up with distortions, just like the HDI.

 

[EdRooney]

Because income distribution does not necessarily indicate anything, other than income distribution, which is not the same as standard of living. And you end up with Greece having a better Gini coefficient than Australia or Poland with a better Gini coefficient than Canada, which is not reflective or quality of life, income or poverty.

Also, the way Gini is survey across countries is not unified either and the methodology fails often when dealing with regional variations, so you end up with distortions, just like the HDI.

So you prefer HDI, which is based on GINI anyway?

 

[camberiu]

So you prefer HDI, which is based on GINI anyway?

The HDI list and ranking seems more credible to me in order to evaluate poverty and quality of life than just GINI, where you have Poland ahead of Canada and Estonia ahead of Australia. If I used your method to evaluate poverty, I guess I'd be telling all Canadians to move to Gdanski because life there would be better, no?