I don't pretend to possess great insight into the fiscal dilemmas facing Arg so what is very simple to you is not very simple for me. Bear with me, please.
As an observer, I perceive something of a chicken / egg scenario. To control inflation one must limit both wages and prices, hopefully in tandem so that the cost of living is not dramatically increased and the populace is not further impoverished. If govt can lower inflation by limiting govt debt, then it would make sense to find ways to limit govt debt.That might include lowering interest on govt issued bonds etc and adopting policies to limit govt paid salaries and wage increases as well as private wage increases. eliminating the subsidies paid to residents of the Recoleta for their utility service was a no brainer. Other subsidies need to be reevaluated. It might further help to adopt policies to stimulate exports in order to achieve a favorable trade balance. Of course, these policies will be disruptive and cause tension, but as it is said, you can not make an omelet without breaking some eggs. The people need to comprehend that some belt tightening may be required.
What I find curious is that so many people are so quick to condemn any effort to effect change. The "milanesas para todos" economic theory relied upon by the former administration led to significant poverty and inflation. I believe that the elimination of the black market for USD is a positive indication that the current administrations policies may bring about the necessary change.
Well, with all my respect, you are naive.
The President asserted that his goal is to transform Argentina into India. It means he need the people to become poorer.
Inflation was the way the 1000 families that rule this country fight the common people who look for increase their salaries. While in other countries it happened through strikes, here proper wages were made by decree by Peron, the same than paid vacations, retirement, free universities, etc.
The right wing didn’t agree but since law Saenz Peña of universal vote was enacted, they never won an election again until Macri. So, they had no chances to influence the laws but they control the economy: the price of the usd blue and inflation. I give an example: how many factories that produce steel you think there are in Argentina? One, Techint. So, he decides on the price of a commodity that alters the prices of the whole markwt because steel is used for contruction. The same we can say about cement: Loma Negra. Paper for newspaper: the famous Papel Prensa, food Molinos Rio de la Plata (perhaps here I m outdated) and so on.
While in the former gobernment there was inflation (about %30), She put limits and the dolar blue and inflation was a political tool against her that she neutralized increasing the wages/social plans/ retirements over the inflation.
Now, instead, they rise the prices with no limit because they are in power while wages are freeze. The 25% of inflation they talk is a joke.
You talk about subsidies. He enacted subsidies to yachting clubds abd erased tax to minery and high end imported cars and cut taxes to farmers and owners of companies. The deficit he has is because he derogated tax to rich people only and this is why he is taking so much loans. The market is full of usd, so they can buy usd with no limit and cheap.
When the market crashes, something they are looking for, the usd they both cheap are going to sky rocket and wages are going to fall badly. It is a win loose situation where rich wins and middle class and poor only looses and common people pays for the debt they took for the usd they sent abroad (the income tax is used to pay the international loans and, ups, this is precisely what Macri historically doesn’t pay, evade using the off shore companies of the Panama Papers). A nice white collar fraud that already happened between 1976/1982.
And here you are naive, they want the middle class to dissapear. They want a cast society.
Inflation is going to go up because it makes them richer and richer.
