Is Argentina's Economy "unstopable" Or "growing And Growing"

[ElQueso]

I created this thread as a response to Matias in another thread, instead of hijacking that thread further.

Matias, I wasn't trying to give you a hard time about your English - you do a fine job, I'm sure better than I do in Spanish, at least written. I've never heard you speak, but I can imagine you speak just fine too.

Perhaps I should have said "don't use so much hyperbole" (related to your statement first that the Argentine GDP was growing unstoppably, and then simply growing and growing). My apologies for referring to your level of English, that was incorrect. Hyperbole can be constant in any language, I believe

To the subject of Argentina's GDP growth: this is not the picture of growth that is either unstoppable or growing and growing. See the chart below. Notice how growth was falling off from 2012-2013 and has pretty much stopped since 2013 - a .5% increase through the second quarter (I believe that's the last data point for this year and that's "point 5 percent", not 5%), down from a high of 5.1% from 2011 to 2012. It's not going to get better this year, unless the government fudges some serious numbers through the end of the year somehow, I believe. Maybe I'm wrong and third and fourth quarters will be record breakers.

"The economy [in 2nd qtr 2013] grew 8.3 percent compared with the same quarter of 2012, due to the good performance of the auto and agricultural sectors."

Looking at the graph, at the end of 2013 (a little past where the data line hits the 600 GDP line) the growth has flattened out. I mention this particular point because this is also where the above quote comes into play. Auto and agricultural sectors had an apparently very high growth rate in the second quarter 2013 - and yet you can see the line falling off anyway in the graph above. It had been two years since that rate of growth had been seen for any given quarter. Kind of looks like there may have been something to prop the numbers up a little longer, hoping for something more to keep them afloat.

Of course, the chart is displayed in US Dollars, so if you take into account the real value of the peso vs the official rate, I think you would see a significant difference, not nearly as big a growth in 2013, maybe even negative growth (I didn't do the change rate difference calculation, depends on the blue value and the official value at the time and other factors that I'm not even competent to list) leading into another, sharper downturn this year. Which actually kind of matches the flow of inflation...but that's just my guess.

The negative view of this, to reiterate and clarify, would be calculated using the blue rate to get the true value (in billions) of dollars that the AR GDP actually equaled, not with the bogus official rate that the government here insists on - and spends large quantities of its reserves to maintain. All smoke and mirrors. And inflation. Plenty of it.

You're right that the unemployment rate seems fairly low here.

But I've seen the jobs available, that keep people "employed". For example, the guy who came by and sharpened my knives the other day. He had a bicycle with a grinding wheel on it, driven by his pedals. Great job. If electric knife sharpeners were more prevalent and less expensive (i.e., fewer import restrictions - hell, we had a mechanical knife sharpener in our house in the States in the '70s! And yes, I'm sure you can get them here. It's just a loose example of what people are willing to work for), people wouldn't need him to do that job. Could be that he could find a better job than tooling around on his bike looking for someone to spend a little bit of money for him to do his work (of course, that presupposes that there are more opportunities available, so really the guy is stuck where he is) - but I agree, better than nothing. Or the guys I saw filling in a trench on the sidewalk along Uruguay, between Arenales and Santa Fe, which also turned the corner on Santa Fe. They were hand-mixing cement (not even concrete) in a wheelbarrow to refill the trench they'd made. They must have spent the entire day (I passed by a number of times between about 11:00 am and 3:00 pm) refilling a trench that was about 30-40 meters long total (it wasn't contiguous - it was broken over about 80 meters). Where's the mixer that you can buy to make the job easier and faster - and more productive? And less laborious? Not to mention mixing a little pebble with your cement to give it some staying power. People still do construction here as it was done decades ago (or longer) in many cases. I have other examples of how much make-work goes on in every-day commerce, but I'll let that stand for now.

But at least there are a lot of low-paying jobs available. I don't think the low unemployment numbers explain the "growth" all that much.

There is no push for efficiency and productivity for various reasons, one of which is it's easier to employ people at menial, repetitive, labor-intensive tasks (and give them no modern aids in many cases) than it is to allow people to see that they can be more productive and not have to work like that. But in order to achieve the latter, you have to make serious changes at so many levels of "society".

As I mentioned, Argentina's GDP growth is far from "growing and growing" or "unstoppable". It could be so much better and not have its wild gyrations but it would mean people would have to stop listening to the government and BELIEVING them, and realize there ain't no mystical father figure that's going to come and save them, who is just waiting for the right time to take the reigns of government and make everything all OK.

Argentinos need to get serious about their country and committing to working it into better shape and quit blaming everyone but themselves for the state in which the country is.

 

[Pensador]

But I've seen the jobs available, that keep people "employed". For example, the guy who came by and sharpened my knives the other day. He had a bicycle with a grinding wheel on it, driven by his pedals. Great job. If electric knife sharpeners were more prevalent and less expensive (i.e., fewer import restrictions - hell, we had a mechanical knife sharpener in our house in the States in the '70s! And yes, I'm sure you can get them here. It's just a loose example of what people are willing to work for), people wouldn't need him to do that job. Could be that he could find a better job than tooling around on his bike looking for someone to spend a little bit of money for him to do his work (of course, that presupposes that there are more opportunities available, so really the guy is stuck where he is) - but I agree, better than nothing. Or the guys I saw filling in a trench on the sidewalk along Uruguay, between Arenales and Santa Fe, which also turned the corner on Santa Fe. They were hand-mixing cement (not even concrete) in a wheelbarrow to refill the trench they'd made. They must have spent the entire day (I passed by a number of times between about 11:00 am and 3:00 pm) refilling a trench that was about 30-40 meters long total (it wasn't contiguous - it was broken over about 80 meters). Where's the mixer that you can buy to make the job easier and faster - and more productive? And less laborious? Not to mention mixing a little pebble with your cement to give it some staying power. People still do construction here as it was done decades ago (or longer) in many cases. I have other examples of how much make-work goes on in every-day commerce, but I'll let that stand for now.

Good post ElQueso and very true! In my opinion especially the above paragraph. I have been working with some of my wife’s family and friends on setting up a small business in Argentina. I am sometimes baffled by the lack of truly needed quality equipment and supplies you really cannot even get without trying to import it. God knows you do not want to go that route. I would estimate that this lack of quality or efficiency and equipment relating to work flow is every sector of the economy.

Peronistas/Argentinians some not all doom themselves and their economy and country from the get go. Low wages for example what is up with that? Well, after some experience and talking to lawyers and other business owners, here is the deal. You want to keep your employees at the lowest possible salary or when possible hire only family etc. Because if you ever have to fire them even for a truly legitimate reason it is going to cost you the business owner a significant amount of money. Therefore you just don’t pay more than is absolutely necessary.

About 4 years ago I watched one or my wife’s cousins pull a classic Peronista employee move. Employed for 5 years and decides she needs to get fired so she can a take a year off. Starts not performing at work and making problems in the office on purpose to get fired. Took about 6 months and sure enough they let her go with a big pile of pesos to boot.
In fact it is so bad that instead of firing or disciplining employees that are late or do not show up for work they put an on time bonus in the work contract. You only get the bonus if you are not late for work any days in the month and show up for work every day.

I am sure many other factors and issues just like the ones above take a serious toll on the economy and quality of life in Argentina. Of course it is all the governments fault! Not!

 

[Matiasba]

Queso,

When you look at that chart, what would be your first conclusion of the GDP and the Ks number? seriously, look it in detail, have a closer look. Look at the GDP in the nineties, when we had a free market model, look at the K years, since 2003. Its true that we have recession now, and inflation, and we re not growing anymore, and this does not look that it will be better the next year (who knows?)...
What I tried to say is what exactly reflects that chart, that the GDP under the Ks years has been growing and growing and growing, a lot much than in the 90s when we did not have inflation and a market oriented economic policy.

About the jobs, the other day I watched a report of one of the things that changed in these years (the same happened in Brazil BTW) there are houndreds of thousands that have today their first fixed income. Thats right, lots of people are recieving for the first time in their lives a fixed income, a salary, that is, in other words, formal job.
That, the job market, is a very important variable to explain the growth, as I said. Try to understand that in the 90s we had a very small State, and 25% unemployment. Informal job grew like never. The State explains a lot of the growth of the job market (not talking of the ñoquis, that exist), for example YPF, the biggest company this country has.

 

[ElQueso]

Matias, although you are quite obviously a Kirchnerist and that's all there is to it. Done arguing I just feel bad that you will probably be hit as bad as the everyone else here who earns in pesos. But you, like many, will continue to think the government's policies are not only sound but actually "helping people." More power to you.

 

[Dublin2BuenosAires]

Perhaps it would be better that the state put it´s mind to creating real jobs that other people pay for than imaginary ones which they have to pay for, that's putting it as simply as I can.

There is a lot of good political space in between hysterical and ultimately meaningless bogeyman catchall of "neo-liberal" , the kleptocracy of menem and corrupt populism of the current administration.

If only someone would fill it.

 

[ElQueso]

Good post ElQueso and very true! In my opinion especially the above paragraph. I have been working with some of my wife’s family and friends on setting up a small business in Argentina. I am sometimes baffled by the lack of truly needed quality equipment and supplies you really cannot even get without trying to import it. God knows you do not want to go that route. I would estimate that this lack of quality or efficiency and equipment relating to work flow is every sector of the economy.

Peronistas/Argentinians some not all doom themselves and their economy and country from the get go. Low wages for example what is up with that? Well, after some experience and talking to lawyers and other business owners, here is the deal. You want to keep your employees at the lowest possible salary or when possible hire only family etc. Because if you ever have to fire them even for a truly legitimate reason it is going to cost you the business owner a significant amount of money. Therefore you just don’t pay more than is absolutely necessary.

About 4 years ago I watched one or my wife’s cousins pull a classic Peronista employee move. Employed for 5 years and decides she needs to get fired so she can a take a year off. Starts not performing at work and making problems in the office on purpose to get fired. Took about 6 months and sure enough they let her go with a big pile of pesos to boot.
In fact it is so bad that instead of firing or disciplining employees that are late or do not show up for work they put an on time bonus in the work contract. You only get the bonus if you are not late for work any days in the month and show up for work every day.

I am sure many other factors and issues just like the ones above take a serious toll on the economy and quality of life in Argentina. Of course it is all the governments fault! Not!

This is not actually limited to Peronists and/or Argentina. Brasil has this sickness of "protecting" the worker and creating an inferno for employers, a strong over-reaction to the rich and those in power and the terrible way they've treated workers over the years.

I used to work for an offshore drilling company and had occasion to spend a goodly amount of time in Brasil in the late 90s. I'm assuming their laws haven't changed - if so, good for them, but I doubt it. It's standard that the management crew for the rigs were all expats, while the labor crews came from local workers. In Brasil the contracts had the same sort of work clause they have here, where someone can work for a certain period of time and you can get rid of them during that time without penalty, but after that - on the first day after the trial period, you were on the hook for a month per year of severance pay if you fired them. And it usually doesn't matter if the firing was for cause - the courts rarely accept that it seems. We had laborers that would just f**k off on the job, waiting for someone to fire them so they could collect their pay and go live free for a few months (the oil industry paid good even to local workers).

Same problem here. Of course, what does that do? Does that really help the worker? Hell no.

And of course, when there's a legitimate issue, like my wife's oldest sister (she doesn't live with us, has three kids and her own place) getting fired the day after she notifies her employer that she's pregnant, she spends years trying to get "justice" here. Seems like most often "justice" only happens for those who don't deserve it. Instead of depending on the government to help her, we, her family have helped her, and she and her kids are not starving and living in the street. She's just awfully lucky that her sister is married to someone who gives a crap and has the means to help her and her kids while she gets back on her feet. Of course, she shouldn't have had that third baby...but that's a cultural thing that even I and my wife couldn't avoid.

Same with the laws on occupying living spaces. You can't hardly get someone out once they are in an apartment or house thanks to the laws that "protect" the poor. So what happens? Now everyone needs a garantia of another piece of property that can be used as a sword over the head of the renter, to try to ensure that the renter doesn't occupy a place without paying. And of course, does that help the poor? Hahahaha. Doesn't help anyone who can't save enough money to buy something, and anyone else is SOL.

Lack of trust, lack of financing options, lack of any means to leverage a better life.

I came here in 2006 to set up a business and hire local employees. I quickly gave up on setting up a business because of the horrendous cost and unfairness to the employer, and contracted with companies here to provide my laborers and they billed me in the US. I found out that the employers were paying the guys about 1/4 of what I was paying the company, which lead to various issues. I ended up hiring the guys away from the company and paid them as monotributistas, almost twice what they were getting paid by the local companies. It was their problem to work out filing taxes and such. It was actually difficult to find guys that would work like that because they wanted the government programs and the security of labor laws full-time employees get. Never mind that they could have easily paid for health insurance out of their own pocket with what I paid them (at the time in Dollars, when the Dollar wasn't restricted) and put aside enough money for savings and still lived well. But the guys who did stick with me, to this day, are good friends and some of them still work for me - though every one of them who works for me left the country to live somewhere else because they couldn't take their own government and people any more.

I've been here 8 years. I have brothers-in-law from Paraguay who are here legally and can only find s**t jobs and live in s**t places. Maybe here is better than other places in Latin America, but I don't see it to be much to brag about.

And it's not only in South America. I became a Libertarian because over my lifetime I've watched freedoms erode and standards of living fail in the US. People there are blaming "the rich" (not that they don't have their share of the blame) but the terrible fact of the matter is that it's the government allowing the rich to use the power that is centered to concentrate their influence to do what they want, in collaboration with the narcissists and sociopaths who are attracted to power and influence (i.e., those who run the government) that is the problem, along with the willingness of more and more people to look to the government to solve their problems, which the government is more than happy to oblige.

People want something for nothing. I've had a long, uphill battle with my oldest sister-in-law, who is quite intelligent but is a product of her culture and the one she finds herself in now. She's at UADE, a good business college, and having a really hard time in her first year. She didn't study hard enough in high school, and even if she had, the school was terrible as far as actually teaching and making sure the students understood. Most students out of high school here get a job from a relative, or in some other fashion, and then go on to live with their parents, or get money from their parents while they start life. Of course, I'm talking about the middle class here - few poor go to college and the rich do whatever suits them.

In the meantime, my sister-in-law had inherited the attitudes from her Porteño classmates - when they had a bad teacher they didn't do anything to make it up - they blamed the teacher and failed, waiting to re-take the tests to pass the class, without really learning anything. Most kids in my sister-in-law's group carried failed classes with them every year until they graduated, when they had to pass everything.

As an adult and seeing that it's not easy to live a life like I provide for her (actually requires dedication and hard work!), she is worried that she won't be able to make enough of what she missed to do business in the international arena. But I have confidence in her and am not letting her fail.

Really, the whole problem is not the society, the government or anything else - it's the Vultures and the United States. Unfortunately, we must leave it at that. It's the only reason the policies of people like Cristina never work.

But man, look at that GDP chart! Growing and growing, unstoppably.

 

[Hybrid Ambassador]

This is not actually limited to Peronists and/or Argentina. Brasil has this sickness of "protecting" the worker and creating an inferno for employers, a strong over-reaction to the rich and those in power and the terrible way they've treated workers over the years.

I used to work for an offshore drilling company and had occasion to spend a goodly amount of time in Brasil in the late 90s. I'm assuming their laws haven't changed - if so, good for them, but I doubt it. It's standard that the management crew for the rigs were all expats, while the labor crews came from local workers. In Brasil the contracts had the same sort of work clause they have here, where someone can work for a certain period of time and you can get rid of them during that time without penalty, but after that - on the first day after the trial period, you were on the hook for a month per year of severance pay if you fired them. And it usually doesn't matter if the firing was for cause - the courts rarely accept that it seems. We had laborers that would just f**k off on the job, waiting for someone to fire them so they could collect their pay and go live free for a few months (the oil industry paid good even to local workers).

Same problem here. Of course, what does that do? Does that really help the worker? Hell no.

And of course, when there's a legitimate issue, like my wife's oldest sister (she doesn't live with us, has three kids and her own place) getting fired the day after she notifies her employer that she's pregnant, she spends years trying to get "justice" here. Seems like most often "justice" only happens for those who don't deserve it. Instead of depending on the government to help her, we, her family have helped her, and she and her kids are not starving and living in the street. She's just awfully lucky that her sister is married to someone who gives a crap and has the means to help her and her kids while she gets back on her feet. Of course, she shouldn't have had that third baby...but that's a cultural thing that even I and my wife couldn't avoid.

Same with the laws on occupying living spaces. You can't hardly get someone out once they are in an apartment or house thanks to the laws that "protect" the poor. So what happens? Now everyone needs a garantia of another piece of property that can be used as a sword over the head of the renter, to try to ensure that the renter doesn't occupy a place without paying. And of course, does that help the poor? Hahahaha. Doesn't help anyone who can't save enough money to buy something, and anyone else is SOL.

Lack of trust, lack of financing options, lack of any means to leverage a better life.

I came here in 2006 to set up a business and hire local employees. I quickly gave up on setting up a business because of the horrendous cost and unfairness to the employer, and contracted with companies here to provide my laborers and they billed me in the US. I found out that the employers were paying the guys about 1/4 of what I was paying the company, which lead to various issues. I ended up hiring the guys away from the company and paid them as monotributistas, almost twice what they were getting paid by the local companies. It was their problem to work out filing taxes and such. It was actually difficult to find guys that would work like that because they wanted the government programs and the security of labor laws full-time employees get. Never mind that they could have easily paid for health insurance out of their own pocket with what I paid them (at the time in Dollars, when the Dollar wasn't restricted) and put aside enough money for savings and still lived well. But the guys who did stick with me, to this day, are good friends and some of them still work for me - though every one of them who works for me left the country to live somewhere else because they couldn't take their own government and people any more.

I've been here 8 years. I have brothers-in-law from Paraguay who are here legally and can only find s**t jobs and live in s**t places. Maybe here is better than other places in Latin America, but I don't see it to be much to brag about.

And it's not only in South America. I became a Libertarian because over my lifetime I've watched freedoms erode and standards of living fail in the US. People there are blaming "the rich" (not that they don't have their share of the blame) but the terrible fact of the matter is that it's the government allowing the rich to use the power that is centered to concentrate their influence to do what they want, in collaboration with the narcissists and sociopaths who are attracted to power and influence (i.e., those who run the government) that is the problem, along with the willingness of more and more people to look to the government to solve their problems, which the government is more than happy to oblige.

People want something for nothing. I've had a long, uphill battle with my oldest sister-in-law, who is quite intelligent but is a product of her culture and the one she finds herself in now. She's at UADE, a good business college, and having a really hard time in her first year. She didn't study hard enough in high school, and even if she had, the school was terrible as far as actually teaching and making sure the students understood. Most students out of high school here get a job from a relative, or in some other fashion, and then go on to live with their parents, or get money from their parents while they start life. Of course, I'm talking about the middle class here - few poor go to college and the rich do whatever suits them.

In the meantime, my sister-in-law had inherited the attitudes from her Porteño classmates - when they had a bad teacher they didn't do anything to make it up - they blamed the teacher and failed, waiting to re-take the tests to pass the class, without really learning anything. Most kids in my sister-in-law's group carried failed classes with them every year until they graduated, when they had to pass everything.

As an adult and seeing that it's not easy to live a life like I provide for her (actually requires dedication and hard work!), she is worried that she won't be able to make enough of what she missed to do business in the international arena. But I have confidence in her and am not letting her fail.

Really, the whole problem is not the society, the government or anything else - it's the Vultures and the United States. Unfortunately, we must leave it at that. It's the only reason the policies of people like Cristina never work.

But man, look at that GDP chart! Growing and growing, unstoppably.

And all due to the "K"'s savvy cabinet ! If it would keep growing unstoppably this way, soon will join the big 8's in no time !

 

[Dublin2BuenosAires]

Argentina certainly doesnt need employment practices currently in place in the US or the UK. Unions should be an effective counter balance to employer demands.

Unfortunately in the US, with zero hour contracts and lousy annual leave, I would argue that employment law is too pro-employer and that in Argentina peronism and collective bargaining (demanding and threatening really) has pushed the balance too far in the other direction.

 

[nkotb]

Why are you engaging with that idiot?

 

[Matiasba]

But man, look at that GDP chart! Growing and growing, unstoppably.

I think it was you the one who brought the chart...