Is President Kirchner Improving The Lives Of Argentinos?

[sesamosinsal]

Then, as today, Argentine industry is being destroyed by government intervention. These show-piece factories being built today may end up closing because they are being protected from international competition and producing shoddy products. Once the money runs out to protect them, they will will close. And the older manufacturers that actually produce a globally competitive product are being hamstrung by import restrictions on component parts. The result: more of Argentina's precious capital squandered by government bungling.

It isn't money that's protecting these factories; they are policies implemented by the government. And these policies aren't opposed to trade entirely. Argentina, as I said, has imported and exported more under the Ks than it ever did under Menem. See the data for yourself.

Folks, this isn't hard. If a country produces absolutely nothing (i.e. imports all goods), how does it survive?

Debt, obviously.

And if a country that doesn't produce absolutely anything takes on unimaginable debt for years to make up for this deficit--as Argentina did in the 1990s--what is the inevitable result?

Look at the U.S. and Europe if you need a hint.

 

[Joe]

Clearly, convertibility affected export revenue. But Menem also removed import tariffs, for example, which had a significant impact on the amount of imports that came into the country.

A floating exchange rate certainly hasn't saved manufacturing in the U.S., Spain, Greece--just to name a few. The policies enacted by these governments on trade do matter.

Yes Menem reduced tariffs whilst keeping the peso artificially high - a sure-fire recipe for destroying your manufacturing base. Argentina lost countless industries that could still be alive today. He also privatized industries in a away to benefit himself and his cronies instead of the country as a whole. All these policies are described as "neo-liberal" or capitalism run-amok when they are in fact massive blunderous governmental interventions and plain old fashion corruption.

Spain and Greece are also the offspring of government blundering. They were allowed to assume massive amounts of debt. But now because they do NOT have control of the currency, they can NOT devalue. This is resulting in a lost generation. A whole generation which will not know about finding employment - thanks again to government mandarins.

Just this week in the Economist is an article on how China is planning to reduce the number of ministries to decrease governmental meddling and increase efficiency. This is the model Argentina should look to - not the US which has been increasing the size of it government sector for decades - resulting in reduced living standards, high structural unemployment and stagnant wages.

 

[Yogur griego]

Yes Menem reduced tariffs whilst keeping the peso artificially high - a sure-fire recipe for destroying your manufacturing base. Argentina lost countless industries that could still be alive today. He also privatized industries in a away to benefit himself and his cronies instead of the country as a whole. All these policies are described as "neo-liberal" or capitalism run-amok when they are in fact massive blunderous governmental interventions and plain old fashion corruption.

That's the best summary of Menem's government I have seen in a while.

 

[sergio]

Believe me, services were HORRIBLE before Menem. The phone system was a disaster. The same could be said about other services that got better under Menem. The trains were neglected, though. Lines were abandoned and there was no oversight over train operations -- but what existed under the state run Ferocarriles Argentinos was very bad.

 

[sesamosinsal]

Spain and Greece are also the offspring of government blundering. They were allowed to assume massive amounts of debt. But now because they do NOT have control of the currency, they can NOT devalue. This is resulting in a lost generation. A whole generation which will not know about finding employment - thanks again to government mandarins.

They allowed themselves to consume massive amounts of debt because they don't produce anything. After all, it's just so much cheaper to buy stuff from Asian sweatshops rather than pay someone a first world salary to do the same job, right?

Spain has been importing more than it exports for years. The party wasn't going to last forever.

As far as the currency, the euro is a free-floating currency. Wasn't this your whole point about Argentina? That everything would have been hunky-dory without the currency peg? I thought we could count on the market to resolve these imbalances?! Heh.

 

[JamJam]

the US which has been increasing the size of it government sector for decades - resulting in reduced living standards, high structural unemployment and stagnant wages.

I don't think its the size of the government that is causing living standards to drop.
I would say its outsoucing all the industry to the far east, which has more to do with 'free market' than government.

 

[Matiasba]

This is all very good, but totally off topic. The question is if CFK is improving the life of the Argentine people and the answer is an overwhelming NO. CFK has not been president since 2003 she has been for the past two years and in that time Argentines and Argentina has been in a downward spiral of no growth and chronic high inflation.

This is the link to the World Bank article and here is an important quote to ponder: http://www.bancomund...-america-latina

"Esta es una buena noticia para millones de latinoamericanos que caen dentro del rango de ingresos de $10-US $ 50 por habitante y día --el parámetro utilizado para determinar quien pertenece a la clase media. Sin embargo, en la medida en que las condiciones económicas globales empeoran, los expertos temen que esos flamantes miembros de la clase media se vean expulsados de su nuevo estatus."


According to this, to be middle class you have to earn between 10 and 50 USD a day. That means that using the unrealistic "official" exchange rate one has to earn between 50 and 250 pesos to be middle class, and with the Blue or "real" rate on has to earn between around 80 and 400 pesos to be considered middle class. For arguments sake lets agree that the truth is somewhere in the middle of these extremes, then to be middle class you have to earn 65 to 325 pesos a day.

So, extrapolating this to the 261 odd work days in 2013 we get a monthly salary of ~$1,414 pesos to be middle class, which is a total joke as it is well below the minimum wage in Argentina and therefore the measure is including millions of people who are in fact poor by official standards.

In the past two years, rampant inflation with a stagnant and in some sectors shrinking economy due to out of control fiscal spending, ~40% annual expansion of the monetary base (printing money) and an inexistent infrastructure policy (Once train massacre, your weekly blackouts etc) means we are poorer and getting poorer with no hope for the foreseeable future. This logic in undeniable, just think about the options you have availiable to keep your savings from depreciating and you'll see it is true. A country where your savings account does not pay interest above inflation is one that is doomed to fail.

Conclusion: Get out while you can or get paid in a foreign currency because this WILL get very ugly.

The limit of poverty line as well as the limit to be consider middle class is totally is an interesting discussion but totally off topic.
As I said in another thread, that limit cant be fixed because it must be dynamic with the upper classes. So it varies depending on the country (although I understand the necessity of trying to put an international parameter just to compare).

 

[Matiasba]

It isn't money that's protecting these factories; they are policies implemented by the government. And these policies aren't opposed to trade entirely. Argentina, as I said, has imported and exported more under the Ks than it ever did under Menem. See the data for yourself.

Folks, this isn't hard. If a country produces absolutely nothing (i.e. imports all goods), how does it survive?

Debt, obviously.

And if a country that doesn't produce absolutely anything takes on unimaginable debt for years to make up for this deficit--as Argentina did in the 1990s--what is the inevitable result?

Look at the U.S. and Europe if you need a hint.

This is another achievement of this government:

The Menemato was based in pure & simple debt. You just cant put the local currency of a mid-sized country at the same level of the currency of the world power. The only way to sustain that is by debt.
Take a look of how much this government got out of the debt, the percentage of GDP in debt, and compare it to the majority of the developed countries (Europe, Usa, Japan).


http://baexpats.org/topic/21797-argentine-debt-to-gdp/page__hl__debt

 

[jp]

My guess the 7 yes clicks came from notebooks with the KFC logo glued on the front of them..

Nope.

Whilst my life isn't improving, I can see that life is improving for millions of Argentines. Based on the demographics of the country (which aren't particularly well represented in Palermo restaurants and bars) I believe that life is improving for a majority. Social programs have lifted people out of poverty. The minimum wage is the highest in the region, and the middle class has expanded dramatically. Life has improved, and continues to improve for millions of Argentines who rely on things like the universal asignacion por hijo, minimum wage, public schools and hospitals.


I don't rely on public services or social programs. I have a family and run a business, and my life gets increasingly difficult with every year that passes. I don't personally know anyone who would claim that their life is improving. But I don't believe I can make a useful assessment about the state of the nation based on my own circumstances.

 

[arlean]

I really don't know enough to vote on this, which is one reason I wish we continued to have the economics meetings, but as for what is happening to the middle class, I have two friends in that category that I value, one an attorney and one in import/export, both of whom say they are leaving permanently if nothing changes in the next election. Another friend wants to do that but does not have money outside and if what she is telling me is correct, she's stuck. She can't get money to go. But especially the first two are the type of people that I think Argentina needs.

If you don't have a strong middle class, eventually the economy will ALL be in poverty. Mostly the best thing the government can do for the people is get out of the way and allow entrepreneurs to build businesses and to allow it to be worthwhile for them to risk and to put in the kind of dedication it takes to build a business. And that's a LOT of dedication. But that's what creates jobs. But like I said, as far as Argentina and this regime, I can't say about that but I'm surely interested in the discussion.