Neoliberalism In Argentina In The Past 10-20 Years

[camberiu]

Sure, he manipulated the "free market" by keeping the ARS at parity with the dollar, but he certainly supported economic liberalization,

It fascinates me that you don't see a brutal contradiction on this phrase. "Yes, he massively manipuated the price of money, but other than that he was for economic liberalization".
This is like saying "The pope does not believe on the principle of the Trinity, but he is a hard core Christian".

 

[sesamosinsal]

Economic liberalization isn't simply a floating currency. It's a very general term that refers to freeing up many facets of the economy, especially government regulations. Menem, even if he had other motives, did that to some degree.

Your analogy is funny. But surely you are aware that there are many types of Christian churches and Christians, many of whom have different views on many issues. The same goes for economics, politics, and many other areas of life. Not much is black or white.

 

[camberiu]

Economic liberalization isn't simply a floating currency. It's a very general term that refers to freeing up many facets of the economy, especially government regulations. Menem, even if he had other motives, did that to some degree.

All somewhat modern economic models rely on a medium of exchange. The moment you arbitrarily set the price of the predominant medium of exchange, what you did was to impose an all encompassing price control. That is central planning raised all the way up to 11. All the other "liberalizations" become simply cosmetic after that.

Your analogy is funny. But surely you are aware that there are many types of Christian churches and Christians, many of whom have different views on many issues. The same goes for economics, politics, and many other areas of life. Not much is black or white.

I am not aware of any branch of Christianity that does not accept the principle of the Trinity. Do you?

 

[sesamosinsal]

All somewhat modern economic models rely on a medium of exchange. The moment you arbitrarily set the price of the predominant medium of exchange, what you did was to impose an all encompassing price control. That is central planning raised all the way up to 11. All the other "liberalizations" become simply cosmetic after that.

I'm not aware of any Christian church that doesn't accept the Trinity, but there are various other issues that are controversial, e.g. gay marriage. Anyway.

Your opinions are all good, and I agree with you that the uno-a-uno was a bad idea. Nonetheless, fixing an exchange rate is not the be all and end all of "economic liberalization," unless you're just going to define these terms to suit your viewpoint. If that's the case, then I'm afraid we can't have much of a discussion.

 

[ajoknoblauch]

I'm not aware of any Christian church that doesn't accept the Trinity, but there are various other issues that are controversial, e.g. gay marriage. Anyway.

Your opinions are all good, and I agree with you that the uno-a-uno was a bad idea. Nonetheless, fixing an exchange rate is not the be all and end all of "economic liberalization," unless you're just going to define these terms to suit your viewpoint. If that's the case, then I'm afraid we can't have much of a discussion.

Interestingly, Ecuador's well left-of-center government continues to use the US dollar as its currency. I haven't been to Ecuador in a long time, but they presumably have made it work, or Correa would no doubt ditch it quickly.

 

[sesamosinsal]

Interestingly, Ecuador's well left-of-center government continues to use the US dollar as its currency. I haven't been to Ecuador in a long time, but they presumably have made it work, or Correa would no doubt ditch it quickly.

This is very interesting. Ecuador is a bit different, though. They export a good deal of oil, and thus they have no problems for now with dollar inflows.

 

[ajoknoblauch]

This is very interesting. Ecuador is a bit different, though. They export a good deal of oil, and thus they have no problems for now with dollar inflows.

Ecuador is OPEC's smallest exporter. During the Menem period, Argentina was self-sufficient in energy, and may even have exported some. I think if Argentina had fixed the peso at a lower rate than one-to-one, they might not have had such serious problems.

 

[camberiu]

Interestingly, Ecuador's well left-of-center government continues to use the US dollar as its currency. I haven't been to Ecuador in a long time, but they presumably have made it work, or Correa would no doubt ditch it quickly.

I think one fundamental difference is that while Argentina pegged its currency to the dollar, Ecuador completely abolished its own currency altogether. So basically the Ecuadorian government forfeit its ability to print money or set interest rates. It simply transferred all of its monetary powers to the US Federal Reserve. I am not saying that this is a good idea, but it can have very different implications compared to what was done in Argentina.

 

[camberiu]

I think if Argentina had fixed the peso at a lower rate than one-to-one, they might not have had such serious problems.

I really don't see the rate as a major issue.
When a government peg its currency to the dollar, it is basically telling the market that, from that moment on anyone can show up at the central bank and exchange a fixed (X) amount of pesos for a dollar. So, the government is guaranteeing from that moment on that it will exchange, on demand, X amount of pesos (1 or 5 or 25) for a dollar. And as long as it has enough dollars (or the market think it does) to back that up, that rate should hold. The problem is that because these governments are really not very "neoliberal", they end up either printing a lot more pesos or spending all the stored dollars (or both), and eventually the market realizes that the government cannot fulfill the promise of exchanging on demand X number of pesos for dollars. And that is when everything implodes.

 

[sesamosinsal]

I think one fundamental difference is that while Argentina pegged its currency to the dollar, Ecuador completely abolished its own currency altogether. So basically the Ecuadorian government forfeit its ability to print money or set interest rates. It simply transferred all of its monetary powers to the US Federal Reserve. I am not saying that this is a good idea, but it can have very different implications compared to what was done in Argentina.

Ecuador went through the same sort of devaluations as Argentina, and all the corrupt politicians made a ton of money off of them. The dollar brought stability to Ecuador, but it has a price, as you mentioned.

Ecuador lacks a lot of infrastructure, but it's by far more economically stable than Argentina. Inflation is really low! Heh! And the tourism opportunities in Ecuador are endless. I'm not a fan of the capital, but the rest of the country is gorgeous.