Question On Inflation.

[Ries]

The problem with this logic is that there has never been, and never will be, a "free market".
Every market has existed in a situation where a government controls its parameters.

There varying degrees of freedom, but there is always regulation, laws, taxes, and invisible forces, both legal and illegal, that keep any market from being truly "free".

So, in the "free-er" markets, there are still all kinds of manipulations, and there are certainly monopolies.
For decades, there was one private company that had a monopoly in the USA on phone service, but it was still a "free market".

Another example in the USA would be automobile companies and dealers- there are state laws in every state giving authorized Ford dealers a monopoly on selling Fords, with no requirement to be transparent about priceing in any way.
Time after time, companies have tried to break this monopoly, and allow consumers better choice and prices, and its always beaten back- its illegal for Tesla to sell cars in most states, unless they build dealerships, and join the good old boys club.

There are many other virtual monopolies in the USA, always supported by government- cable tv franchises, utility companies, or other companies who have managed to get local or federal laws passed assuring them virtual monopoly status.
This has always been the case in most places, and always will be.

 

[Matiasba]

Give me some examples of free market monopolies.

Now, this doesn't mean that when a new product comes out that certain companies don't have a corner on the market to begin with. In fact, Libertarians call this a good thing and say that we don't need patents because over the long term patents are means to help monopolies, or at least concentration of market share, along, whereas in a free market the first people to get a product out will profit greatly, recouping their expenditures, and as others enter the market they will have to keep up with bettering their product along with the competition in order to continue to survive, since they don't have a monopoly on the patent that either prevents someone from legally using their technology without royalties, for years and years to come.

Eventually competition will come in, if there is no interference from the government, and even things out.

Monopolies are created when the government allows them to happen, either implicitly or explicitly. In the US there were a number of monopolies in the past created specifically from government intervention, or government creating the correct climate to allow one or two companies to corner the market.

The only thing a government should do in relation to a monopoly is to ensure that the monopoly didn't come into existence via malfeasance, and then leave the market to balance out.



Milk is still relatively cheap. Someone stated they can only get milk at 12 pesos, but in the bags (not the cartons) we pay around 8-9 pesos at the Disco down the street and I never have problems finding it. I can remember milk in the same bags a couple of years ago around 4 pesos. Much like the Big Mac combo in McDonalds, although that has risen but still not as high as other combos, because the government uses that to "prove" inflation isn't as bad as everyone says it is.

With milk and other dairy prices set by the government, of course Serinisima and Sancor are raising prices with other products. And no one else wants to get into the market - it's a zero-sum game for those who are not already in it. Particularly between the horrendous labor laws and extremely high taxes the government imposes on business and in addition to price controls in the dairy market. The government controls aspects of the market which prevents other players from entering into it. The government has created conditions which foster monopolies and the government likes that because there are fewer companies with which they have to push around.



I just have to laugh about that bolded section.



Dude, you are saying once again that the demand for dollars creates inflation (which I believe you refuted in a different post with someone else). Demand does not create inflation. Demand may cause higher prices until the market is saturated - this happens because people are recouping their investment costs in production and as costs are paid off, production because easier and volume increases, prices lower.

Currency is not a product, but rather a commodity. Flooding a market with too many dollars reduces the demand for dollars and allowing the market to build naturally causes the peso, in comparison, to fall in value naturally because the peso already is crap. That's why people flock to the dollar and that doesn't create inflation. Stupid government policies, like printing a lot of pesos to cover internal costs devalues a currency, which makes it weak against other currencies that do not have the problem (or as much of a problem, and again, unfortunately, the dollar is a special situation due to port-World War II advantage-taking and idiocy from the US).

The government saturated the market with dollars, lowering demand, and it took a lot of dollars to saturate the market, dollars which the government could use for other things, like, I don't know, paying off money they borrowed in the past instead of inventing a crisis because they don't want to pay their debt? I know, too many on this board think Argentina is a victim of "vultures" but I continue to call BS on that. The government is controlling the market by keeping a very high artificial official price on the peso and continuing to print money where there is no increase in production and value to offset it and is creating its own inflation. Another government policy from the past, the corralito, causes citizens to start panicking when they see inflation and start raising prices themselves, which does indeed help things.

The dollar has nothing to do with inflation here.

You can't just say you know things but don't remember how you know. Particularly because you are parotting what the government here says and it makes no sense whatsoever. Like you, the government states that something like printing money is not causing inflation, but rather for some mysterious reason people are flocking to the dollar and causing inflation. If there was no or little inflation, the peso would be stronger and there would be no need for people to flock to the dollar.

And if the blue dollar market is so small compared to the official rate (which I agree with, BTW) - how in hell can it make so much difference to cause 40% inflation anyway, across the economy???? Think critically!

Microsoft had a monopoly situation (or at least, something i the way) in the economy that boast about being the freer.
I see you believe in competition, I dont. There are tons of examples, here in Argentina in these K years, that make fun of competition. One, the pre paid medicines (OSDE, Omint, Swiss Medical, etc) they are like 5 or 6. You know what they do? they agree on rising the prices, all together, very similar prices, of course over the 25% or 30% inflation, creating more inflation. Yes, the government should do something, but then you know, that is authoritarian, that is corruption, etc, etc. They basically put the price they want and of course do whatever it takes to boicot this government, without any competition. The same happens as I mentioned with La Serenisima and Sancor, the same happens with almost any company here that shares an important piece of the market (lets say, more than 30%). Free competition, without monopoly or oligopoly is a dream, an uthopia, something very difficult to have in reality, because the capital itself naturally tends to concentrate. Thats why we have those huge fortunes of trillion dollars and people without a dollar per day in Africa. Thats why we have big companies buying small companies, absorbing competition when they not compete. The not monopoly or oligopoly situation you can have it in some specific branches, in very special situations, but when talking of big capitals, they are 4 or 5 that have almost all the markeet covered. And of course they defend themself from new competition, they have alliances, agreements, etc.
About the vultures, I disagree too, but this Im afraid we can write and ramble on and we wont agree in 100 years.

 

[ajoknoblauch]

I think it's cheap here. I have a super apartment in Recoleta for like 650 USD. For a litre of milk it's like 8 pesos (60-70 cents) you can get a decent bottle of wine for 14 pesos (1 dollar) food is cheap if you use dollars. But you need to plan ahead and bring the cash for your entire stay until you can get out and re-load. Who on earth uses the official rate? You are losing half your money.
Cinema tickets are 37 pesos each (2-3 bucks) if you go on Wednesdays.
Earning money here sucks but spending it here is a blast.

It's relatively cheap here if you have dollars. If you're earning rapidly eroding pesos, it's increasing expensive.

 

[Hybrid Ambassador]

It's relatively cheap here if you have dollars. If you're earning rapidly eroding pesos, it's increasing expensive.

Very good comment Sherlock........

 

[Ceviche]

My OSDE bill is incresing by 100~200 pesos almost every month in sync with the parallel dollar.

I also get a letter from the ceo that it is as per law of some law number approved by the government.

My query is - are you from OSDE or other private health insurers facing the same?

Further, what is the law? How many times a year, can they increase the premium?

Dr Bajo??

 

[Rich One]

My OSDE bill is incresing by 100~200 pesos almost every month in sync with the parallel dollar.

I also get a letter from the ceo that it is as per law of some law number approved by the government.

My query is - are you from OSDE or other private health insurers facing the same?

Further, what is the law? How many times a year, can they increase the premium?

Dr Bajo??

From Cronista today private health providers have increased 26 % this year across the Board , all increases are approved in the Official Gazette by the Ministry of Health. A new increase is predicted before year end. The average cover for a couple runs between $4000 to $ 6000.

http://www.cronista....50922-0048.html


Through a resolution, published yesterday in the Official Gazette, signed by the Health Minister Daniel Gollan, this increase 9% is allowed, but with the clarification that companies can only apply after having "duly notified" their users.

A través de una resolución, publicada ayer en el Boletín Oficial, con la firma del ministro de Salud, Daniel Gollan, se permitió este incremento, aunque con la aclaración de que las empresas sólo lo podrán aplicar luego de haber "notificado fehacientemente" a sus usuarios.

 

[Rich One]

The increases this year for all providers are aprox. 26% all increases are approved by the Ministry of Health. Another increase is predicted before year end.

See article on Cronica today

 

[Ceviche]

Thanks Rich One. I always appreciate your detailed responses.