These Are The People Who Are Stealing Your Money

[jackbower]

"This" isn't about democracy v non-democracy or whether the "western world" should be telling developing countries what to do or not. There is not a shred of doubt that so-called "western" economic principles such as responsible fiscal and monetary policy (aimed at moderate and consistent growth), sanctity of contracts, transparency, clear and consistent rule of law, and strong market orientation are the path to bringing the highest and most sustainable standard of living to the greatest number of people. Argentina's repeated economic capitulations always come back to not sticking to the tried-and-true "western" economic principles. The current problems are merely symptoms of not respecting the above mentioned "western" economic principles.

There really isnt much to say to this nonsensical gibberish, sorry. If you actually believe what you type, good for you.

 

[Dublin2BuenosAires]

delete (life's too short)

 

[Gringoboy]

See what you started now GS?
Terrorists, drones, Middle East, western imperialism....................................

 

[Reneige]

Those are their worldwide profit margins ... does not tell us much about their margins in Argentina.

Yes, I recognise that. There are some regional breakdowns but frankly I didn't bother going through the reports to see if the the exact figure is there. My point is that grocering is an incredibly competitive and low margin business, blaming them for price speculation is ridiculous. Furthermore, all these companies are taxed on their net profits so if they were making windfall profits, that most definitely publicly known. Basically this is all theatre.

There is probably a register online where we can see the exact profit margin figure for the Argentinian subsidiaries of these grocery stores but I haven't checked. What is obvious is that companies like Carrefour, who need to defend their profits in Euros, will obviously have to raise their prices as the value of the peso goes down...

 

[Jaredberryman]

I think I'm missing a piece of the puzzle. Here is the way I understood market forces to work.

Grocer A has 12 apples for $20
Grocer B has 12 apples for $20
They split the apple market 50/50

Grocer A gets greedy. He decides to raise his price to $22
Grocer B keeps his apples at $20
Grocer B gains 20% more of the apple market.

Grocer A and Grocer B have a coffee and decide to both raise their prices to $22
Grocer A and Grocer B then get a phone call from the Federal Trade Commission or the Department of Justice.

How does it work here? One would think that people have a reasonable access to information and can freely choose the lowest price.

GS

I think that's the way it works in Argentina. However, a solution would be the following: make it easy for someone to start a supermarket. Then you have B through Z, and they say, A and B keep raising the price, but if we keep our prices the same, we will outsell them by 50%. That's actually sort of what happened with the Chinese supermarkets. They got special tax deals form the government that made it easy for them to open up places, and now they are major competitors. Now you see these new Carrefour markets all over the place with much lower prices. They had to do that to compete with the Chinese supermarkets, who can get lower profits margins than the supermarket and have the same products.

If you are going to have a capitalist system, you have to let people compete. Otherwise monopolies begin to form. But the rhetoric from this government is that businesses are evil and we should take all their money away. But what about small and medium sized businesses? What about smaller corporations? To just lightly say that all businesses are evil and that they should be punished also punishes the consumer and the employees. As far as I know, everyone who works either owns a business or is an employee. Why make everyone's life miserable by punishing every single business?? And what is large businesses are not evil, but are honestly trying to make a profit? Wouldn't that be normal behavior?

This is basically what they do in this country. The posters are typical rhetoric from this government to try shift blame off of themselves and their complicated bureaucracy and heavy handed taxes.

 

[Dublin2BuenosAires]

Truth to be told we are all operating in a vacuum of data here, working from facts and figures. I find it incredible and frankly terrifying that the apparently number 1 issue in the country is being discussed without reference to a single fact. Honestly the global profit margins do not give us a clear enough picture of the situation in Argentina regarding profit margins.

Cámara de Empresas Exportadoras Argentinas (Ceea) - Not sure what political bent this group has, but I found an article in Spanish from this time last year where they are warning of exorbitant profit margins by supermarket chains.

We know that there are 3 big players with 70% of the market, I don't think that is an excessive monopoly but if there has been price fixing it ought to be a serious criminal offence. Note, Dia is not Nac & Pop - it is part of the carrefour chain.

From a dairy industry website:

"En los quesos se observan márgenes del 114% para la mayoría de las categorías de todos los quesos. En leche fluida, si bien el margen no es tan grande, el mismo ronda el 55%. En yogures los márgenes son un poco superiores los de las leches fluidas"

Which does suggest excessive profiteering, but again, I cannot speak to the political bent of the site. Lecherialatina.com

This dairy industry site also makes reference to agressive tactics the supermarkets take with their suppliers to keep them from selling elsewhere.

Another quote I found from the Executive Director of the Supermarket and "Chino" Association where he says the Chinos aren't making excessive profits, but yeah, maybe the supermarkets (his members!) are.

Miguel Calvete, director ejecutivo de la Federación de Supermercados y Asociaciones Chinas de la República Argentina, afirmó que los supermercados pequeños no tienen altos márgenes de ganancias. Consideró que “es un exceso lo que ha dicho el ministro”, pero “en el caso de las grandes cadenas, algo de razón tiene”.

In truth, I suspect there is something in the fact the supermarkets chains are making and maintaining excessive margins. The way the govt is going about controlling this is extremely crass and poorly executed. What is required is a price fixing investigation and thoughts on how to give incentive to competition and other shopping choices. Why dont the govt subsidise a model which has less supply chain and more farmer direct to consumer involvement?

 

[Dublin2BuenosAires]

I think that's the way it works in Argentina. However, a solution would be the following: make it easy for someone to start a supermarket. Then you have B through Z, and they say, A and B keep raising the price, but if we keep our prices the same, we will outsell them by 50%. That's actually sort of what happened with the Chinese supermarkets. They got special tax deals form the government that made it easy for them to open up places, and now they are major competitors. Now you see these new Carrefour markets all over the place with much lower prices. They had to do that to compete with the Chinese supermarkets, who can get lower profits margins than the supermarket and have the same products.

If you are going to have a capitalist system, you have to let people compete. Otherwise monopolies begin to form. But the rhetoric from this government is that businesses are evil and we should take all their money away. But what about small and medium sized businesses? What about smaller corporations? To just lightly say that all businesses are evil and that they should be punished also punishes the consumer and the employees. As far as I know, everyone who works either owns a business or is an employee. Why make everyone's life miserable by punishing every single business?? And what is large businesses are not evil, but are honestly trying to make a profit? Wouldn't that be normal behavior?

This is basically what they do in this country. The posters are typical rhetoric from this government to try shift blame off of themselves and their complicated bureaucracy and heavy handed taxes.

God I am loath to defend the govt but I think they are specifically attacking one sector (supermarkets) , I don't agree that they have ever said business is evil. They support business once it is inside the campora wing. There are plenty of kirchner capitalist clientelismo types out there making hay while the sun shines.

These attacks are so strong because they are foreign companies I believe, which leaves them outside the control of govt. This govt relies on managing the supply side of the economy (price fixing etc) and external control of the supply side can undermine their model.

So, business is OK, so long as you toe the line and do what you're told in line with the holy "model". Also, in an unregulated capitalist model monopolies will always form. In regulated (anti-monopoly, anti-price fixing) capitalism we can protect against these structural problems.

 

[GS_Dirtboy]

I'll go on the record to say that I think CFK routinely hijacking radio and TV time for her monologues is an abuse of position and power. I can't believe that supposedly intelligent people in this country think that is appropriate and correct. Are all of those cut-away's to an adoring and applauding audience spliced from her speaches before her popularity plummeted?

It matters not whether I'm for or against her. I would feel that way about any president who prances around in the public eye like a pampered poodle.

 

[Gringoboy]

I'll go on the record to say that I think CFK routinely hijacking radio and TV time for her monologues is an abuse of position and power. I can't believe that supposedly intelligent people in this country think that is appropriate and correct. Are all of those cut-away's to an adoring and applauding audience spliced from her speaches before her popularity plummeted?

It matters not whether I'm for or against her. I would feel that way about any president who prances around in the public eye like a pampered poodle.

I couldn't agree more GS.
Who does she think she's fooling anyhow?

 

[Jaredberryman]

Dublin you are absolutely right that those chains are probably price gouging, that's the way things work in Argentina. My brother-in-law is an executive at TEL (major screw company in Argentina and main supplier of screws in Easy) and he tells me that this kind of thing is standard procedure. Their own company is one of the only major screw suppliers in Argentina, and they were going to make a deal with Sodimac (one of the few competitors of Easy) to sell them screws as well. When Easy found out they basically told TEL that if they dare sell their screws to Sodimac that they would cut out TEL. Easy is trying to maintain a monopoly by undercutting their main competitor. All these kind of closed door deals and promises are the norm here. Most government officials that use suppliers will claim 20 to 80 percent of profits (for themselves personally) from companies if you want to sell to the government. Nothing would surprise me if the main supermarket chains collude on prices. This is common knowledge to the average business person here. Even someone who works in large corporations might claim 10 or 20 percent under the table for them to hire you as a service or supplier.

I still think that the underlying narrative from this government is that businesses are evil, that they are all just rich fat cats looking to eat up everyone, and that the government stands up for the rest of us (many of whom work in the fat cat corporation). The result has been mountains of bureaucracy and taxes --which a major corporation can handle, but a small business owner cannot. If you are hoping to have a small business that can grow at all in the future you must have an entire structure dedicated to payments and bureaucracy from the very beginning.

The way forward is to protect and encourage startups and small businesses and give them some favorable breaks and rules, in addition to finding ways to enforce monopoly laws (which admittedly will probably never happen). This would also help combat inflation. There is so much room for growth in that area in this country. I'm fairly certain that if some entrepreneur started a small supermarket chain to combat the big ones that the current chains would move to try and squash it. In this country the government currently murders the small guy and overloads him, all while putting up posters of executives of large chains. It makes absolutely no sense whatsoever. No one is saying that monopolistic behavior should not be punished here, the opposite. But price fixing, threats, more taxes, more bureaucracy, and putting up posters is utterly useless and are just superficial ways for these people to try to save face in the short term, just like always.

Someone said, "Why not just open a supermarket because you will make so much money?" Because we live in Argentina, the land of anti-business. It's a feat of remarkable portions to make any kind of business successful.