What Would Dollarization Mean for Expats?

[sergio]

You're honest. The expat party will come to an end. I remember it was during the Menem years.

I meant to say I remember how expensive it was during Menem

 

[Redpossum]

This is what it comes down to for me. He has some ideas that may or may not work, but they are different from the ideas that have failed over the past 20 years. If you look at his economic proposals they are not exactly the same as Menem or the junta.

That he cloned his dogs, his sex life, and the other eccentricities are irrelevant.

No, they're not irrelevant. These are important clues that the man is dangerously unstable. He's got bats in his belfry.

 

[Ries]

I am amused that someone thinks dollarisation, alone, would "kill inflation".
Inflation in Argentina is a complicated thing. Some of it is due to the exchange rate, and dollarisation would mean a constant exchange rate. But that is far from the only cause of rising prices in Argentina.
Obviously, War, global commodity price swings, (particularly oil and grains) climate change, local, regional and global politics, technological development, and many other factors way beyond the simple dollar/peso rate affect the costs of things in Argentina.
And Argentina, just like the US or the EU, defines inflation, and determines which prices will be included in the official rate, for political, ideological, historical, and other mysterious reasons.
In a country where only about 25% of the students attend schools that have any sort of tuition, last year the government included a 125% rise in "education" costs as one of the factors the official inflation rate is based on.
And a lot of the oddball reasons some things are cheap, and others expensive, in Argentina, were, at the time of the laws being passed, considered features, not bugs.
To assign all of the problems of the Argentine economy to "corrruption" is short sighted and wrong.
The current interlocking systems of tariffs, taxes, and duties, of import discouragement at every level from the shipload to the small package at the post office was all intentionally put in, and the people who did it had reasons.
In every single case, just like in the case of potential dollarisation, somebody won, and somebody lost.
During Peronism, the military, the unions, and the big heriditary landowners were the main players, along with Peron's ideological desire for locally manufactured everything.
Some of which made sense, some of which did not.
The establishmend of local auto manufacturing, and the support system or subcontractors, still results in large dollar income for the country, and also allows a lot of related export industries like transformers and motors, agricultural equipment, commercial food processing equipment, and even hand tools, to continue to exist in Argentina, and all of those industries provide above average salaried jobs, exports, and dollar income.
That was a Peronist folly, which turned out well.
There are many more examples of economic decisions that benefit, in many cases, huge slices of the argentine populace, that annoy wealthy expats.
But the stakeholders who got things like 13 months of wages, or yearly cost of living increases, are every bit as politically powerful as, say, the Social Security recepients in the USA. And those stakeholders still will affect what ANY new administration can do.

 

[Redpossum]

I am amused that someone thinks dollarisation, alone, would "kill inflation".
Inflation in Argentina is a complicated thing. Some of it is due to the exchange rate, and dollarisation would mean a constant exchange rate. But that is far from the only cause of rising prices in Argentina.
Obviously, War, global commodity price swings, (particularly oil and grains) climate change, local, regional and global politics, technological development, and many other factors way beyond the simple dollar/peso rate affect the costs of things in Argentina.
And Argentina, just like the US or the EU, defines inflation, and determines which prices will be included in the official rate, for political, ideological, historical, and other mysterious reasons.
In a country where only about 25% of the students attend schools that have any sort of tuition, last year the government included a 125% rise in "education" costs as one of the factors the official inflation rate is based on.
And a lot of the oddball reasons some things are cheap, and others expensive, in Argentina, were, at the time of the laws being passed, considered features, not bugs.
To assign all of the problems of the Argentine economy to "corrruption" is short sighted and wrong.
The current interlocking systems of tariffs, taxes, and duties, of import discouragement at every level from the shipload to the small package at the post office was all intentionally put in, and the people who did it had reasons.
In every single case, just like in the case of potential dollarisation, somebody won, and somebody lost.
During Peronism, the military, the unions, and the big heriditary landowners were the main players, along with Peron's ideological desire for locally manufactured everything.
Some of which made sense, some of which did not.
The establishmend of local auto manufacturing, and the support system or subcontractors, still results in large dollar income for the country, and also allows a lot of related export industries like transformers and motors, agricultural equipment, commercial food processing equipment, and even hand tools, to continue to exist in Argentina, and all of those industries provide above average salaried jobs, exports, and dollar income.
That was a Peronist folly, which turned out well.
There are many more examples of economic decisions that benefit, in many cases, huge slices of the argentine populace, that annoy wealthy expats.
But the stakeholders who got things like 13 months of wages, or yearly cost of living increases, are every bit as politically powerful as, say, the Social Security recepients in the USA. And those stakeholders still will affect what ANY new administration can do.

Very good! A splendid description of the situation, and actually quite brief in proportion to the complexity of the issues being discussed

Although, I would point out that drastically greater brevity could have been achieved by the use of a simple and very common two-word expression - "es complicado".

As a brief footnote, I would say that I do not think Perón's ambition to manufacture almost everything domestically was a bad idea at the time. All of the industries he tried to foster were and are still possible. The really hard to almost impossible part would involve new industries that didn't exist at the time, e.g. 7nm chips, or even 14nm. Maybe better just stick to potato chips...

 

[Ries]

Very good! A splendid description of the situation, and actually quite brief in proportion to the complexity of the issues being discussed

Although, I would point out that drastically greater brevity could have been achieved by the use of a simple and very common two-word expression - "es complicado".

As a brief footnote, I would say that I do not think Perón's ambition to manufacture almost everything domestically was a bad idea at the time. All of the industries he tried to foster were and are still possible. The really hard to almost impossible part would involve new industries that didn't exist at the time, e.g. 7nm chips, or even 14nm. Maybe better just stick to potato chips...

As someone who has been involved in making things, manufacturing, and a love of real physical objects all my life, I would say most of Peron's nationalist production schemes actually worked out pretty well.
It was unrealistic to expect a viable jet fighter manufacturing capacity, or submarines, but the general model is really much better than say, Uruguay, where virtually NOTHING is made there, import and financial rules are mostly what the right wing wants for Argentina, and yet, mysteriously, most things cost 3 times what they cost in Argentina.
That seems to be the future if Milei gets his way- a larger, poorer Uruguay. No nation, not even Uruguay, can exist solely on money laundering and loose banking laws. Only so many tellers are needed.

 

[FrankPintor]

We saw the benefits to maintaining manufacturing capacity for strategic rather than primarily economic reasons in the pandemic, where Argentina was the only one of the southern cone countries able to manufacture (not one, but two) vaccines locally. Through the first year of vaccination, Chile, in particular, and also Uruguay, were forced to scramble for expensive and mostly-unavailable Pfizer vaccines, or use lower quality Chinese vaccines, leading to high and long lasting rates of infection.

As far as research capacity is concerned, Conicet weren't able to get their vaccine over the line before the pandemic petered out (well, we hope anyway), but they're in the forefront of a very interesting research field which will likely have practical applications again. What kind of an idiot would throw all that away?

Comparing Conicet to NASA is particularly stupid, NASA is singularly focused on space, which Conicet seems to be spread over a broad range of fields. From vaccines to small nuclear power plants (where I believe Argentina is a world leader). A better comparison might be with the Frauenhofer Institut, for example? I'm sure Conicet can be made more efficient and less politicized, and both of those things would be good, but simply closing it down would be grotesque.

This is what it comes down to for me. He has some ideas that may or may not work, but they are different from the ideas that have failed over the past 20 years. If you look at his economic proposals they are not exactly the same as Menem or the junta.

That he cloned his dogs, his sex life, and the other eccentricities are irrelevant.

It would be nice to think that his eccentricities are irrelevant, but I'm not so sure. As I mentioned previously, other countries seem to be able to manage unstable presidents, but especially now, Argentina needs one without too many loose screws, And while repeating the same ideas that already didn't work might be insane, just having different ideas doesn't mean that the chances of success are much higher, quite possibly it's just a new idea that won't work either. There's more to it than that.

 

[Ries]

Libertarians are, by definition, loose screws. Because its not an economic theory, or a proven political option- its an ideological and emotional belief system, that is overwhelmingly espoused by affluent white men, who believe they should have MORE.
the reason that women didnt vote for Milei is that women dont fall for that shit- historically, libertarians run about 75% white men.
What Argentina needs to get better is reasoning, compromise, and slow negotiated solutions to hundreds of complex problems. This means time, patience, and the ability to accept the good over the ideal.
Exactly the opposite of a libertarian.
And, mostly, historically and globally, the arena of competent women (and I dont mean wealthy ex-montaneros).
Actual policymaking, retail politics, and problem solving is not glamourous, fast, or instantly popular, but it has a 2 millenium or so history of working, whereas there has never been a functional libertarian government anywhere in the world.
Milwaukee was socialist for a majority of the 20th Century, and it was a plodding, job producing un-phenomenal manufacturing economy that had lots of solid middle class jobs.
There is no example of a functioning libertarian economic system, even on a scale as small as a small city.
Because it has built in functional contradictions, glossed over by ideological macro "explanations".

 

[carride]

Conicet seems to be spread over a broad range of fields

Yes! Including the biology studies to increase agriculture output, and geology for productive mining and petroleum (similar and more to USGS).

 

[Quilombo]

the reason that women didnt vote for Milei is that women dont fall for that shit- historically, libertarians run about 75% white men.

All else being equal, voting for Milei is highly associated with being 16-24 and having a dick, aka
the "pubertario" contingent of the electorate as they're often derided.

As one of the 2-3 token leftists on here my guess as to why he's managed to break across race and
class barriers within Argentine society unlike libertarians in Western countries is due to a bastardized
form of class consciousness here the Ks and JxC have created thanks to years of downwards economic
mobility.

You see a bunch of rich people voting for Milei because he correctly represents their class interests, and working
class people support him because Peronism (having governed the country for the majority of the past 40 years)
has so destroyed the material conditions of millions, with the state ceasing to exist for those who need it most, or
being seen as a hinderance/source of misery that people want to burn it all down.

It's no wonder a bunch of 16-24 year olds now believe they are temporarily embarrassed millionaires, and dollarization
will bring back the yesteryear of their parents who last saw economic stability (well, by Argentine standards) in the 90s
by simply using USD where ARS used to be (I know Milei's argument and agenda is larger than this, but I'd argue less
than 15% of his supporters have any opinion on Keynesianism, quantitative easing, NTBs, etc.)

 

[Redpossum]

Libertarians are, by definition, loose screws. Because its not an economic theory, or a proven political option- its an ideological and emotional belief system, that is overwhelmingly espoused by affluent white men, who believe they should have MORE.
the reason that women didnt vote for Milei is that women dont fall for that shit- historically, libertarians run about 75% white men.

I don't know about the race angle. I tend to be leery of anyone playing that card, but I certainly do agree that Libertarians are grossly unrealistic. TBH, until Milei came along, I had considered Libertarians in the same category as Jehovah's Witnesses; annoying but harmless.

What Argentina needs to get better is reasoning, compromise, and slow negotiated solutions to hundreds of complex problems. This means time, patience, and the ability to accept the good over the ideal.
Exactly the opposite of a libertarian.
And, mostly, historically and globally, the arena of competent women (and I dont mean wealthy ex-montaneros).

Ah, the secret history of Patricia Bullrich. I see you've done your reading.

Actual policymaking, retail politics, and problem solving is not glamourous, fast, or instantly popular, but it has a 2 millenium or so history of working, whereas there has never been a functional libertarian government anywhere in the world.
Milwaukee was socialist for a majority of the 20th Century, and it was a plodding, job producing un-phenomenal manufacturing economy that had lots of solid middle class jobs.
There is no example of a functioning libertarian economic system, even on a scale as small as a small city.
Because it has built in functional contradictions, glossed over by ideological macro "explanations".

This, exactly.