With Less Than 2 Weeks Until The Elections ...

[paul stanley]

El Manco, Scioli, is going to win. End of story.

 

[Noesdeayer]

Once again in Argentina we are faced with the dilemma of economic short term shock therapy or a longer term CBT-like (Cognitive Behavioural Therapy route to straighten the economy out.If the Peronists hadn't been as successful as they have been up to the present in perpetuating themselves in power,we wouldn't be in this situation yet again! But given how adept and chameleon-like they've always been,they will most likely choose the CBT therapy,if they win.I would think a rather short CBTtherapy though,something like 6 months or so.By June'16,we will have seen some marked changes.Cut a deal with the vultures return to credit markets and go from there.What they want above all else is to remain in power with their complete party machinery and multitudinous "hangers on".if all that apparatus can be reduced to something more expeditious,so be it.Removing it completely would be too costly and they would not take it lying down.CHANGE FROM WITHIN and relatively quickly but not (de golpe) shockingly.Argentines do not take well to doing things speedily.

 

[mikic007]

Let's just imagine that 10 percent of the population is indeed employed by the Argentine state -- the real number isn't so relevant to the discussion. Let's also imagine (haha) that Macri wins, and cuts that number down to 3 percent. So, official unemployment jumps to 15 percent approximately.

In a perfect scenario, the 7 percent of freshly unemployed people are absorbed by the private sector and have no major impact on salaries. In a mediocre scenario, some of those people are employed by the private sector, while the others remain unemployed; wage growth is impacted somewhat. In the worst scenario, almost none of them are employed by the private sector, and wage growth is significantly impacted.

ElQueso, mikick007, et al: If you were Presidente de la Nación, how would you handle the mediocre and worst scenarios? Keep in mind that in those two scenarios, not only do people lose their jobs and often lower their salary expectations, they also reduce their own spending, which adversely affects thousands of small and medium sized businesses and even local governments/the national government as tax revenues fall.

In my opinion, there is always a cost to unemployment, and I'd prefer for it to be just an economic one rather than both a social and economic one, as is the case in many so-called "developed countries."

If you are thinking like this, then you should expect that all unemployed people should be employed by the state. As it is now, only special and loyal selection has access, which is something I, since I'm technically employer, cannot approve.

This things are usually solved with social transfers, that prevent worse case scenarios, but keep people on the job market. Thinking that anyone already employed will loose a job is naive, that is virtually impossible here. This is also one of the reasons, why they should be careful, how many they employ.

And I wouldn't mind, if Argentina would hire in police, education and health sectors, but this is not the case. Also they could invest money in development and infrastructure, and again nothing.

People that do nothing and produce nothing are not helping economy. In this case it would be better just lowering taxes..

I'm coming from Europe and have nothing against public workers, but the rate they are employing here is without doubt unsustainable.

 

[sesamosinsal]

If you are thinking like this, then you should expect that all unemployed people should be employed by the state.

It's not a bad idea.

 

[ElQueso]

Bradly, it seems that you are saying the same thing the president has been doing. Looking at a way to make things work in the short term without thinking about any kind of solution for the long term. What you say makes sense in the narrow short term but won't do anything for the long term to make things better.

The biggest problem is, as I've mentioned, as I've seen Mikic mention, and probably others, is that the government doesn't actually contribute to the GDP. In business terms, it's a cost center, not a profit center. The bigger the state employment, the fewer people who are working in the productive sector of society. The more the productive sector of society has to pay to employ those who are working in the non-productive sector. The more the rich can ignore things and do what they want while the poor and what's left of the middle class get to support the government, which is now a significant portion of the drain on the economy.

Not to mention that, particularly in a corrupt society, most of those people you are employing are probably not even contributing to the running of the government. They are cronies of the current administration. Many of these actually get paid to do nothing. There's a word here for those kinds of jobs, but I can't remember it. Those are the worst kinds because they don't even contribute to the running of the government. But you also may have 2-3 times as many clerks as you need, or whatever job positions we're talking about. More people does not make things run faster. In fact, over a certain point it usually inhibits efficiency.

So you have increased inefficiency in government with more cost on the backs of those who are doing productive jobs. Those producers have to work harder to stay the same, or work the way they always have and get less and less. (I'm obviously leaving out a lot of things like inflation, the value of the currency for exterior trading, etc)

As to what I would do? Hah. If I were king, I'd start canceling a lot of social programs, taxes on both persons and businesses, remove currency and import/export restrictions, along with a lot of other issues. Which would include fighting corruption on a large scale.

I'd make people work for their living and not give people a false hope that the government can take care of everyone. But then I'd be run out of office in a heartbeat because that's not what people here want.

In fact, a lot of this is what Macri is talking about doing. But he won't be successful if he's president because he's not king. Nor is even Cristina a queen even though she often acts like. Macri (or me) would have to deal with 1) Congress which right now FpV and their allies have pretty well tied up 2) the judges that Cristina has in her pocket and 3) the bureaucrats that Cristina has loaded with her people over her last two administrations, plus that of her husband's prior.

Just because it would hurt to reduce the government job situation in the short term doesn't mean it isn't the right thing to do. Counting Matias made a comment along the lines of "if enough people think one thing over and over again, they can't all be wrong and therefore they must be right". That is one of the silliest arguments I've ever heard and is completely untenable.

But no one is going to change things here for the better, any time soon. I've realized that long ago. Just like no one is going to change things in the States even as they move closer and closer to oblivion.

 

[mikic007]

Counting Matias made a comment along the lines of "if enough people think one thing over and over again, they can't all be wrong and therefore they must be right". That is one of the silliest arguments I've ever heard and is completely untenable.

Galileo learned that logic hard way, and curiously we are still circling around the sun...

 

[Somewhereinba]

It seems like Scioli is going to win?? Is he just going to be a K puppet - I can't imagine any massive improve in sentiment from an investment point of view if he wins.. What does this mean for the economy and exchange etc Will I still have to pay $50USD to illegally import a replacement debit card?

 

[Gringoboy]

Just look what happened in Canada.
Apparently most people voted for Trudeau because they were tired of the ten years Harper gave them and Trudeau campaigned on the 'change' ticket.

 

[camberiu]

 

[sesamosinsal]

The biggest problem is, as I've mentioned, as I've seen Mikic mention, and probably others, is that the government doesn't actually contribute to the GDP.

First of all, I think we need to scrap this notion that GDP somehow represents the amount of work that needs to be done (or is being done) in any given area. Here in Argentina and elsewhere, there is a lot of work that needs to be done, and completion of that work probably won't affect GDP numbers in the short or medium terms. There are parts of the world where schools are still hard to come by, running water is a luxury, and decent healthcare is a dream. So, to me, considering all of the infrastructure projects and training that need to be done, it seems absurd that we have parts of the world where unemployment is in the double digits.

The role of the state in a modern economy is to invest in the areas where the private sector won't. With some exceptions, the current Argentine administration does this. But as I note below, a few bad apples don't spoil the bunch.

Secondly, to say that the public sector doesn't contribute to GDP is insultingly incorrect. Please tell that to the firefighters that save your business from burning down, the public school teachers who educated you, or the police officers who protect your streets. This is the problem with your ideology -- just because it doesn't have value or immediate profit for you (or the private sector) personally doesn't mean that it doesn't have value for anyone else.

Thirdly, corruption is a fair concern, but there are other ways to ameliorate this problem (e.g. total transparency) than just saying we shouldn't have any government at all. Just because the free market demands child porn, snuff films and drugs doesn't make it a flawed idea. Why, then, is corruption always used to support the belief that involvement of the state in the economy is a flawed idea?

As to what I would do? Hah. If I were king, I'd start canceling a lot of social programs, taxes on both persons and businesses, remove currency and import/export restrictions, along with a lot of other issues. Which would include fighting corruption on a large scale.

... Ahhh. ElQueso, it's midday, and reading that makes me want to open a bottle of Malbec and check out. These ideas are as old and crusty as Reagan's corpse.