i just hired someone (developer) from INDEC. It turns out that they pay their people "en negro" - that means the official inflation group for the country doesn't pay their taxes - they hand cash to their employees and don't report it - or report a small amount and pay a lot more 'under the table'. Yet there are advertisements (paid by the government) all over the buses in Buenos Aires that say "Trabajo mejor cuando mi trabajo es en blanco" - I work better when my work is "in white" - in other words, when my employer pays the proper official taxes.
The level of hypocrisy in this country is staggering.
This is a well spread practice in the federal government around here, since you've been in Argentina for many years by now I'm surprised you've just found out.
The government is the biggest "en negro" employer of the country. It's also the biggest hirer of workers under precarious conditions such as fixed time contracts. Ironically, one of the biggest "en negro"-hiring branches of the federal government is the Labour Ministry. I suppose you're also not surprised by this, since you must already know the government to be the biggest everything in Argentina :P
Hiring "en negro" or under precarious conditions is not only terrible because of tax evading, in this case they would only be cheating themselves. It mainly sucks to be employed that way because you loose (or its harder for you to enforce on your employer) most of the labor benefits you usually get when you are employed by someone here. In Argentina that means no social security, health plan, granted days of leave to study for exams, extra money on holidays, bonus 13th month salary, increasing days for vacations when employed for more than 5/10 years, etc... the list is in fact pretty extensive.
Just out of curiosity, are you afraid that what's happening in Greece right now also will happen in Argentina? With pay raise to avoid internal conflicts and benefits beyond this planet, I see an impending doom.
Is it also possible that Argentina has been on it about Falkland Islands lately, because the government also see the impending economic doom and need something to blame it on / shift focus?
Very much speculation from my part, as my knowledge of Argentina is about as much as a famous footballer, but it would be interesting to get your thoughts on it!
There is a window of opportunity opening up for Argentina regarding the Falkland Islands on the diplomatic front and militarily too. With the Cold War safely out of the way the interests of the United States lie more with good relations with their South American neighbours than with their older (perhaps former) allies in Europe. Argentina's push on the diplomatic front, presenting themselves as the agreived party is likely to gain a lot more traction than it did in the 1980s. On the military side the UK is unlikely to have a credible aircraft carrier capability for at least another 10 years, if ever. If the airbase on the islands could be neutralized then the chances of creating another Task Force to liberate the islands once more are very slim indeed.
I don't know what you are smoking or drinking but I want some.
I had been living in Argentina for a year(I'm Spanish with family there), and something more in UK. Argentina could not compete in a war against UK, period.
The industrial base is so overwhelming in favor of UK that Argentina has not an option.(industry is what supports war, not soja). If they need it, they could create whatever planes they need, including US drones.
The people in Europe is disciplined, Argentina is a chaos, everything is disorganized, the UK army is fighting wars with US as a partner right now, they are so much better trained in real combat.
UK has nuclear weapons, Argentina do not. UK needs Falkland as a base for the Antarctic continent, and fishing.
UK situation is stable(with all the crisis, crisis in Europe is "normal' in Argentina).
UK is not a fried of the USA, it is the father of the USA. They could have problems from time to time but when when push comes to shove they are relatives.
USA is not going to tolerate an invasion of Falkland(whatever the Argentinians feel about Maldivas as their own). They don't want conflicts.
Hear hear. Besides which, the UK actually has the moral high ground here. There's no native population yearning to break free of the British yoke here. What there is is a self-governing democracy with large country next door intent on enforcing territorial claims that were murky when they last occupied the place 200 years ago.
Argentine people did not go to war with Britain, a fascist dictator that tortured and killed 30.000 Argentineans during 1976 and 1983 did. The people responsible for this are now in jail or dead and the army was completely dismantled to avoid this happening again. Although today there is democracy in Argentina, politicians are extremely corrupt and use the Falklands to divert attention.
Again, read a book or something, don't be ignorant.
The UK could easily press the Ark Royal back into service and still has HMS Illustrious. Even if the Argentine Mirages could get past the UK's type 45 destroyers, which is unlikely because the type 45 is considered the best air defence class destroyer in the world, they would still have to contend with an upgraded version of the harriers that spanked them in the last war.
Any Argentine Naval operations would have to somehow get passed the UK submarine fleet.
And this is all under the assumption that the Typhoons stationed at Mount Pleasant somehow fell from the sky instead of flying circles round any Mirage attacks or sinking any Argentine naval ingression.
And as for ground operations? It's not even funny how badly the Argentine troops would fare against the now Afghan and Iraq battle-hardened UK paratroop and royal marine regiments.
The result of the last conflict was not as clear cut as you suggest. The UK military were severely stretched last time around and given the changes in defence spending a repeat operation might not be possible.
The main point is that I think the wind of change is blowing against the UK on this one. It will take a concerted effort to counter the diplomatic push by Argentina and it is not clear that the politicians, despite the obvious emotive issues surrounding the territory both in the UK and in the Falklands, have a clear long term plan.
Update: Look to the recent conflict in Libya as a guide. The UK had considerable difficulty mounting an operation at Europe's back door. At a distance of 8,000+ miles the problems are multiplied many times over.
The diplomatic push may work, but the military arguments are erroneous. I anything the balance of power is far more slanted against Argentina whose military is pretty much in tatters right now (I heard an estimate on NPR that they can barely get six aircraft off the ground).
"In 2001, the Argentine economy effectively imploded due to the collapse of the Argentine peso. The Argentine military proved incapable of surviving the negative aftershocks of a then broken policy of defending the peso at all costs. Since then, the military’s annual budget sank becoming a fraction of what it was in the past. Salaries were cut throughout the ranks. The size of the armed forces not only had to be reduced, but in many cases equipment had to be sold on the black market in order for military units to meet their daily expenses. According to Military Technology, the current strength of the Argentine military is about 68,000 troops."
There's still a lot of Argentineans that were trained during the times of obligatory military service.
They'll probably still be very badly trained in comparison to the UK soldiers, but saying Argentina can only field 68,000 troops is incorrect.
That said, I'm pretty certain Argentina would lose an eventual war with the UK over the Falklands/Malvinas.
I'm annoyed at Cristina Kirchner's "bread and circuses" strategy with regards to this, diverting attention from the economic disaster that is brewing (and which will strongly affect us here in Uruguay).
There's a lot of hate in your lite. Looks like you know nothing about economy or history. Stop talking about war and read a book, because all the stuff you said is nonsense and all your theories are wrong mate. There's democracy in Argentina since 1983. And when there's democracy problems get solved by diplomats, not soldiers.
It would be nice if the Economist also recognised a lot of other official statistics from all over the world are routinely faked or "massaged", especially when it comes to inflation and unemployment levels. Some European countries experienced very high inflation rates almost overnight when the common currency was introduced, up to 100% in some areas, but 15 years later official figures are only just starting to recognise that. The definition of unemployment in most countries is basically "tweaked" every time a general election is looming. Hell, even rating agencies have lost faith in most official sources, and are now pulling ratings out of their (probably gold-plated) ass most of the time.
The Argentinian government is just guilty of being a bad liar in a sea of very slick liars.
Another fact not mentioned, is that Argentina's government pressured McDonalds to lie on the price of the Big Mac as to appear lower on the chart of the Economist's Big Mac Index (http://www.economist.com/node/21542808).
The Big Mac combo in Argentina is AR$21.50 (approx USD$4.90) and the next cheapest combo is around USD$8.50.
Another funny fact is that one of the USD 8.50 combos is the "Triple Mac", which is basically a Big Mac featuring yer another slice of meat on top of the lowest one. One can build his own "Triple Mac" for arround USD 7 by buying a Big Mac and another hamburger.
Also FYI no official information about the government really regulating the Big Mac price is available... only rumors. Both the government and McDonalds deny theiy have engaged in talks regarding the Big Mac price, McDondalds alludes they are only segmenting the market to allure to cheapskates and the lower substrates of the market. I'm not defending the government here, only telling what I found out.
Well nobody recorded the conversation... But what I just realized this week directly is that I can't find certain very important medications because the same minister (Moreno) stopped importation of foreign elements. So... if he stopped critical imports related to health I can only think that the big mac story is real.
Also, Mc Donalds will be harmed if they recognize it, this is the reality.
Indeed the typical big mac (two hamburgers) doesn't appear in the big photos just in a little menu in small letters. There is then another big mac combo with three hamburgers with the real price but because is not "the real big mac" it is not part of The Economist index.
A federal judge, following orders of president Cristina Kirchner, ordered MD to remove it from the menu. They are trying to hide the inflation rate while they spend all the money from the federal reserve. Once that money is gone, the economy collapses once more. Ah, and Cristina Kirchner doesn't care what we say here, she knows very well that the people who voted for her in this past elections (54%) don't know how to read (English, of course).
On a related note, Hong Kong produced no economic statistics on purpose for many years.
>Cowperthwaite was similarly opposed to five-year development plans, noting that revenues to offset expenses were not predictable. The publication of official statistics was curtailed, for fear that it would encourage civil servants to meddle.
Menem, the former president, was jailed for selling arms to Croatia. After that his wife left him for not investigating the death of his son, who was killed by the drug cartel. He built a clandestine airport in Anillaco (his home town) which he used to smuggle arms and drugs. Menem, today, is a National Senator, the airport is still open and the government dropped all charges against him, including: corruption, illegal enrichment and arms smuggling.
People are willing to tolerate this, that's why the country is doomed.
The Argentinian government has an army of "social media soldiers". They are very easy to spot, if you read something completely irrational it's a "social media soldier" work or some kind of blind government fundamentalist.
They should just limit comments to those who have paid subscriptions. Typically the Economist has a decent comments section when nutters like this batch don't show up. Sure, if it's part of a concerted effort by an organization they can just buy a few subscriptions but at least it'd keep the one-offs out.
It's pretty much impossible to read any article about banking/economics/finance nowadays without people spewing nonsense about conspiracy. Pretty sad, when the understanding and information is so important to everyone in the world.
The most disgusting part is where the Argentine government censors private analysis/journalism of economic statistics:
"In an extraordinary abuse of power by a democratic government, independent economists have been forced to stop publishing their own estimates of inflation by fines and threats of prosecution."
To be fair, even the European Commission drafted something similar in the height of the financial crisis, when they considered "regulating" credit ratings agencies (e.g. telling them what ratings they could and could not issue on sovereign debt).
There's quite a difference between proposing something and retracting it or having it shot down in a general vote vs. actually getting it ratified and enforced.
Why the bias towards official figures? In other words, for other countries where unofficial figures are better than official ones, why not use those? Why do the official figures have to be so glaringly, grossly wrong before they report unofficial ones?
Answering in this context: because Argentina had a good statistics institute that was destroyed by three governments. So now you are paying people for lying in your face.
And speaking generically not all countries have a private sector that can afford country wide statistics research.
It was not destroyed. Some clever guy realized that people automatically trust statistics and you can fake them. Locally, INDEC lost all credibility years ago. The Economist just realized it, next time they will realize the "big mac" index is also totally useless here. Meanwhile people are having 25% raises in dollars every year, meaning that temporally we have a lot of money, until all business go broke, that is.
I don't know, the big mac index does a fairly good job at being an independent measure of inflation (and by a company that isn't trying to manipulate the price to hide inflation).
Big mac's goal is to measure currency exchange rates, which I think is a little wonky since county to country a big mac doesn't work out so well, and I wish the used it to focus more on inflation.
Argentina is also taking a lot of other extreme measures to combat inflation and flight of capital, like not printing money, leading to a shortage of coins for example; and severe restrictions on exchanging pesos for dollars, hurting tourists and imports. Newspapers even report the paralell exchange rates!
I suspect there will be an economic crisis in the next few years, and it will hurt us Uruguayans as usual, we're already feeling the pain of export restrictions and now they want to restrict services and software which will direcly affect several friends and colleagues.
Would you mind explaining the downvote? I friggin live here and I KNOW they are printing more money than ever.
Their modus operandi is basically this:
- Take money from the middle class through unconstitutional high tax rates (that never come back in the form of infrastructure, education, security, etc), so they become poor.
- Give money to the poor so they keep voting favorably
- Give money to already rich friends and the Congress members, to have more power
- Get crazy laws approved, so that middle class has no escape. Eg: We can no longer buy other currencies, not even gold, so we are forced to stick to the pesos.
- Print print print! (more pesos) This way the money flows like this: people's savings and salaries -> government
They are printing a lot of money, but they are not printing $ 400 or $ 500 bills, that is what we need. About 50% of the bills in the street are $100 bills, which doesn't make sense. Printing bills with a higher denomination would be a way to officially declare that there is, indeed, inflation.
Sorry, I was thinking along the lines of loboman's argument, but I was probably wrong.
What they're not doing is expanding the supply of coins and large denominations (500 peso bills for example).
Edit: loboman's link says that they're not creating new coins and low denominations:
"falta de numerario de baja denominación que se traduce no sólo en los problemas de cambio y devolución en las operaciones comerciales, sino también, en el deterioro de los papeles de baja denominación"
The common officialist argument, for whatever it's worth, is that publishing the real values would induce panic and further inflation. Basically, they claim that it would be irresponsible to disclose the real values.
But don't they realize that then this gets baked-in in people's expectations. I.e. when they say 5% people know to adjust accordingly and think, oh 10%, and so on.
Short term this might work, but long-term (year or more) it becomes useless.
So, one way to diminish the crippling effects of inflation is to lie and say there is none. Of course, as you say, in the long run you'll get hammered, as people's expectations fly out of whack and they are required to guestimate future rates of inflation.
According to modern macroeconomics, people are omniscient, and will see past fake statistics. Also, recessions can't be predicted, because everyone is smart enough to prevent them.
"People are omniscient" -- one of several false assumptions that lead to unrealistic results from the theories (and disaster/losses to banks/investors/govt's who base their actions on them)
The argument I heard is that if they publish these ridiculous values, they get to pay a much smaller amount of debt. I don't know if this is true, but many people claim this is a good reason for lying in the INDEC. (I think this is the worst reason, if true; because then this is a world-wide con)
and I'd be very curious to find out what HN participants who are familiar with Argentina (I am not) think are appropriate lessons to take for other countries from the economic experience of Argentina.
Obviously this is just one opinion from an Argentinian but I think there are only two lessons. The other economic analysis (GDP growth) are explained because the country came from a really strong recession (subzero situation), and the commodities rocketed sky-high while the agricultural sector improved a lot in terms of efficiency. The rest of things remains the same: an hyper-corrupt country, without justice (except when the government pushes for specific cases), with a lot of poor people and people living of social assistance handled by government lords in change of favors (votes).
Lessons for other countries:
- You can renegotiate your foreign obligations (what is happening in Greece). The default is not the end of the game.
I have this advice: Argentina is the "hurt me plenty" or "nightmare" doom level but for business. Entrepeneurs from all the world come here to train. If they survive, they are ready for everything.
Inflation and economic disaster is the norm in the latest 30 years of this country. I believe this government is saying "fuck this, we might as well try something new before everything crash". I believe they actually succeeded in delaying the inevitable crash. All the world economy is crashing anyway.
Why now? It doesn't escape my notice that an influential British magazine is majorly dissing the Argentine government just as Britain and Argentina are getting into another tiff over the Falklands and a bunch of oil is found there.
Both are probably better off than Argentina right now, but I would try for something more drastic if I was thinking of emigrating (personally, I'd try Canada, Australia/New Zealand, or the United Arab Emirates for work reasons).
Besides, you'll get some of the disadvantages of the Argentinean government here in Uruguay as well.. they'll just be milder.
Well, they are blind trusting the privates right? The comments here have not many data supporting the arguments. "I live here" is not good enough, ever heard about antropological fallacy?
There is no "citation needed" meme. There is two metrics (or many, one from the .gov and the others from private analysts) and everybody repeats that one is wrong without explaining why. I have no interest in defending the .ar goverment, but this article is not really good. They should say something like "this another metric or method should be used, these are the correct parameters, because of a, b, and c. The ones used by the Argentinian gov are wrong because of d, e, and f". Also remember that the index is not an absolute number, it is relative to certain parameters. Saying that "15%" is low or high just like that is absurd, its like saying that a distance of "10" is too large without referring to a scale. OTOH, the argument usually exposed is also wrong, it reads like: "The people buying every day in the local store knows that inflation is higher." Thats a fallacy, the only thing I can know from going to the store is the price from that store. An index cant be used for predictions directly.
I would like to repeat that I have no sympathy with .gov.ar, I think they do many things wrong. Sadly, those things are not the ones pointed by the media. I am interested in changing the status quo but, imho, the only democratic, honest way to do it is using rationality as a tool for making our best possible decisions.
I dont understand why do you react like that. I am not joking. Read carefuly. My salary increased more than 4x, but that doesnt prove you wrong right? Statistics doenst work that way. Sorry if I offended you by having a different opinion, but ad hominem arguments like yours are not going to improve things, we should try to actually think.
Yes, of course, but that doesnt prove anything about INDEC. The index does not measure the changes in that way. Please, dont call me "irrational", it clearly doesnt apply, I think that I have a reasonable argument that of course can be wrong, but by any means is irrational. Please tellme how do you go from this premise: "The prices in the supermarket raised" to "Indec is a lier". My argument is that it cant be "Because yogurth increased 300% and Indec inflation report is 10%". We need something better to prove they are wrong (and let me repeat again that I think they are wrong)
Well, you keep talking about me instead about the topic,and I dont understand why you are disrespectful with my person. I will go back to reading on Logic, mi topic for this week. I got "Metalogic" from Hunter. Really, sorry for the noise.
You are asking to see meticulous proofs in a simple blog post, which is not gonna happen. Also, any article like this will assume that you already know something about what's going on there, or at least in the rest of the world. Eg: If someone says 20-30% inflation rate is high, it's obviously comparing it to the inflation in other countries. So yes, it's damn high.
About the metrics, its pretty simple: they just pick the products/services that didn't increase much their price during that period. Of course nobody can't actually live with those products, nobody buys them or even know them. And when they need something real for the index, like the Big Mac.. Well, you know what happens. Automagically its price is reduced to a half, and the product is removed from the menu.
So, in this metric, 10% of inflation is high, right? and another countries can use a different metric, and in fact, they do. Each economy is different, if you cant produce energy by natural caracteristics of your country, your economy could be tied to international oil prices, for example. So comparing this things one to one is not possible. I want to make it clear again. I am not defending .gov.ar, but the way we are thinking these problemsis wrong.
Proof need to happen, in a post or anywhere else. Without that a rational decision cant be made, and we will never reach true democracy. The simple blog post as you call it is not only useless but harmful, because we use this information for actually making decisions. In modern politic, there is a close relation between knowledge, rationality and freedom.
The level of hypocrisy in this country is staggering.