Argentina inflation seen cooling as Milei austerity tempers food prices
reuters.com
reuters.com
Hopefully the new crackdown on crime will also help temper inflation. My Argentinian colleague was kidnapped on the street and taken to his Buenos Aires apartment where he was robbed of a big chunk of his savings back in 2015/2016. If organized crime has been operating like that the threat and fear must put a damper on everyone's productivity.
https://www.courthousenews.com/argentines-feeling-unsafe-des...
When will prices drop, we don't know. However, there's little incentive to do so. Argentina does one thing right and that is exporting good quality food. If it doesn't get bought internally, it will get exported instead of lowering prices.
> "Food and beverage prices... rose significantly below the average: 11% in February," said consulting firm C&T
Fixing hiperinflation is never easy. It's like going on a diet: it's hard to do, but nobody knows a better alternative. And politicians always have the easy binge at hand to solve any problem: printing money.
Being responsible is hard at all times, and the only visible reward you get is the statu quo. But by printing money you get an easy economic spike that will soar your popularity.
The problem the diet analogy is that people neither die nor sink into poverty after a few months of reduced caloric intake. It's not just "unpleasant", long running companies die, people on the ends of the spectrum fall into starvation. You don't easily recover from that.
Suffocating the private sector is not a long term policy. It's shooting yourself in the foot.
Traditionally hyperinflations also cause poverty. Take for example Venezuela or Zimbabwe, two of the worse cases in the last couple of decades. It's not like they ride the hyperinflation with a happy smile and business thriving.
Argentina was drunk, and Milei decided to stop drinking. Hangover will have to come anyways, and everybody knows it. You cannot blame the headache on stopping drinking, and the solution is keep drinking for a while. That's not how hyperinflation works, we have had plenty of cases. It's exponentially worse.
To me, the private sector, the health of long running companies (and of course human lives) is a more logical argument than any loose analogy about being drunk or going on a diet that depict nothing on the actual real-life impact of any economic policy.
I didn't even mention good or evil. I mentioned that messing with your domestic industry almost never fares well for your country.
And, about Trump. They both have in common that they have special persionalities and both spend a lot of time on Twitter. But that's it. Regarding economic policies, Trump is a proteccionist and Milei is an anarchocapitalist.
In other words, if you are too big to fail, you are too big to exist.
Alleviating taxes and shrinking the state would have been wonderful to our suffering private sector.
Sadly, he didn't. He stopped sending money to the welfare part of the state, but he didn't lower any taxes yet, and it's asphyxiating the economy.
It doesn't boil down to "lower taxes whatever it takes" if you then have massive deficits. That's a wrong policy usually taken by Republicans in the US.
LESZEK BALCEROWICZ, Finance Minister, Poland, 1989-1991: Just after breakthrough, there is a short period, a period of extraordinary politics. By definition, people are ready to accept more radical solutions because they are pretty euphoric of freshly regained freedom. One could use it only in one way, by moving forward very, very quickly.
JOSEPH STANISLAW: Poland decided to do what Bolivia did, to introduce shock therapy, cut back on government expenditure and try and introduce a market system and see if it could work.
NARRATOR: Prices almost doubled, and shortages didn't end. All Balcerowicz could do was chew his nails and wait for the law of supply and demand to kick in. But then, after a few days, farmers began to bring their produce to market.
LESZEK BALCEROWICZ: I was going for a walk, and we were looking at the prices in the shops, the prices of eggs.
NARRATOR: His aides told him to concentrate on the price of eggs. If eggs appeared, if eggs got cheaper, the market would be working. Eggs did appear. And then the price of eggs began to fall.
LESZEK BALCEROWICZ: And I remember that very important day when the prices of eggs are falling. This was one of the signals that the program, the stabilization program, is working.
https://www.pbs.org/wgbh/commandingheights/shared/minitext/t...
It wasn’t the cost of his reforms, it was the cost of 40 years of communism. The only way out of the frying pan is through the fire, sadly. Blame the people who put Poland into the frying pan, not the people who led it out.
Don't attribute to communism what can be explained by incompetence.
In the real world, we have to ponder monopolies, the export market, other, non-free, big economic bullies, trying to destroy competition through subsidized goods, etc.
Argentina’s economy is largely a mirage fuelled by cycles of borrowing, default, and inflation. It will come crashing down sooner or later. I’m rather sceptical that Milei will manage to end the cycle, but I’ve yet to understand what the suggested alternative to trying is.
I agree that people are suffering in Argentina right now, and the blame for that largely rests on the shoulders of those responsible for decades of economic mismanagement. The only question is whether they will still be suffering in five / ten years or not. Argentina could be the Poland of 2035 - or it could be the Venezuela.
Yeah. We're just used to the usual "local" inflation caused by the constant devaluation of the peso, where workers have to constantly fight to even maintain their purchasing power. Of course, they end up lagging slowly more and more. But, if you measured the cost of living in US dollars up until December 2023, it was roughly the same.
This time, following the disregulation we had a sharp spike in the price of groceries, in dollars. It's a rise too steep for workers to even try to compensate in their salaries.
Worse than that, even if company owners wanted to compensate it (a starving population is not an effective work force), they just can't. People brought their spending to a bare minimum to even stay alive, so most businesses don't even have enough income to raise wages.
Some people think we're heading to a depression like the US had in 1930
> Argentina’s economy is largely a mirage fuelled by cycles of borrowing, default, and inflation. It will come crashing down sooner or later. I’m rather sceptical that Milei will manage to end the cycle, but I’ve yet to understand what the suggested alternative to trying is.
I agree. However, he's trying to stop the cycle by stopping the total cash flow. The risk is collapsing the entire country in the process.
> I agree that people are suffering in Argentina right now, and the blame for that largely rests on the shoulders of those responsible for decades of economic mismanagement. The only question is whether they will still be suffering in five / ten years or not. Argentina could be the Poland of 2035 - or it could be the Venezuela.
Some economist predict that in the next few months poverty will reach 70%. Unless they are totally wrong, even 50% doesn't leave you more than a few months of economic shock.
https://www.reuters.com/world/americas/argentinas-barrios-ri...
To me this is an incredibly complicated economic problem.
2) Argentina is not poor. It's a rich country and their agriculture industry is one of the best in the world.
However, it's an industry with very little trickle down dynamics, compared to other fields like electronics or the service industry. You don't need that many educated people to export crude oil and unprocessed goods to the world.
A "pure" agricultural Argentina would be very financially stable, at the cost of having horribly high levels of inequality, with a (from my POV) inhuman quality of life for the average person. And no country in the world would favor that.
2) Argentina has the GDP of a third world country. It is poor. You don't need natural resources to be a wealthy country, you need efficient industry. You will never get that as long as Argentina continues its populist policies. I'm not even against government spending, but the spending needs to be done tactically, like east Asian countries, not for "muh workers".
The point of any talk about economics is to create prosperous nations and long lasting well being for the people. Not to make a number look good on paper.
If you think that most people should live terrible lives just to have low rates of inflation, you just failed economics.
There's a lot of sunken cost, millions of dollars and years of long running companies from an industry founded thanks to proteccionist policies.
Those companies don't generate whealth directly, but it does sustain domestic commerce, create jobs and give fluidity to the internal economy
No, the article says nothing of the kind. The only thing it says even roughly directly about poverty (though using slightly different words) is that the mechanism by which Milei’s policies are reining in prices is by causing poverty: “…as new libertarian President Javier Milei’s austerity drive squeezes shoppers, helping rein in grocery price rises.”