Rampant inflation, a booming black market for US dollars and crippling debt - welcome to Argentina, one of the world's most dysfunctional economies. How did ...
Plenty things that I disagree with this video, but I’ll focus on tidbits.
so I’d say it is an illegal market, but pseudo-legal if you look at it day to day
Another way to look at this is to say that Argentina has notoriously sloppy law enforcement, and this creates a vicious cycle where laws aren’t enforced, people don’t expect them to be enforced, and people disregard the laws even further. (Note: this applies to most other governments in the Americas, I’m aware. Including the one that I pay taxes to.)
After all, why would your typical porteño bother with the “you can only exchange X dollars per month” law, if he can travel 2~3h and exchange them in Montevideo instead? And then go back home and say “hey, I exchanged some dollars, I can help you out but I’ll want some profit out of it. You know, to cover the cost of the ferry.”
And that’s perhaps the biggest damage caused by the governments between 1930 and 1983, including both of Perón’s terms, but specially the military juntas. Usually under a junta nothing fucking works, but the population still needs to live, so they, well, circumvent the law to keep doing their things as usual?
Printing money, from 7:18 - money printing is basically an undeclared tax that the government gets from the population. Except that it’ll hit specially bad the poorer population.
I don’t know how to solve this and I won’t pretend that I do.
Yeah I’d be interested to hear ideas from some economically literate people from different perspectives. The Economist’s implicit suggestion that austerity is the only way out does not seem very appealing. Surely there must be another method?
Large loans to build infrastructure and public works that employ large numbers (like fucking huge numbers) of people and increase confidence in the government. Massive reform of laws and law enforcement.
Basically you suck all the excess cash, that caused inflation, out of your economy by means of the loan and interest paid.
This will cause deflation in the mid term which would be disastrous for the working class - and that’s why you employ an enormous number of people to develop infrastructure.
That money then flows back into the local economy because these are working class employees, which supports other workers, and prevents or at least mitigates the depression that you normally risk under deflation.
When you’re done you have infrastructure and services you can use to justify taxation (and taxation by methods like tolls), you have an improved (skilled) working class and a healthier currency. You still have enormous loans to pay back but government debt isn’t actually a problem.
Austerity is just a slower and worse method of the above where you end up with no additional infrastructure or skills in your workforce.
If I were to answer this with what I really think, it would start with “seize the means of production”. However Lemmy is full of other communists than me, and plenty of them would do a better job defending this line of thought than I do. Instead I’ll focus on other stuff. (Keep in mind that I don’t consider myself “economically literate”.)
The problem that I see with The Economist is not that it’s preaching austerity, or “spend less money”; that’s fine. The problem is that it’s beelining to blame social programs and the size of the government for ideological reasons. It’s fine to cut a bit of money going to the social programs but the main issue with them is to optimise the usage of the money from those programs, to stimulate the economy in the long run while fulfilling their social purpose. And that got to be on a provincial level, because the issues in (let’s say) Jujuy will be completely to the ones in Rio Negro, and both will be different from the ones in Buenos Aires province.
In other words, relay the money and the responsibility of the social programs to the provinces.
Money printing needs to end, the sooner the better. Because otherwise the social programs don’t matter, since the value of the money is still leaking from the population into the federal government’s coffers. If necessary to default, do it. And perhaps a set of policies resembling the Brazilian Plano Real could work to stabilise the inflation, but perhaps this wouldn’t be even needed.
But whatever they do, they need to roll it gradually. Sudden changes fuck an economy really bad.
I also agree with TE that dollarisation won’t solve anything. It’ll make the problem worse, by tying the local economy to one in the middle of nowhere, and to another central bank that will give even less fucks to the Argentinian population. It’s basically the damage that the dollar smugglers already cause on the economy, except institutionalised.
Plenty things that I disagree with this video, but I’ll focus on tidbits.
Another way to look at this is to say that Argentina has notoriously sloppy law enforcement, and this creates a vicious cycle where laws aren’t enforced, people don’t expect them to be enforced, and people disregard the laws even further. (Note: this applies to most other governments in the Americas, I’m aware. Including the one that I pay taxes to.)
After all, why would your typical porteño bother with the “you can only exchange X dollars per month” law, if he can travel 2~3h and exchange them in Montevideo instead? And then go back home and say “hey, I exchanged some dollars, I can help you out but I’ll want some profit out of it. You know, to cover the cost of the ferry.”
And that’s perhaps the biggest damage caused by the governments between 1930 and 1983, including both of Perón’s terms, but specially the military juntas. Usually under a junta nothing fucking works, but the population still needs to live, so they, well, circumvent the law to keep doing their things as usual?
Printing money, from 7:18 - money printing is basically an undeclared tax that the government gets from the population. Except that it’ll hit specially bad the poorer population.
I don’t know how to solve this and I won’t pretend that I do.
Yeah I’d be interested to hear ideas from some economically literate people from different perspectives. The Economist’s implicit suggestion that austerity is the only way out does not seem very appealing. Surely there must be another method?
Large loans to build infrastructure and public works that employ large numbers (like fucking huge numbers) of people and increase confidence in the government. Massive reform of laws and law enforcement.
Basically you suck all the excess cash, that caused inflation, out of your economy by means of the loan and interest paid.
This will cause deflation in the mid term which would be disastrous for the working class - and that’s why you employ an enormous number of people to develop infrastructure.
That money then flows back into the local economy because these are working class employees, which supports other workers, and prevents or at least mitigates the depression that you normally risk under deflation.
When you’re done you have infrastructure and services you can use to justify taxation (and taxation by methods like tolls), you have an improved (skilled) working class and a healthier currency. You still have enormous loans to pay back but government debt isn’t actually a problem.
Austerity is just a slower and worse method of the above where you end up with no additional infrastructure or skills in your workforce.
If I were to answer this with what I really think, it would start with “seize the means of production”. However Lemmy is full of other communists than me, and plenty of them would do a better job defending this line of thought than I do. Instead I’ll focus on other stuff. (Keep in mind that I don’t consider myself “economically literate”.)
The problem that I see with The Economist is not that it’s preaching austerity, or “spend less money”; that’s fine. The problem is that it’s beelining to blame social programs and the size of the government for ideological reasons. It’s fine to cut a bit of money going to the social programs but the main issue with them is to optimise the usage of the money from those programs, to stimulate the economy in the long run while fulfilling their social purpose. And that got to be on a provincial level, because the issues in (let’s say) Jujuy will be completely to the ones in Rio Negro, and both will be different from the ones in Buenos Aires province.
In other words, relay the money and the responsibility of the social programs to the provinces.
Money printing needs to end, the sooner the better. Because otherwise the social programs don’t matter, since the value of the money is still leaking from the population into the federal government’s coffers. If necessary to default, do it. And perhaps a set of policies resembling the Brazilian Plano Real could work to stabilise the inflation, but perhaps this wouldn’t be even needed.
But whatever they do, they need to roll it gradually. Sudden changes fuck an economy really bad.
I also agree with TE that dollarisation won’t solve anything. It’ll make the problem worse, by tying the local economy to one in the middle of nowhere, and to another central bank that will give even less fucks to the Argentinian population. It’s basically the damage that the dollar smugglers already cause on the economy, except institutionalised.