After a few paragraphs of ridicule to start things off, Mount gets around to the policy he's trashing:
In a desperate gambit to save local jobs and central bank reserves, the government has since 2010 implemented a series of economic regulations that seem to mix purposeful self-delusion -- akin to closing the window shade and claiming it's nighttime -- with discredited economic theories last taken seriously during the era of black-and-white television.Oh, wait, that's still the ridicule part. In fact, you don't get to much of any description of policy until so far in the article that a lot of readers surely never get there, being left with the accusation that the policies of Argentine President Cristina Fernández are "crazy", delusional, completely failed, unserious, stuck in "magical thinking", "populist", thuggish and - OMG! - inflationary.
The policy he starts off ridiculing is government regulation that require some companies, BMW Group Argentina in the opening example, to partner with exporters to ensure that certain products are exported in sufficient quantities to meet policy goals before they are allowed to import the quantity of BMW's into Argentina they want to.
The piece reads like it was composed by talking to a few Argentine oligarchs and their lobbyists. I'm guessing that insufficient quantities of imported BMWs are not the major problem on the minds of most Argentines, even less so than they would be for most Americans. He proceeds to tell us some of the other horrors allegedly produced by this policy:
Imports indeed fell some 7 percent over the first eight months of the year, allowing Fernández to announce in early September that the country had already met its trade surplus goal for the year. But the deeper result was a bizarre string of unintended consequences: Barbie dolls and Jägermeister disappeared from stores; Ralph Lauren, Cartier, and Louis Vuitton closed their boutiques in Buenos Aires; electronic toothbrushes were almost nowhere to be found.A Jägermeister shortage was bad enough, but not enough electronic toothbrushes?! Hell on earth has arrived!
Mount continues directly, "Other shortages were more serious. Medicines and medical devices such as EpiPen epinephrine autoinjectors grew scarce. Factories, such as a Fiat plant in Córdoba, suspended production because of a foreign parts shortage. Workers were furloughed." Uh, if those are the more serious shortages, why didn't you tell your readers about them before the bleeping Barbie dolls and BMWs? Maybe even before the several paragraphs of ill-informed polemics?
The rest of the article has more of this. If they talked to any actual officials of the current government, the piece doesn't show it. They do quote a former official, but it's not at all clear that he meant the two sentences quoted in the way Bloomberg Businessweek spins them.
But they did talk to this guy:
Argentina’s current predicament would be more comic than tragic if there were any sign of reason in the Casa Rosada presidential offices in Buenos Aires.Oh, yeah, the Chamber of Commerce guy is bound to give you a sound evaluation of the policies of the left-leaning Peronist government. The cream of business journalism at work.
“The current Argentine government does not have the capacity to reach consensus on regulations with the people who know the issue,” says Jorge Rodríguez Aparicio, president of Cambras, the Argentine/Brazilian chamber of commerce. "There’s an ideological bias that discards all those who are not in agreement." [my emphasis]
What Mount describes sounds pretty chaotic and senseless. At least when you don't know the actual context of the policy, which Mount's Chamber of Commerce contacts apparently didn't explain to him.
Argentina has a conscious economic policy goal of increasing manufacturing. It's hardly an irrational one. President Obama in his re-election campaign at least paid lip service to a policy to increase manufacturing in the United States. Under the neoliberal policies that reached their heyday during the Presidency of Carlos Menem in the 1990s, manufacturing shrank as a percentage of the Argentine GDP. That was an effect of the neoliberal policies of unrestricted movement of capital and the ultimately disastrous policy known as la Convertibilidad, the pegging of the Argentine peso to the US dollar. Convertibilidad put Argentina in a position very similar to the "periphery" countries of the eurozone today. As Argentine productivity growth failed to keep pace with that in the US, Argentine manufacturing exports became too expensive.
The financial collapse of 2001 resulted in Argentina defaulting on its debts, ending
la Convertibilidad and devaluing the peso, and rejecting the neoliberal doctrines and the additional austerity that the IMF wanted to impose on Argentina, just as the EU, Germany and the IMF are imposed destructive austerity on several countries of the eurozone. Freed from the burden of interest payments, Argentina has steadily rebuilt its economy with, as even Mount manages to mention, noting that from 2003-2001, their economy grew an average of 7.8% yearly. Unemployment is way down and so is the poverty rate.
Part of the strategy of kirchnerismo, the economic policies followed by the current President's late husband Nestor Kirchner, who proceeded her in the Casa Rosada, and continued by Cristina, has been re-industrializing Argentina's economy to provide the economy balance and good-paying manufacturing jobs that entails. Part of that strategy involves keeping the peso low relative to the dollar. And that policy also requires that the Treasury manages its dollar reserves carefully, including maintaining a net trade surplus (exports exceeding imports). There are also outstanding issues from the debt default that require the government to hold a certain supply of dollars in reserve. Andres Asiain y Lorena Putero deal with a different aspect of those policies in La consigna del lobby devluactionista: "El modelo está agotado" Página 12/Cash 11.11.2012.
Without that explanation, the policies Mount describes may seem nonsensical. And in the neoliberal doctrine, policies deliberately aimed a protecting domestic jobs are considered "protectionism" and are by definition sinful. But whether the re-industrialization is advisable or not, one would think Bloomberg Businessweek should have at least bothered to give its readers some reasonable context, rather than misleadingly writing off a long-standing approach as a "desperate gambit."
Instead, Mount offers up the true neoliberal faith as painfully obvious against an equally obvious sinful course: "A more conventional country might try to tame rising prices by cutting public spending or raising interest rates and letting the market work it out. The Fernández regime went with Perón-style, closed-border nationalism."
A "more conventional" Argentina would have knuckled under to the IMF's austerity demands and spent the years since 2001 undergoing round after round of what Greece is currently enduring. There's good reason that earlier this year, Greek opposition leader Alexis Tsipras found occasion to declare in a parliamentary debate, "You say how 'we didn't become Argentina’. I wish that we had: Argentina went through huge difficulties and its citizens were able to stand with dignity."
Tags: argentina, alexis tsipras