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Montevideo, June 25th 2018 - 14:00 UTC
Argentina's Commerce Secretary Miguel Braun travelled to Washington to negotiate an exemption to the higher tariffs recently placed on steel and aluminum imports by the Donald Trump administration. Read full article
The current Argentine government's free market policies touted during Mauricio Macri's election campaign as the country's return to the world is a lose-lose proposition when developed countries begin to take protectionist measures designed to protect their domestic economies.
Opening the doors wide to imports with the goal of reducing inflation was already tried by the civic-military dictatorship of the 1970s. The strategy then and now causes ravages to Argentina's struggling domestic productive sector, killing small and medium-size enterprises with the subsequent loss of quality jobs and a huge currency drain.
Add to that mix massive borrowing abroad that is just keeping the lights on, and you have all the elements of the next perfect storm. When that happens, stern observers will again blame the Argentines, for not paying their dues and will angrily point to the next government in charge of dealing with the aftermath.
They will of course avoid pointing to the small group of CEOs who are right now greedily sucking the country's scarce resources for their benefit and that of their families and friends.
Enrique, playing the role of the victim again? Clearly, the Argentine people are responsible for having elected Macri as president and having voted for him again only a few months ago. Also, the Argentine people are responsible for having voted for Nestor and CFK, Carlos Menen and Raul Alfonsin.
Apart from this, my vision of the current government is a little different from yours. The growth of the external debt is not alarming yet, since it is quite low in relation to its GDP. The main issue is that the government should have made a brutal adjustment to reduce the budget deficit and inflation but it prefers “GRADUALISM” .
The discussion of tariff barriers commodity by commodity is part of the regular conversations between two countries. Instead of delirious of “revolution” and “anti-imperialism”, the government of Mauricio Macri is trying to defend the businesses of Argentine companies and, also, to recover lost markets. This is the right thing that any government must do. Lost exportations, some even banned by the previous government, of lemons, meat, dairy products and biodiesel are currently slowly recovering. This government has also recovered the public works, important engine of the economy, which the previous government canceled.
This is the true (and despised by populism) return to the World. Production, trading, exportations and importations. It is the hard, and daily, work for the creation of wealth that every society must do to survive and make progress.
Take a look at PG's image of the current Argentine government:
It is the hard, and daily, work for the creation of wealth that every society must do to survive and make progress.
”This is the true (and despised by populism) “return to the World”. Production, trading, exportations and importations.
What do we have in Argentina in reality? An economy where financial speculation is rampant and where the lights are kept on by foreign borrowing. You are not worried by foreign debt because the country had a very low level debt in December 2015 when Mauricio Macri took office. Since then it has gone up steeply, but most alarming is, most of that money is being used to finance the government operations, meaning payment capacity is not increasing.
PG: Do you read newspapers at all?
Production? The Union Industrial Argentina, a friend of the Macri government, went six days ago to talk to Production Minister, Francisco Cabrera, asking for better support from the government. What Cabrera said? Stop crying, he told them. What Macri said later? I like what you told them, he told Cabrera.
Exports? Stagnant, and the only exports the Macri government has supported are agri exports, which benefited from reduced or eliminated export taxes.
Imports? Imports to Argentina soared 32.1 percent year-on-year to USD 5736 million in January of 2018.” (Trading Economics).
While you are at it, PG, tell readers where in my above posting a role of the victim appears. I don't mind discussing different opinions, but this tactic of yours in lieu of argument is sort of childish--with apologies to the children.
Enrique, you have some missconcepts in economy.
Why do you think that reducing taxes to private activity is something bad?
Why do you think that taking debt for public works and infraestructure investments are bad?
Why do you think that promoting the export of basic products is a mistake?
(in a country, like Argentina, that it is only competitive in basic products) I might remind you that the previous government banned the export of some products (meat, some crops and dairy products) to cause an artificial lowering in the prices in the domestic market (causing the lost of markets in the World).
Why do you think that import is something bad?
The real problem is that Argentina it exports little (it is not that Argentina imports a lot). Please, let me invite you to read the attached note written by a rational leftist economist. Sometimes it is very good to be informedf....
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