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Uruguay needs ‘a dollar at 25 Pesos’ if it wants to remain competitive warn economists

Tuesday, July 30th 2013 - 03:07 UTC
Full article 15 comments

Uruguay is too expensive in dollar terms and needs to adapt quickly because the adjustment will come anyway ‘and will be painful’ unless inflation is brought under control and costs equilibrium is reached with Brazil with a competitive dollar at 25 Pesos. Read full article

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  • Stevie

    Uruguay needs to pesificate, just like Argentina.
    Could turn out ugly short termed, but in the long run, one has to do what one can...

    Jul 30th, 2013 - 09:59 am - Link - Report abuse 0
  • ChrisR

    1 Stevie

    Oh dear! You are as clueless as the “two Uruguayan economists” an oxymoron if ever there was one.

    The PhD in economic history is really useful FOR LOOKING BACKWARD.

    What we need is to look forward and one way of reducing inflation AND making the limited industry AND agriculture more competitive is to reduce the dead hand of this government that the commie Pepe has decided to socialise at the expense of those people working and paying taxes in Uruguay.

    So Stevie, that lets you out as you do not live here and me IN as I do AND I pay taxes here on my investments.

    Pepe was lamenting the fact that no Uruguayo ever has a sick note for being overworked! What he did NOT say was that these ‘social’ schemes and increasing the numbers of government employees AND letting UTE and ANCAP have a free rein to charge what they like increase the costs of the industries that actually make a profit and now make less.

    AND, does he really think that anybody having a ‘social’ wage is going to work! NO CHANCE. Ask the people who work what they think about it and they will tell you that they don’t mind supporting the ill, disabled and those who genuinely need it BUT the hate paying their increased taxes for a bunch of wasters. This is exactly the same in the UK, so don’t try to change the topic.

    Guess who pays taxes Stevie: I will give you a clue NO government employees ever pay tax IN REALITY.

    “However ‘these policies are complex, non pleasant and it is hard to see the government implementing them when we are 15 months away from presidential elections’.” SAYS IT ALL.

    Now, off you go and try and shoot me down on that one BUT use your head first.

    Jul 30th, 2013 - 03:05 pm - Link - Report abuse 0
  • Stevie

    Well Chris, taxes are paid by every person that is employed and has a productive function, as the money every person gets as salary is for their time commited, no matter what sector they work in.
    Taxes are a cut of that amount, hence even government emplyees pay taxes IN REALITY, as you put it.

    Jul 30th, 2013 - 04:14 pm - Link - Report abuse 0
  • ChrisR

    3 Stevie

    NO, they do not.

    Please consider the following:

    1) Where does the government get its money from?

    2) Where would the government get its money from if everyone in the private sector, sending goods into the country and exporting items did not pay the taxes, fees, Aduanas fees, UTE, ANCAP, OSE, ANTEL, BSE, etc etc, I am SURE you understand what I am getting at. IT WOULD NOT RECIEVE A PENNY.

    3) So why can’t the government employees have money and pay taxes: they are not being paid because governments do NOT EARN MONEY only the productive people earn money. Governments run the Ponzi scheme ‘we will tax you’ but all they are doing is shifting money around their own accounts.

    It is one of the biggest lies perpetrated onto ordinary people who work for the government that they ‘pay taxes’.

    Jul 30th, 2013 - 06:33 pm - Link - Report abuse 0
  • Mr Ed

    @3 government payroll employees do not really pay taxes. If one gets a gross salary f $30,000 pa from the State coffers as a State employee, and income taxes deducted are $10,000, then the reality is that that employee is paid $20,000 by the State (a net cost to those taxed to pay the salary, assuming the money is not printed or borrowed).

    If that State employee pays 25% in sales taxes on net income of $20,000, then another $4,000 goes back to the State, leaving the employee with $16,000 as a net cost to the State, with the State clawing back $14,000 overall.

    Governments can either seize money theough tax, ask for donations, print money if the monetary system is so set up, borrow money, say by bond issues (deferred future tax) or attempt to trade through nationalised industries or assets (which often lose money rather than make it).

    Jul 31st, 2013 - 02:44 am - Link - Report abuse 0
  • Stevie

    Chris
    With your logic, the only ones to contribute with taxes, are the ones pronting money.
    The national enterprises gives salary for production and taxes are paid from that salary. The private companies do exactly the same, or where did you think they got their money from?
    You think they print it themselves?

    Ed
    See above.

    Jul 31st, 2013 - 05:48 am - Link - Report abuse 0
  • Mr Ed

    Dear me, Stevie, it appears that you fail to understand how money functions. It is no good shifting around credits or pieces of paper, unless they are valued in exchange for something else in the transaction, otherwise it is not economic activity.

    You simply avoid addressing the points that ChrisR and I have made, so presumably you are unable to refute the points, but, unable to understand them, default to disagreement rather than pointing out any errors.

    Money serves as a medium of exchange, enabling us to avoid barter. By monetary exchange economic calculation is possible. Start with some money, end up with more by trade, and absent inflation of the money supply, profit, if you have maintained capital.

    Or, for a government, tax people and thereby make them poorer and the state richer, and pay out in taxes to your clients, be they civil servants, soldiers, contractors, benefit recipients or cronies. There will be net winners and losers, and so politics goes on, to reward failure and sometimes punish success in commercial dealings.

    Jul 31st, 2013 - 06:38 am - Link - Report abuse 0
  • Stevie

    Money is time, as you put it yourself. The state employees offer a service or a product and get paid for their time used in the process. Taxes are paid from their salaries, exactly the same as with workers in the private sector.

    You wish to make it seem as the amount of money is the denominator of the productivity, and I disagree, as usual.
    The denominator is Time, which is what the money pays for.

    Jul 31st, 2013 - 06:56 am - Link - Report abuse 0
  • Mr Ed

    Blimey, that's further from economics than the labour theory of value.

    Jul 31st, 2013 - 08:07 am - Link - Report abuse 0
  • ChrisR

    5 Mr Ed

    If you lived in Uruguay the statement “or attempt to trade through nationalised industries or assets (which often lose money rather than make it).” Would not be valid.

    Believe me the monopolies UTE (electricity supplier and crap management), ANCAP fuel supplier (and crap management), OSE water provider, ANTEL telecommunications inc BBand (and excellent management that think and provide monies for the future expansion of the business), BSE insurance company and virtual monopoly (good service but on the pricey side), ALL make terrific profits. You note the “monopoly” term: the consumer is held to ransom by these companies and the government finance minister praised UTE for managing to overcome the deficit they had run up BY MANAGING TO PASS IT ON TO THE PUBLIC. This twat has no idea about the causes of inflation.

    I have no idea what the hell Stevie is on about but he is not alone in holding these concepts!

    Jul 31st, 2013 - 12:00 pm - Link - Report abuse 0
  • Mr Ed

    @ 10 ChrisR I do not live in Uruguay, I enjoy the odd wine from the Banda Oriental, but whilst those industries may make money, they might not add value, by overcharging and producing inefficiently, they might lower the overall living standards in the ountry, enriching a select few.

    Stevie appears to old fallacious ideas on economics, but Mr Osborne the UK Chancellor is streets ahead of him in that competition, throwning another £130,000,000,000 of imaginary money at the UK housing market in price maintenance operations.

    The simplest plan would be to see what the Peso fetches for a dollar and not fiddle, but that would imply that politicians as a species are worse than useless...

    Jul 31st, 2013 - 03:25 pm - Link - Report abuse 0
  • Beresford

    Sigh! Uruguay is a lovely land, except for the “Rubber Stamp Brigade”, which seems to defy time and rationality. Red Tape is simply enormous and public employees are legion. Seems like the Uruguayans top ambition is to become a public employee, in order to spend the afternoons on the beach drinking mate. Just for starters, AFE looses USD 14 million a year, is grossly overstaffed and is hopelessley ineficient. Tabare wanted to privatize the railway network and Pepe had the same idea, but it is almost impossible to acomplish, because the trede unions are controlled by the Communist Party. And so the story goes on and on........

    Jul 31st, 2013 - 10:18 pm - Link - Report abuse 0
  • ChrisR

    12 Beresford

    But, but, er, the commies are what we want to help the poor people!!!!!

    I bet you know who that is don’t you.

    What Stevie and his like really should say is “commies make sure we are all poor now” instead of the laughable claim “we are all Chavez”.

    I bought a new LED monitor to replace my smallest of the three I use on my office computer from a really well know store in Punta Del Este last week. My wife went to pay the cashier and came back laughing: FOUR separate rubber stamps on the bottom of it EACH initialled by the cashier and don’t even get me started on the IMM office!

    Did you hear about a certain character, deputy to the Jefe of Maldonado, who when stopped by the Maldonado policia last weekend staggered out of his car and told them to go after the criminals, not people of his importance! “Blow in the bag” followed and “how old are these girls in your car, and where have you been with them” was then asked.

    It turns out he had been shagging them at a party he held on Intendencia property, together with a group of other men who were paying for the girls “affections”. Only trouble was they were all under age.

    Up in front of the beak and consigned to a jail sentence and the policia are now investigating a prostitution racket being operated from Intendencia locations over the whole of the area. The main Jefe has been quoted as saying “I trusted him and he let me down”! My Uruguayo friend who told me this could hardly stand up for laughing.

    Aug 01st, 2013 - 01:33 pm - Link - Report abuse 0
  • Stevie

    The Jefe of Maldonado?

    Maldonado is a Departamento, Chris, not a tribe...

    Aug 01st, 2013 - 06:40 pm - Link - Report abuse 0
  • ChrisR

    14 Stevie

    I am aware of that, thank you, but I did not want to specify the actual title for obvious reasons.

    If you lived here you would know who I am writing about.

    Aug 02nd, 2013 - 09:50 am - Link - Report abuse 0

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