Category: Argentina

The Economist finally gets religion on populism

3/7/2017

The Economist
Latin American experience teaches that populists are easily underestimated and can stay in power for a long time. But not forever. Populist regimes are often corrupt and spendthrift, and usually fail to make people better off. Whatever the example from the White House, Latin American history shows that populist nationalism is a recipe for national decline. That is the message liberals need to hammer home.

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Pettis on Argentina

9/16/2014

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From the previous post:
"And contrary to the popular press, China is probably not the fastest growing country in history. That prize probably belongs to Argentina in the four decades before 1914, but the subsequent decades nonetheless turned out pretty badly. There is a furious debate on where Argentina went wrong. Some argue that Argentina’s relative decline began with the Uriburu coup in 1930, after which it seemed that the main role of government was to disrupt economic liberalization and income redistribution and unassailably to protect the existing elite. Others blame Juan Peron, whose presidency in the 1940s and 1950s entrenched a near-autarchic state-corporatism, which some would call fascist. Finally others argue that Argentina’s decline only really occurred in the decade that began with Peron’s death in 1974, followed by the 1976 coup that established the right-wing administration of Jorge Rafael Videla. Nearly all the explanations stress the breakdown of civil society, the entrenchment of the elite and the resistance to income redistribution. This might be a lesson worth learning for China and other developing countries."

Here is what I said earlier this year:
"I often wonder when most people look at Argentina, do they draw the wrong conclusions? Its rising inequality in the face of discredited market reforms that causes knee jerk populism. Inclusive market reforms that limit inequality are what is needed to put Argentina, Venezuela, etc on a stable economic growth path. Knee jerk populism is worse than crony capitalism but the poor often don't see it that way."

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High food prices are driving social unrest the world over

2/22/2014

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Via Motherboard. My thanks to Brent. Here is an excerpt.

"It's happening in Ukraine, Venezuela, Thailand, Bosnia, Syria, and beyond. Revolutions, unrest, and riots are sweeping the globe. The near-simultaneous eruption of violent protest can seem random and chaotic; inevitable symptoms of an unstable world. But there's at least one common thread between the disparate nations, cultures, and people in conflict, one element that has demonstrably proven to make these uprisings more likely: high global food prices.

Just over a year ago, complex systems theorists at the New England Complex Systems Institute warned us that if food prices continued to climb, so too would the likelihood that there would be riots across the globe. Sure enough, we're seeing them now. The paper's author, Yaneer Bar-Yam, charted the rise in the FAO food price index—a measure the UN uses to map the cost of food over time—and found that whenever it rose above 210, riots broke out worldwide. It happened in 2008 after the economic collapse, and again in 2011, when a Tunisian street vendor who could no longer feed his family set himself on fire in protest. "

Here is another link from Conversable Economist discussing the possibility that staples are Giffen Goods to the poor.

I first talked about these issues in the third post of my blog when I predicted more riots and cited research between the link between growing inequality and revolution (Although my predictions were that we would have more "revolution" in developed countries and that hasn't yet materialized on the scale I might of imagined).

I often wonder when most people look at Argentina, do they draw the wrong conclusions? Its rising inequality in the face of discredited market reforms that causes knee jerk populism. Inclusive market reforms that limit inequality are what is needed to put Argentina, Venezuela, etc on a stable economic growth path. Knee jerk populism is worse than crony capitalism but the poor often don't see it that way.

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What if it is envy and not greed that drives us?

12/25/2012

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"Consider Easterlin's Paradox, the finding that after a minimum level of income has been achieved, measured happiness does not appear to rise much. If people's happiness is a function of wealth, we are much wealthier than our ancestors but not much happier. This has been documented in many countries, such as Japan, where income rose five-fold from 1958-1987, yet people remained about as happy. This puzzle been addressed in such books as Gregg Easterbrook's The Progress Paradox, David Myer's The American Paradox, Barry Schwart's The Paradox of Choice. It is a paradox, because it is contrary to what we think should make people happy. If people are primarily envious, this is no paradox at all. Libertarians are fond of highlighting criticisms of Easterlin’s Paradox, because they can’t stand the thought that people are primarily status seeking. This is because the assumption of simple wealth maximization has the nice property that liberty maximizes people’s wealth and thus happiness; if people are primarily status seeking, letting people alone won’t necessarily increase aggregate welfare, because there will always be an underclass that is relatively poor, and unhappy. "

Happier countries seem to be ones where there is less inequality. Let inequality rise too far, especially as unemployment rises, and you get expropriation as in my mother's country of birth, Argentina. .

The implications for policy analysis are huge. For example, the benefits of Fed policy that produces wealth effects also need to be evaluated if they are increasing inequality.

Merry Christmas.

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I have seen the future of Greece and Spain and ...

7/13/2012

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... it is Argentina in 1999-2002.
After riots in Decembr 2001, Argentina went off the peg and unemployment reached 25%. A year later, 58% of the population fell below the poverty line, more than one in four were in extreme poverty.

This led to nationalization of some industries.

Adjustments in Spain and Greece have barely begun and their unemployment levels are at 25% already (and they are still on a fixed peg).

Here is an an exceprt from the Wikipedia pages on the crisis.

"Worker-owned cooperatives and self-management
During the economic collapse, many business owners and foreign investors drew all of their money out of the Argentine economy and sent it overseas. As a result, many small and medium enterprises closed due to lack of capital, thereby
exacerbating unemployment. Many workers at these enterprises, faced with a sudden loss of employment and no source of income, decided to reopen businesses on their own, without the presence of the owners and their capital, as self-managed cooperatives.

Worker managed cooperative businesses range from ceramics factory Zanon (FaSinPat), to the four-star Hotel Bauen, to suit factory Brukman, to printing press Chilavert, and many others. In some cases, former owners sent police to remove workers out of these workplaces; this was sometimes successful but in other cases workers defended occupied workplaces against the
state, the police, and the bosses.

A survey by an Argentina newspaper in the capital found that around 1/3 of the population had participated in general assemblies. The assemblies used to take place in street corners and public spaces, and generally gathered to discuss
ways of helping each other in the face of eviction, or organizing around issues like health care, collective food buying, or conducting free food distribution programs. Some assemblies started to create new structures of health care and schooling, to replace the old ones that were not working. Neighborhood assemblies met once a week in a large assembly to discuss issues
affecting the larger community.In 2004, Avi Lewis and Naomi Klein (author of No Logo) released the documentary The
Take, about these events.

Some businesses have now been legally purchased by the workers for nominal fees, others remain 'occupied' by workers who have no legal standing with the state (and in some cases reject negotiation with the state on the grounds that working productively is its own justification). The Argentine government is considering a Law of Expropriation that would transfer some occupied businesses to their worker-managers."

Some version of this most certainly lies ahead for the peripherry of Europe. For Spain, I think it is not too much to say things will be worse than Argentina -becasue of its housing bubble, fixed exchange rate, banking crisss. and a backdrop of global deleveraging.

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The Economist finally gets religion on populism

Pettis on Argentina

High food prices are driving social unrest the world over

What if it is envy and not greed that drives us?

I have seen the future of Greece and Spain and ...

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