Friday, September 05, 2014

Argentina: We're Not Venezuela!

So the Argentine legislature is debating a price fixing law, but the Fernández administration is trying to reassure everyone it won't be like Venezuela:

“The fact that there’s a law doesn’t mean it will be applied like it is in Venezuela or that the consequences will be like those of Venezuela,” Commerce Secretary Augusto Costa said in a telephone interview from Buenos Aires yesterday.

The Argentine government clearly does not want to be seen as copying Venezuela (despite the fact that Nicolás Maduro's son visited Argentina to talk all about it) which has harebrained schemes of fingerprinting and claims of conspiracies. Still, inflation is 38% (at least by one measure--this is a constant matter of debate) and the government figures they can attack prices. Good luck with that!

In my Latin American politics class, I bring up the idea of incentives very early on. Prices are obviously a problem, but the core issue revolves around the incentives that government policies generate which drive prices up in the first place. Fighting prices per se is mostly attacking symptoms rather than disease. For example, currently farmers have an incentive to hoard soybeans priced in dollars because selling them and getting pesos is too risky.


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