Sam Gregg writes of Argentina, whence the new Pope Francis hails, “Over and over again, Argentina has been brought to its knees by the populist politics of Peronism, which dominates Argentina’s Right and Left. ‘Kirchnerism,’ as peddled by Argentina’s present and immediate past president, is simply the latest version of that.” For a bit of the current economic context in Argentina, here’s the latest on Kirchnerian political economy as related by John Teevan:
That’s the Argentine Way: In order to prevent the outflow of dollars from President Cristiana Kirchner’s silly-but-harmful economy, she created a new trade policy that permits only as much importing of foreign goods as can be paid for by equally matched by exports. So how is Newsan, an Argentine maker of Sanyo and JVC electronic equipment, going to create the exports necessary to buy the parts it needs to import? Easy, they added a seafood business that now exports shrimp and is paid in dollars. Similarly, Argentine BMW exports rice. Better to partner with Argentina’s wineries which produced $865m in wine exports. The words to describe this urgent economic inefficiency are not ‘free market’ nor even ‘social economic planning’ but ‘a Byzantine labyrinth.’ Why is it necessary? Because Ms. Kirchner also has currency rules or controls that ration how much foreign currency people can hold. Why? Because her policies have made the Argentine currency worth less threatening her dollar reserves. All this is to help ‘manage trade’ as she says so that Argentine jobs can be protected from ‘cheap imports’. President Cristiana is contorting herself to put many fingers in her leaky dike. She’s running out of fingers and looks ridiculous.
The above is from John’s monthly email, “Economic Prospect.” Send John a message if you’d like to be added to his list.