May 26, 2013
Autumn plan or Happy Easter?
If yesterday’s editorial suggested that some grand plan might be in the offing to correct the accumulated economic dislocations of which the exchange markets are but a symptom, we may well have been overestimating the expertise of the economic team, its ability to admit to problems or any strategic as opposed to tactical sense even to comprehend the plans which have been hatched in the more technocratic government circles (such as a multiple exchange rate) — not to mention, the time of year and the urge to repeat the “Happy Easter, the house is in order” of 26 years ago (especially with an Argentine pope at the helm of Holy Week worldwide this year) apparently prevailing over any temptation provided by next week’s extra bank holidays. President Cristina Fernández de Kirchner’s talk of freeing imports to tame “monopolistic” local prices was only the latest example of contradictions in economic policy. Not only does it clash with almost 18 months of import curbs to fight an inflation otherwise denied with the outlay of dollars whose lack has led to a ferocious currency crackdown — the latest trade figures indicate that now might be a dangerous moment to free imports. February’s 61 percent fall in the trade surplus suggests that policies which succeeded in improving the trade balance last year at the expense of grinding the entire economy to a halt no longer permit even that small victory — exports to an uncertain world less open to a more protectionist Argentina are falling and fuel imports continue to mount with both these trends likely to continue for a while yet.
None of the stopgap strategies muscling down the “blue dollar” by some 30 cents in the last couple of days achieve anything while the exit of the Brazilian mining giant Vale from its multi-billion investment continues to stand. Vale will stay out while they collect five pesos for every dollar earned but pay local costs at eight pesos per greenback. The root of this mismatch is, of course, inflation which the official exchange rate refuses to recognize in the form of any major devaluation — the main cause of this inflation is, in turn, unsustainable deficit spending funded by printing vast sums of pesos.
But perhaps all the critics of clumsy and counterproductive state controls are missing the real point — perhaps the decisive motive is not any illusion that they are a sensible economic policy but rather the conviction that state intervention at every stage represents a massive advance of political power at the highest level while a myriad regulations offer juicy kickback opportunities for the humbler echelons of bureaucracy.