November 24, 2014
Don’t click to buy
At times it feels like the economic news out there is repetitive. The Central Bank’s foreign currency reserves keep going down and the price of the black market dollar keeps going up. Yet there is also something else to report: the currency exchange controls are getting tighter. The restrictions to online shopping introduced on Tuesday are part of an effort to stop the fall in foreign currency reserves (last year alone they dropped 30 percent, they are below the 30 billion dollar mark and at their lowest since 2006). But said effort is on the verge of getting desperate and reveals a government that is growing obsessed with regulation and is convinced that market forces can be curbed by the strong arm of the state. Any purchase from an international website exceeding the limit of 25 dollars per person will now carry a 50 percent tax, but the real restriction is the paperwork that will be involved in buying simple items, a sworn declaration must be signed and packages will have to be collected at the Customs Office, where the wait can be frustratingly long. In the age of the Internet Argentine consumers now look effectively segregated from the rest of the world by a firewall of red tape.
Yet this story exceeds even the taxman because the zest for Internet purchases in Argentina also shows that the domestic market is not offering competitive prices even when the peso is weakening on a daily basis and the national government tries to limit imports. It’s easy to scoff at the national government’s efforts to “watch” supermarket prices, but the comparison of the prices of products abroad with what is on offer locally raises questions that go beyond the authorities currently in charge (even, say, when the prices in euros and the credit card tariff of 35 percent are taken into consideration). It’s the story of local business leaders choosing to jack up prices instead of investing to increase production to meet growing local demand for goods. It’s a story that is older than the Kirchnerite administrations in office since 2003, and will probably out live it.
The protectionist measures that the national government keeps throwing at the worrying situation periodically (the restrictions were tightened even more yesterday) may well be designed to stop the peso from weakening further and to protect local producers. But at the same time they effectively leave consumers unprotected in an environment that is getting hostile.