Thursday
October 23, 2014
Wednesday, February 5, 2014

Rush to judgement

The prevailing polarization of Argentine politics leads to virtually everything being viewed in black and white terms as an either/or proposition and the government’s conspiratorial theories about the post-devaluation price problems being the result of “coup-mongering and destabilizing speculation” are a case in point — such claims are invariably seen as either the whole truth explaining everything or paranoid nonsense by the two sides of the political divide. But a far more complex reality lies somewhere in between. The idea of complicity by evil plutocratic interests seeking to topple a democratic government via “speculative attacks” is hopelessly simplistic to explain the current problems (if only because the global trends for emerging markets as a whole are a major contributory factor) but speculative greed is not an arbitrary invention — businesses can always plead that they have to give themselves the benefit of the doubt amid uncertainty at which prices they will have to restock; beef prices can be blamed on the weather and a million other excuses but at the end of the day abusive greed plainly exists in many price increases (for example, the sixfold difference in cherry tomato prices exposed on this newspaper’s front page eight days ago). Not that this excuses the government from having to deal with the crisis because abuse of the profit motive underlying business is an obvious fact of life everywhere — the Pope can moralize but more is expected of governments.

To take one specific example, Shell’s 12-percent fuel price increase at the start of the week, neither a verdict of innocent or guilty fits the case. Against Cabinet Chief Jorge Capitanich’s accusations of “conspiring against the interests of the country,” it might seem that if a company chooses to up its prices so far ahead of the rest of the field in a competitive market, it has the right to its own funeral. But while Shell argues that this increase is only half last month’s devaluation, this move is far from innocent because the price difference increases the pressure on state-run YPF with the cheapest petrol which is stretched to meet demand. Yet even taking the most malicious view of Shell’s motives, it could be argued that this “friendly fire” actually benefits YPF by justifying greater price increases which would raise more investment capital for developing the wealth of the Vaca Muerta shale field — which would also be in “the interests of the country,” as quoted by Capitanich. In a word, reality is more complex than the current rhetoric.

Simplistic populism and market dogmatism are confronting each other more than ever but the citizenry needs to look beyond both.

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