October 31, 2014
Of consuming interest
The Roman dictum “Caveat emptor” (let the buyer beware) is perhaps the oldest advice ever given to the consuming public and today in Argentina the consumer should indeed be wary of both sides in the debate over the government’s legislative package in this area. The economic team justifies these proposals as defending consumer interests from excessive profiteering and other abuses at the hands of “concentrated economic groups” and this argument cannot be dismissed as pure propaganda — those concentrated business interests definitely exist within the economic structure, occupying key positions in the price chain and accounting for much of the abuse inflicted on the long-suffering consumer. But at the same time can a government seeking wide-ranging price policing be fully trusted, given the highly discretionary way in which it has often wielded its power at various levels in the last decade? Both those defending and criticizing the new consumer legislation state valid points in an autistic way which entirely fails to see the other side — the government tends to explain inflation as purely the result of business greed without money supply or public spending playing any role while critics heap all the blame on fiscal and monetary policy in the name of a free-market ideology, trying to blind everybody as to how business monopolies and oligopolies make a mockery of that free market.
Do these legislative reforms mark an improvement on the existing situation? Probably, but there is plenty of scope for improving the improvements. The reform should be measured both against the legislation it replaces (i.e. the harsh Anti-Hoarding Law of 1974 dating from the most extreme decade in Argentine history which sought to enforce an unrealistic price freeze by throwing businessmen into jail) and the immediate past —when prices were defined by the wheeling and dealing between the tyrannical 2006-13 Domestic Trade Secretary Guillermo Moreno and hardly more democratic business groups. The new legislation at least seeks to give a more institutional face to consumer protection although this could be improved in both form and substance. At the formal level, why focus on the Anti-Hoarding Law or the 2011 Anti-Terrorist Law when there is existing legislation for the defence of both the consumer and competition which would provide a far better basis for institutional maturity? Meanwhile the main substantial problem is the aforementioned discretionary state.
Plenty has already been said on this issue but any genuine debate has yet to begin.