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Symbolism Vs. Substance In Cristina's Government

May 15th, 2008 | Categoría: Politics

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Cristina Fernández de Kirchner cares a great deal about appearances, especially her own. She dresses impeccably, wearing only carefully chosen designer outfits. She exercises almost daily and carefully watches her weight. Before becoming president, she even had a Pilates machine installed at the presidential residence in Olivos. She has had collagen injected into her lips to give them a fuller, more vibrant look. She spends around an 1hr a day dressing and applying makeup, according to a person who used to work with her.

To get an idea of how much makeup the president uses, contrast the images you've seen of her with the following photo, which was taken, sans makeup, back in November.


Of course, none of this is particularly relevant to what kind of person Cristina is or how effective she may or not be as a president. Indeed, even discussing such things seems superficial and unworthy of serious reflection. Nonetheless, Cristina has received intense criticism for supposedly caring more about symbolism than substance. So the question arises: Is there any merit to the criticism?

Much of it dates back to the early days of Cristina's 2005 Buenos Aires senate campaign. Before that, Cristina was a national senator from Santa Cruz Province, where she had been involved in local politics since 1989. In 2005 she pulled a Hillary Clinton and carpet-bagged her way to Buenos Aires Province, where she trounced former first lady Hilda “Chiche” Duhalde. Cristina won the election without granting any interviews to local media. Nor did she offer any insight into what policies she might pursue as a Buenos Aires senator. This provided ammunition to critics who said she won the election based largely on her image. It was, they said, a triumph of symbolism over substance.

Since then, the criticism has mounted. Last year Cristina ran to replace her husband, Nestor, and became Argentina's first democratically elected female president. With the exception of a few interviews given in the last 48 hours of the campaign, she again managed to win an election without discussing any policies. What did she think about inflation? What did she think about Argentina's relationship with Venezuela and the U.S.? What did she think about the state of health care in public hospitals? How about her husband's handling of agriculture policy? What did she think about Argentina's little-mentioned energy crisis? Nobody knew because, as a presidential candidate, she said nothing specific about any of this. The answers were as unclear then as they are now.

What was known about Cristina was that she was articulate, intelligent, passionate, evidently angry and somewhat rancorous, hostile toward the press and, well, impeccably dressed.

Cryptically, her campaign slogan was limited to this: “We know what needs to be done. We know how to do it.” That left many people asking, “What needs to be done?” and “How will she do it?” Cristina did not answer. Five months after she took office, we still do not know. Apparently, nobody does.

“She has no plan,” the president of a large industrial company told me this week. “There are no plans. They don't exist. They (in the government) are managing everything on a day to day basis. Nobody knows what their plans are because they don't know what their plans are. It's not that they have a secret plan for everything. They have no plan for anything. Many of the things the government says are simply for the press, for mass consumption, for show.”

Symbolism appears to play an important role in everyday government decisions. This is true in all governments, of course. But in the Kirchner administration symbolism does not appear to be accompanied by any kind of substantive or strategic policy planning.

Last week the government carried out the most recent round of half-hearted and eventually fruitless negotiations with farmers over the country's agricultural conflict. (For those who have been absent for the past two months, the conflict's catalyst was a government decision to raise farm export taxes.) During the talks, Presidential Cabinet Chief Alberto Fernández told farmers that the president was willing to reduce export taxes. “But we can negotiate this only if you wait until May 25,” Fernández said. “We can't do that,” replied one of the farm leaders. “We've been waiting more than a month for you to give us an answer about this. Why should we wait any longer, especially if there is no guarantee that anything will change on the 25th?” Fernández had no answer.

The talks broke down and the rest is history. Farmers began a second major national strike and are now again protesting the export taxes. Fernández knew this would happen. Farm leaders told him explicitly that it would. Presumably, Fernández relayed their admonition to Cristina Kirchner, who also knew it would happen. So why did the government insist on waiting until May 25 to announce it w

ould cut export taxes?

There are myriad possibilities. First, perhaps Cristina was so focused on the symbolic importance of May 25, the country's anniversary, that she refused to budge. Second, maybe it was just pure stubbornness. Cristina reportedly has been waiting since January to announce cabinet changes that would distance her administration from that of her husband. She also has been planning for months to announce a grand social and economic plan, supposedly aimed at curtailing inflation and salary disputes while guaranteeing economic growth.

But those plans, if they ever existed, were interrupted by unexpected news that a U.S. prosecutor was investigating the illegal transfer of $800,000 from Venezuela to Argentina, allegedly for use in Cristina's presidential campaign. That news, as well as Cristina's explosive reaction to it, set off weeks of scandal that completely distracted attention from whatever plans she might have had for her cabinet and the economy. She may be tired of having other people and circumstances dictate her agenda.

Third, she may be seeking to wear out farmers through endless talks while she waits (and hopes) for public opinion to turn against farmers. Fourth, perhaps it was a combination of all three factors. Fifth, Cristina may have wanted to lower export taxes before May 25 but feared that doing so would have made her look weak, subjecting her to further protests from other groups who want concessions from the government.

Finally, perhaps Cristina is not actually in command. Many local analysts believe that it is Nestor Kirchner, not Cristina, who is actually dictating the government's approach to the farm crisis. “I want to see the farmers on their knees,” Kirchner has been quoted as saying.

I have no particular insight into the First Couple and do not know how, if at all, they divide power. But it is clear that many key political figures believe the former president retains much of the power he held when he sat in the famous Sillón de Rivadavia (the presidential chair). Meanwhile, two of the farm leaders who negotiated with Alberto Fernández said they believed it was Nestor, and not Cristina, who was the driving force behind the negotiations.

Regardless of which, if any, of these options explain the government's conduct, it is clear that the administration told farmers that if they wanted lower export taxes, they would have to wait until May 25 to find out how they would be reduced. Because of this, it seems reasonable to conclude that the government imposed a relatively arbitrary, but symbolically important, date on negotiations with farmers. This, even though the government knew that doing so would lead to a second farm strike and cost the government hundreds of millions in lost revenue.

Meanwhile, in another symbolic gesture, Cristina cancelled a planned visit to Cordoba, where she had planned to appear at an event alongside Fiat Argentina President (and celebrity photo hog) Cristian Rattazzi and Cordoba Governor Juan Schiaretti. The event, which was set for next week, was supposed to bring the three together to announce that Fiat would invest $300 million to produce auto parts and motors. Cristina declined to attend the event because she did not want to appear publicly next to Governor Schiaretti, who earlier this week said the government should lower farm export taxes.

Fiat suspended the event. Of course, this event was symbolic from the very outset. Fiat's investment will occur regardless of whether Fiat makes an announcement next week. But the symbolism is particularly important now because Argentina is having a hard time attracting investment. The event would have been a perfect opportunity for Cristina to show that:

1) despite political differences with Schiaretti, she is a democratic leader capable of working with people who disagree with her
2) the farm conflict has not brought everything in the country to a standstill
3) the government and private sector firms are still going about business
4) despite the strike, and a precipitous decline in the government's approval ratings, Argentina is able to attract investment

The benefits of appearing next to Schiaretti would have outweighed the risks. But Cristina, evidently, did not see it this way. Was she afraid that going to Cordoba would unwisely reward Schiaretti for his intellectual and political independence? Was she afraid that doing so would give other politicians pause and lead them to believe that they too might be able to think and behave independently? It is not certain, but this seems like a reasonable interpretation. What does appear clear is that Cristina cancelled a long-planned symbolic event because she did not like what it might symbolize. If this is not a triumph of symbolism over substance, what is?

Link: Brief Official Biography of Cristina Kirchner (in Spanish)

UPDATE: Argentine news site MinutoUno published the following photo, entitled “Cristina Fernández de Kirchner. The worst dressed (leader) at the Summit?”. I'm posting it here just for kicks. If we're going to be superficial, we might as well admit that the grey pants are truly atrocious.

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15 Comments

Longhorn Dave says:

I have no doubt that Nester is in control and Cristina is herself, just a symbolic figurehead. This country deserves so much better.

This country is falling further and further behind by any world benchmark you want to measure ( see todays Herold). In the process, blowing a golden opportunity given current trends in farm commodities.

But no, none of that is as important as nester playing Godfather and dolling out punishment for those that don’t respect his power.

miss tango says:

Not really very funny but true, the No Plan Plan. It is how life is here, according to mi hombre. You can not even make plans to plan ones life here in this country, the plans keep changing.

By the way, collagen injections are soooo 80´s! No one uses collagen anymore. It´s all about the Restylane®.

Devil's Advocate says:

to play devil’s advocate, one might be led to believe that what you state is particular to Argentina. What about Obama? What substance is there? Why doesn’t anybody dig deeper into the fact that he is a product of Chicago politics (widely accepted in Chicago as very corrupt). Because of the vibrant speeches and eloquence. Don’t be fooled to believe that these things don’t happen in other places. What about Bill Clinton being given a fellatio at the Oval Office? Is that substance? I guess it was in some way, Lewinski might agree with that…

Anyways, I thought I play devils advocate for a while.

Taos Turner says:

To Miss Tango,
Very funny that about Restylane®.
LOL.
Taos

To Devil’s Advocate,
You are certainly right. This is a problem, possibly most of the time in most countries. I suppose it’s only a matter of degree. In some countries it is better or worse than in others. I refer only to Argentina here, not because its politics has a monopoly on symbolism (or its abuse) but because this space is dedicated to the country. That said, I would say that the U.S. has suffered badly from a lack of substantive strategic policy planning for many years now.
Best wishes,
Taos

Devil's Advocate says:

Thanks Taos for acknowledging the message, and you are correct in pointing out the scope of the blog (Argentine). I agree that it is a matter of degree, I think the nature of politics at the core is similar. For instance, once in Buenos Aires I was in awe at the fact that people stole the copper of the power grid cables, to later hear the same is happening in Chicago. Amazing. It is definitely a matter of degree.

Fernando (Nerd Gaucho) says:

“Of course, none of this is particularly relevant to what kind of person Cristina is or how effective she may or not be as a president. Indeed, even discussing such things seems superficial and unworthy of serious reflection. Nonetheless,”

And nonetheless you add up to the myth and the superficial criticism. Why not be honest and say you hate her? That would put your “unbiased analysis” in perspective. You seem to quote Alejandro Rozitchner a lot, a guy I consider full of drivel and full of himself.

It’s “damned if she does, and damned if she doesn’t”. Funnily enough his husband was criticized exactly because of the opposite: for not knowing how to match clothes and for not dressing “correctly” with his suit always open (as if it accounted for anything).

Continue posting your anti-Cristina drivel. Plenty of us who voted for her, support her policies, and do not for the government, will continue to find your posts a big source of amusement.

FC

Taos Turner says:

Hi Fernando,

I have to say fist that your photo is very funny.

You have at least somewhat of a point when it comes to your first remark about Cristina’s alleged superficiality and my decision to address it by way of first mentioning her focus on clothing an appearances. That said, the rest of your comment fails to add anything constructive. Indeed, the remainder of your comment is merely an insult. You describe my writing as “drivel.”

How does your insult add value either to this blog or to a more general debate about the merits of the Kirchner government? A wiser, more helpful approach would be to specifically address specific ideas or policies and then state exactly why it is that you support or do not support them.

It is easy to insult people, as you have done here. It is harder to construct logically coherent arguments in favor of specific policy positions. However, it is only by doing the latter that any of us can hope to learn and evolve, both personally and collectively.

As for Cristina, I gave specific reasons for why one might conclude that her administration seems less substantive than superficial. You didn’t address any of these. Cristina does seem to be more concerned with appearance than substance. If she spoke publicly and debated her ideas and policy proposals openly, it would be easier to determine exactly how substantive her approach to governance is. Instead, she refuses all attempts to inquire about the substance of her ideas and policies. She engages in demagoguery often, instead of careful dialog. Instead of addresses her opponents’ ideas, she questions their motives and insults them.

To whit, no serious economist in Argentina believes that poverty has done anything but gotten worse over the past year. But Cristina says, without providing any demonstrable or credible evidence, that poverty has declined. Inflation is real and everyone knows that, but instead of acknowledging this, Cristina pretends that it is not a problem. In reality, inflation has been harder on Argentina’s poor than it has been on anyone else. Why does Cristina deny this reality? Sadly, we do not know because she refuses to say.

The president is not “damned if she does and damned if she doesn’t.” To believe she is to engage in a grievous conceptual error that impedes legitimate dialog. Only the paranoid and the distrusting think this way in life.

However, there is at least one thing that is positive about Cristina, and you touched on this in your comment. Her hubsand, Nestor, is not considered to be a particularly attractive man physically. And as you mentioned, he has been criticized (or at least joked about) for dressing badly. That Cristina would not let this impede her love for him speaks well, on at least some level, about what she considered to be truly important. In this sense, at least, one cannot accuse her of being superficial.

Taos

Fernando (Nerd Gaucho) says:

I’m too busy right now to comment in-depth, but will return to this thread later.

However, let me point out that the unfair criticism Cristina gets as a women and the amount of drivel on the expensive purses or the designer outfits she chooses to wear is not something unique…


“there have often been sexist overtones to the coverage,” she said, proving that “the media thinks it’s OK to say sexist things” about matters such as Clinton’s pantsuits and her laugh, or to “poke fun at her middle age women supporters.”
– Jennifer Palmieri, Center for American Progress

Michelle Bachelet spoke about this kind of bias in a recent interview with the BBC. She spoke about the El Mercurio chilean paper (the same one once paid by the US in its campaign against Allende) which apparently spent a lot of time criticising the clothes she elected to wear at his European tour and wondered with the interviewer if “a male president would get the same treatment”.

I will try to find that video (I have it digitized somewhere in my HD) and upload that snippet to my blog.

I’ll be back…
FC

Taos Turner says:

Hi Fernando,

There may be a good deal of “drivel” (to use your words) in the world about Cristina’s expensive purses and her designer clothing. But this is largely beside the point. It is a tangential issue, at best, and is of little substantive interest to anyone seriously interested in Argentina’s well-being.

(If you really want to focus on this, you should admit that Cristina actively cultivates her image as a person who is interested in things that are less than substantive. A story published in Corriere della Sera and later translated into Spanish for La Nación, traced the president’s steps as she shopped this week in some of the most expensive shops on the planet. According to the story, the president bought a pair of bedroom sheets that cost 1,000 euros. Cristina is a president who constantly talks about her vocation for helping the poor, and yet she makes a concerted effort on her trips abroad to shop at the world’s most luxurious stores. There is an interesting dichotomy here, and journalists and analysts have every right to comment on it. But the truth is that, in the final analysis, all of this amounts to little more than an issue that lies on the periphery of what is really important to Argentines and others who love the country.)

As for my post, I used Cristina’s apparent emphasis on appearance as a segway into a more serious topic that examined whether her approach to governing is more substantive than superficial. I then looked at specific reasons for thinking that her administration is often insubstantial. You failed to address any of these larger points in your comments.

Not only did you not address any of these points, but you insulted me, a friend of mine, and, in your second comment, sought to distract from the initial focus of my post.

While it may be true that Cristina and her Chilean counterpart face media commentary that is itself superficial, the fact is that the vast bulk of stories about Cristina address serious issues and have nothing to do with the fact she is a woman. Nor do the vast bulk of her coverage have anything to do with her clothing. To the extent that this is true, your effort to change the focus of our conversation is little more than a Red Herring. It makes no difference to me or most people what kind of clothing the president wears. Is it her policy pursuits that are most important to most people. Unfortunately, because she refuses to discuss her ideas publicly, it is easier to get information about her clothing than it is to gain insight into her policy plans. This is truly unfortunate and it weakens Argentina’s ability to mature democratically.

The Kirchner government, and many of its supporters, such as yourself, suffer from a problem that is all too common in Argentina. You made this manifest in your comments to me, when you said, and I quote, “Why not be honest and say that you hate her?”

It would be patently dishonest for me to say that I hate the president. I can honestly say that I do
not understand her thinking. I also can honestly say that often I do not understand the logic of her policies. Moreover, I believe that some of her policies are not in the country’s best interest. But no two people agree completely with each other on everything. I don’t agree with any of my family members or my friends on 100% of the issues 100% of the time. Anytime two people agree on everything, it is extremely likely that one of them is really not thinking at all. And yet, I do not hate anyone in my family. Nor do I hate any of my friends. Why would I hate the president simply because I do not agree with or understand some of her policies?

A very serious ailment has plagued Argentine politics for decades. It is the fact that politicians attack each other instead of attacking each other’s ideas. They question each other’s motives instead of questioning each other’s policy proposals. The Kirchners have done this consistently over the past five years. They constantly insult and question the motives of their political opponents. They consider their partisan counterparts to be enemies instead of partners. They call the farmers “golpistas” instead of cogently and respectfully explaining what is wrong, in their view, with the farmers’ ideas. This kind of politics is exceptionally damaging and unhealthy. It fosters animosity and distrust, making creative collaboration difficult. Just as no two people will ever agree on everything, no two political parties will ever see eye to eye on everything. Because of this, democracies require constructive collaboration, cooperation and consensus in order to function and evolve. But lasting consensus is only possible when people trust each other and do not distrust each other’s motives. Politics is not a zero-sum game where there are either winners or losers. The sooner Argentina’s leaders understand this, the sooner the country will be able to put aside its rancorous disputes and begin realizing its enormous potential.

Taos

Taos Turner says:

UPDATE: Presidential Spokesman Miguel Nuñez, a person who, unlike his title suggests, does not actually speak to the press with any frequency, said Friday that the Corriere della Sera article cited here was “malicious” and “absolutely false.” “Such a shopping spree never existed,” Nuñez said in a statement. He called on the newspaper to apologize.

Fernando (Nerd Gaucho) says:

“The sooner Argentina’s leaders understand this, the sooner the country will be able to put aside its rancorous disputes and begin realizing its enormous potential.”

I think the country is doing VERY well. Thanks very much for your interest and your concern.

I personally think that “the sooner the USA puts aside the republican supply-side economics and its chronic fiscal deficits, trade deficits and playing World Police, the sooner North Americans will realize their enourmous potential”. Sounds good?.

In other words: as the British say “people living in glass houses should not throw stones”.

I didn’t insult you. I said I think your comments with regards to the presidents’ appearance, and later, her “shopping spree” are DRIVEL and I will say it again. They serve no purpose with regards to the policy debate but to paint a picture of someone who “lives in a bubble” or “doesn’t care about “ordinary people”.

The president’s whole family had enough money before taking office to buy THOUSANDS of expensive clothes and accesories, should they want to.

Do you think the president uses the public budget to buy clothes? Do you have proof? If not, what she does with her money is nobody’s business but herself. Like the stupid criticism when she bought a Mini Cooper to her daughter. UNLESS of course, you imply that public money is being used for such ends.

There is no conflict whatsoever with wearing expensive clothes and helping the poor or doing progressive policies.
Strangely, people didn’t gave such criticism to Lady Di, but Cristina is facing the same mean spirited comments with regards to her appearance as Eva Peron did. And the source of those mean spirited comments is always the same: the right wing or those who’d prefer the end of progressive policies.

I think the bulk of your commentary is dishonest, becuase of your choice of continue injecting the president’s appearance or purchasing habits into the conversation. That’s not an insult, it’s my subjective appreciation. Prove me wrong, please.

And I also you think you’re playing naive when you say you do “not understand” her policies or that she doesn’t explain those. I think you do understand those policies very well, yet play being flabbergasted, as someonw withenessing something out of the ordinary or incomprehensible.

The policies are well explained and if you ask any economist they would tell you what the policies in place are. It’s rather strange to ask for a president to “explain the economic policy” every week. The economic policy is what lifted the country from 2003 onwards and that’s what most of the people voted for in the last election…

-a pro-industry economic policy
(which has already had excellent results)
-A favourable exchange rate (read: expensive dollar) that makes Argentina’s exports more competitive
-Taxing soybean since it’s something that Argentina doesn’t consume locally (94% of soybean is exported)… which in turn occupies agriculture land which could otherwise be used to
-Boost non-traditional exports, including industry, software, IT services, and tourism.

You can question my opinions about the USA because I never lived and worked there. But I can speak with some degree of confidence about Argentina because I’ve been living 33 years down here, and I’ve been through the supposedly “pro-market” 1990s when Chicago school economics were applied… and Argentina was turning into an expensive services-only country where the best you could hope for was a bank clek or taxi driver.

The railroad network was axed in the name of “small government” and education was transferred to the provinces without the needed budget, as a result education quality and resources tanked. A former finance minister said that argentina’s scientists should “go do the dishes” instead of protesting budget cuts and then the same minister said that “it didn’t matter” if the country manufactured cars of candy, as it was the same thing. (Gee, I guess he doesn’t know the level of added-value the level of employment and salaries generated by each).

Hundreds of thousands of manufacturing jobs were lost, industries shut down and turned into importers of finished goods.

In the IT sector, where I work, the best you could hope for after university was getting a job as a cab driver.

Today, the IT sector down here is nearing full employment. There’s a shortage of people and salaries are going up. The IT sector is starting to take people in the last two years of their studies and start offering jobs and training them before graduation.

That’s a big change from the “farm country” that some in Argentina’s top class wish we would become.

And now we’re discussing policies.See the difference?. Or are you going to respond with more presidential shopping habits?

FC

Fernando (Nerd Gaucho) says:

Speaking of policies, results, and “serious economists”…

Some facts:

1. Argentina recovered after the 2001 crisis thanks to its industrial sectore, not soybean.

The hard data was mentioned by Julio Sevares, Economy professor at U.B.A. at Clarin’s iEco over here:

http://weblogs.clarin.com/i-desarrollo/archives/2008/03/el-crecimiento-y-el-campo-piquetero.html

“A recent research paper by CEPAL [English acronym:ECLAC http://www.eclac.org/default.asp?idioma=IN ] strikes a blow to the agriculture sector’s narcisism, which considers itself the source of Argentina’s post-crisis recovery”

“According to the paper titled “Crisis, recovery, and new dilemmas: Argentina’s economy from 2002-2007″ the contribution to Argentina’s GDP was 22.6% of industry, 17.1% of commerce, and only 3.5% from el campo”

Some more facts:

Record steel production
http://www.lanacion.com.ar/1005468

Software and IT services: Argentina in front of a new export resource
http://www.lanacion.com.ar/988029

“services exports, without accounting for transport and tourism, [I repeat: without tourism and transport] generated USD $2.6 B in the first nine months of 2007 -more than what was produced by corn and wheat in the whole year, and a 24% higher level than the same period the year before”

“compared to the best year during the covertibility [Cavallo's "1 peso pegged to 1 USD"] era, 1998, services exports that year left USD $ 674 million. To put this simples: the business has quadrupled, a decade later”

Record production and export of car parts
http://www.lanacion.com.ar/969902

Historic number of cars production
http://www.lanacion.com.ar/968482

Tourism growth
“During 2007 tourism grew at 7% and there were over 500 new lodging places throughout the country. On the other side, investments during that same year reached $350M, according to the trade association for hotels, restaurants and caterers (Fehgra). Specialists expect that this trend will continue throughout 2008″

“We expect the construction of over 250 new hotels at an average of 4 million pesos per hotel, reaching that way a total of over $1B” says Juan Minera, presidente of Argentina’s Tourism business chamber. “
http://www.lanacion.com.ar/985834

Volkswagen reconognizes Argentina’s quality
http://www.lanacion.com.ar/954355

“Volkswagen has just announced a great investment to build a truck at its plant in General Pacheco. That way, Argentina is the only place in the world outside Germany where VW will build a vehicle like this. ¿Why did Volkswagen’s headquarters choose Arggentina for such an important project? The reasons are several. Obviously, there’s the lower costs. But that’s not enough. It was key for this decision the quality of manufacturing achieved by Argentina’s terminals and the high capacity of local workers. In fact, the gearboxes manufacturing plant that Volkswagen has in Córdoba in known internationally for its efficiency and exports those components to other countries”

More later…
FC

Fernando (Nerd Gaucho) says:

Taos, you mention inflation -which surely exists, but also do exist the wage increases- and talk about “no serious economist”.

Well, here’s one serious economist’s opinion:

——————————————
“Yesterday, the Nobel Prize winning Joseph Stiglitz defended the soybean export duties as a way to fight inflation and said ‘maybe there are protests about ‘retenciones’ but those are preferable from people starving to death’

Stiglitz was in the country in Buenos Aires where he gave a conference titled “Argentina’s economy and its new insertion in the World”. He spoke with Clarin>

-¿How do you see Argentina’s economy, given the new international context?

-The last few years have been memorable. The growth experienced by Argentina is much more than just a recovery from a crisis. It’s a very impressive performance. It’s true that this growth has been helped by a beneficial international context with the high price of commodities but it’s also true that there’s countries which also export agriculture commodities and they didn’t grew as much as Argentina”

-¿How do you evaluate the measures being applied by the government, like the soybean export duties or price accords?

-There’s plenty of countries which intervene in the economy with taxes which allow to keep the price of basic food under control. If done in the right way, they work. I suggest this tool be employed as a variable to contain inflation. The protests against retenciones are preferable to people starving to death, that’s for sure. Besides, the export and import duties gives governments the tools to boost investment in the social policies and that’s also important, specially in developing countries like Argentina

-¿To which degree does the arrival of foreign investment depend on the so-called “investment climate”?

-The best “investment climate” is a growing economy. If there’s a 6% yearly growth rate, that helps. Obviously, also important are investments in infrastructure, the education level, and technology innovation. But what business ask often is ‘how easy is it to do business in a given country?’ Without a doubt, Argentina -like many other countries in Latin America- suffers the consequences of applying the Washington Concensus measures, which made the country to be “under-invested”.

-The last week there was a change in the economy ministry in Argentina and markets reacted negatively on the news. Your take?

-There’s a very fragile link between the financial markets and the real economy. Governments should not focus on what hapens in the financial markets because those are short-term movements and not relevant. What they should do is focus in the long-term investment movements.
——————————————

In short: I prefer an Argentina with high growth rate and moderate inflation but low unemployment, a diversifying exports base, and new hope, rather than a slowly dying country with no inflation and no hope. We had that in the 1990s. I don’t know if you were here to witness it back then. I was.

One more hard data:

July 2007 – Number of sales in supermarkets grows in the poorest “third ring” of greater Buenos Aires.
http://buscador.lanacion.com.ar/Nota.asp?nota_id=909024

It speaks about yr/yr growth from 2006 to 2007 in units, not just pesos (which would be affected by inflation). More units= more people buying, quoting data from ACNielsen.

With regards to inflation rates, I think the “road blocking patriots” (aka rednecks) from the countryside have done a great job of “colling down” the economy with all the uncertainty their rebel leaders are generating. I’d say inflation will ease off as there’s been a contraction in purchasin in the last few months.

Finally, if you think food price inflation is something unique of Argentina, you haven’t been reading the international press lately.

FC
PS: Unlike Longhorn Dave, I don’t want my country to return to being a “FARM COUNTRY” like it was at the beginning of the 20th century. Because that’s a country that can support only a few, where only the land owners get rich, and what about the rest of the 40M people who live in this country (12M+ of which live in the Greater Buenos Aires area).

I don’t know if you have ever visited the greater buenos aires area, but that’s where most of the small and medium sized industry is at. I know because I lived until 2003 there (the west zone of GBA). And that’s the source of most value-added employment which has hopefully recovered from the 1990s slump.

Fernando (Nerd Gaucho) says:

Longhorn Dave, you say:

“This country is falling further and further behind by any world benchmark you want to measure ( see todays Herold)”

Oh really? I think the improvements since 2003 are incredible, and that today is a much different country than it was in the 1990s.

In the 1990s (and before) we had a shrinking industry and manufacturing base, high unemployment, cronic fiscal deficits and trade deficits (much like the USA of today). We have now both fiscal and trade surpluses, a booming IT, industrial, and manufacturing sector.

In the sector I work, that is, information technology, people right now DO have a sense of future, whereas IT graduates in a decade ago had to drive a cab to survive.

Even the soybean crybabies that are now experts in organized blockades were dying a slow death in the 1990s, and now the sector enjoys record production, thanks to the favourable exchange rate.

See my comment above with the Stiglitz quote (I hope Tavos publishes them all).

FC

Taos Turner says:

Hi Fernando,

It’s great that you have taken the time and effort to add a more substantive element to your position here. I appreciate it. Readers may appreciate it too.

My responses follow:

1)

You referenced my comment in which I said Argentina would be able to live up to its enormous potential only when it puts aside its unnecessarily rancorous, confrontational and distrusting style of politics. You replied by saying: “I think the country is doing VERY well.”

My response: Until last year the country had been doing very well. Unfortunately, despite the many admirable and impressive gains made in recent years, things are beginning to get worse. Perhaps the most disconcerting of these is poverty, which is on the rise again. There is no debate among private sector economists over whether poverty has risen over the past year. The only debate that exists revolves around how much poverty has risen. Some economists believe hundreds of thousands more people are now indigent; others say millions more are now living in poverty.

Dozens of local and foreign stories have delved into this problem in recent weeks. Here are two typical stories, one from La Nación, another from Clarin.

http://buscador.lanacion.com.ar/Nota.asp?nota_id=1014597&high=pobreza
http://www.clarin.com/diario/2008/05/26/elpais/p-01601.htm

Here is what a Clarin story had to say about poverty:

“Never have poor families been able to buy so little. Now, on average, the poorest homes can buy just 43% of the basic goods and services that they need in order to live above the poverty level. In the middle of the 2002 crisis, that ratio was 47%.” The story, which refers to a study done by the Equis consulting firm, said “the gap between rich and poor is now a record.” Meanwhile, Equis reported that “at least for a quarter of the population, their chances for overcoming poverty are worse than they were even during the middle of the worst socio-economic crisis in May, 2002.” Ernesto Kritz, who runs the Society of Labor Studies, says the government is underestimating the number of poor people by about 4 million. In a country of 40 million, that is no small figure. He believes the real poverty rate is about 30%, compared with 20.7%, according to Cristina Kirchner.

Clarin: http://www.clarin.com/diario/2008/04/29/elpais/p-00708.htm
Kritz: http://www.clarin.com/diario/2008/05/14/elpais/p-00402.htm

Half way through last year the government stopped measuring and publishing data on poverty. But it did more than this. The government fired the respected national statistics agency (INDEC) specialist Cynthia Pok after she warned that poverty estimates could not be accurately made unless the government also accurately measured inflation data. Instead of praising her for being a patriot and a whistleblower, President Nestor Kirchner sacked her. When Cristina Kirchner recently said poverty had declined, she did so based on a report using totally discredited inflation data. That data, even according to off-the-record comments by members of Kirchner’s own cabinet, likely underestimates inflation by at least 50%. This key piece of data makes the difference between statistics that show millions of people falling into poverty or being lifted out of it.

One of my jobs as a journalist is to cull through economic data and speak with economists. I interview economists almost every week. Over the past year I have not met a single one who believes the government’s inflation data or who thinks poverty has declined. This is a stark contrast to the years preceding 2007, when nearly everyone agreed that rapid economic growth was swiftly lifting people out of poverty. If people are getting poorer, there is something wrong that needs to be addressed and fixed. Falsifying economic data is not in anyone’s long-term interest, and it is especially not helpful to the poor. By falsifying inflation data, the government has saved billions by paying lower rates on inflation-indexed bonds. But this short-term financial gain has also cost the government in credibility and made it harder to determine how many people really are living in poverty. The less information we have about what is really happening in the broader economy, the harder it is to make wise policy decisions that can help those who most need it.

Argentina made wonderful strides in eliminating poverty between 2003 and late 2006. But those gains are now being undone. Meanwhile, confidence in the economy and in the government has been declining rapidly thanks in large degree to often shifting and unpredictable government policies, and an overall climate that is hostile to investment. Argentina’s admirable boom, which resulted from a combination of wise policy decisions made largely by President Eduardo Duhalde and then improved upon and maintained under Nestor Kirchner, as well as a favorable international context and rising commodities prices, clearly is in jeopardy.

2)

You said “the sooner the USA puts aside the Republican supply-side economics and its chronic fiscal deficits, trade deficits and playing World Police, the sooner North Americans will realize their enormous potential. Sound good?
In other words: as the British say “people living in glass houses should not throw stones.”

My response: The first part sounds great. I agree completely. US government policy in many ways has been absolutely disastrous since 2001. But this is irrelevant to our exchange here in this space. This is The Argentine Post, not The International Post or The World Post. This space is dedicated to Argentina and all things Argentine. As for your second point, you are mistaken. You have every right to form opinions and make formal arguments that support or critique US policy. The fact that you have never lived in the US has no relation to the validity of your arguments about US policy. To say otherwise is to engage in what philosophers and logicians call the Genetic Fallacy. Simply put, this states that the validity or soundness of an argument has no relation to the argument’s origin.

A simple syllogism will help highlight this point.

Person A, an intelligent, skinny Argentine woman from Chaco, makes the following deductive argument:

Premise 1: All cows are mammals
Premise 2: John is a cow
Conclusion: John is a mammal

Person B, a fat, smelly old man from Alabama, makes the following deductive argument:

Premise 1: All cows are mammals
Premise 2: John is a giraffe
Conclusion: John is a mammal

You can see clearly from this that person A’s argument is sound (it’s premises are valid and its conclusion follows ineluctably from them). But person B’s argument is unsound. The conclusion that John is a mammal does not follow inescapably from the premises. Person’s A argument is sound, but it would be sound even it were made by person B. Meanwhile, person’s B’s argument is unsound and it would continue to be unsound no matter who made it. The point is simple. Arguments are sound or unsound based upon the logic of their premises and conclusions, not based on who makes them. So go ahead, critique US policy as much as you want. I’ll be happy to join you. Just don’t do it here in this pace, unless it is directly related to Argentine affairs.

3)

As to your point about the president’s clothing, I already stated clearly that this is a trivial matter and is of little real concern to most people. This point already has become belabored. I propose that we simply drop it, as we appear to be talking past each other while actually saying something quite similar.

4)

You said: “I also you think you’re playing naive when you say you ‘don’t understand’ (Cristina’s) policies or that she doesn’t explain (them). I think you do understand those policies very well, yet play being flabbergasted, as someone witnessing something out of the ordinary or incomprehensible. The policies are well explained and if you ask any economist they (will) tell you what … policies are in place. It’s rather strange to ask for a president to “explain the economic policy” every week.

My response: This is disingenuous of you. Here, in a way that is typical of the Kirchner’s and their supporters, you question my sincerity instead of trying to address the issues hand. You could have said, “Which policies in particular do you not understand? Let me know, and perhaps I can explain them to you. Then we can have a debate about the efficacy of those policies.” Instead, you accuse me of being dishonest, even though your critique is couched in more diplomatic terms: you say I’m playing naïve. But you’re implicitly saying that I’m lying to you.

I can rather easily grasp the purpose and rationale behind many of the government’s policies. But the truth is that in many other cases I fail to see the logic behind certain policies. The government’s decision to destroy INDEC is a perfect example. I understand that if the government pretends inflation is lower than it really is, the government can save money because this means it does not have to pay the real market value of inflation-adjusted government bonds. But beyond this, the damage caused by the destruction of INDEC is virtually incalculable. It destroys the government’s credibility both here and abroad, but also makes it hard for either the government or the private sector to calculate risk, real inflation and a broad host of other indicators that depend on inflation.

When individuals and companies have no reliable means of measuring inflation, they begin to make financial decisions based on what they think inflation might be. Generally, out of self-interest and fear, they tend to exacerbate their perception of inflation as a hedge against losing money. This, in turn, often leads to even greater inflation by encouraging people and corporations to charge more for certain products or services than they otherwise would. This is a somewhat complex subject that I would be happy to explore in more detail at another time. But the key point for now is this: businesses don’t make decisions in a vacuum. They depend on clear information. When their options are not clear, they tend to overreact to perceived trouble in ways that impede economic growth. This often leads to overly cautious or excessively aggressive behavior, neither of which is good for business.

Another thing that I do not understand about government policy is this administration’s proclivity to promulgate policy on the fly. For the most part, the most successful, growing and developed economies in the world are in countries where federal regulations are largely predictable. Investors, whether they are individuals or multinational corporations, seek stability. Investors abhor chaos and unpredictability. Successful leaders keep this in mind when planning policy. It is counterproductive to change policies on a whim without adequate planning or forewarning. Yet this is exactly what the Kirchner administration has been doing for years. It is constantly changing “the rules of the game” on companies and on entire sectors of the economy. This kind of behavior was understandable in the year or two that followed the country’s 2002 financial and political meltdown. After all, the country was in the middle of a very serious crisis and had little time to engage in long-term planning and prudent policy making.

But it is now 2008. The country is no longer submerged in that crisis, and continued growth will require a change in perspective and a recognition that longer-term planning and regulatory stability are necessary. Indeed, in the future such fiscal and regulatory stability will be a sine qua non for new investment. Brazil’s government understands this, and it is one important reason why Brazil is attracting so much new domestic and foreign investment.

Argentina has not had anyone clearly explain economic policy since Roberto Lavagna was the economy minister. Since he left office, policy planning has become increasingly centralized, impromptu and directed primarily by Nestor Kirchner. Kirchner’s approach is largely off the cuff. He deals with problems as they arise and engages in little long-term planning. Often, people in the economy ministry, people who would normally be involved in planning, learn about new policies through the newspapers. I remember one time a few years ago when I was covering then Economy Minister Felisa Miceli. She was asked at around 6pm if the government planned to ban beef exports. Her reply: No way. And she believed what she said. A few hours later, however, Kirchner ordered Miceli to appear unplanned on late-night television to announce that the government actually had decided, on the spur of the moment, to ban beef exports.

The economy minister herself was caught unawares. So were virtually all of the officials who worked at the Agriculture Secretariat. They had no idea the policy was coming. Nor did any of the country’s beef exporters or farmers. Nor did any of Argentina’s importers in other countries. The ban on beef came out of nowhere, just like that. The unannounced policy cost Argentina hundreds of millions in lost export revenue. It also cost farmers, meatpackers and exporters millions while simultaneously damaging Argentina’s reputation as a reliable food exporter. At this point, Nestor Kirchner had been in power for years, which was plenty of time for him to develop a long-term strategy for boosting beef production in Argentina. But during those years, Kirchner did next to nothing to implement any kind of productive strategy for the sector. Like his wife now, he chose to deal with problems as they arose, rather than engaging in long-term policy planning. Many of this government’s policies are decided at the last minute and implemented just when people are least expecting them. This is detrimental to economic growth and it impedes Argentina from taking full advantage of its potential. I don’t understand the benefits of this approach to governance. I understand that Argentina is an emerging market and a young democracy. You cannot expect from Argentina the kind of stability and prudence you might expect from Switzerland, Japan or Canada. But that does not mean Argentina cannot do much better. And even if the country is “doing very well,” this does not mean that it is living up to its potential. We should measure ourselves not just by how much we accomplish, but also by how much we are capable of accomplishing.

5)

You highlighted some of the positive things that have been achieved in recent years such as growth and new investment in the IT sector. This is great. I applaud the focus the government has had on trying to spur growth and investment in this sector. In some ways provincial governments such as Cordoba’s have gone even further than the national government in promoting the tech sector. This is praiseworthy, although most of these policies were implemented before Cristina took office and we are talking here about Cristina’s government, not that of her predecessor. Even so, there is no need to debate the proposition that this government has done some good things. I ask you, which specific policies has Cristina Kirchner proposed that you support? After all, my original post was about her administration, not that of her husband.

As for the 1990s, I would say it was a decade of mixed failures and successes. It was a mixture of impressive economic growth and investment in infrastructure, appalling corruption and recession. Argentines tend to view the past, and judge their political opponents, in very black and white terms. The truth is that the 1990s produced some very good things for Argentina, while at the same time aggravating some longstanding problems. The massive investment in infrastructure – in roads, highways, telecommunications, and in hospitals, etc. – made it possible for Argentina to experience the rebound that was seen between 2003 and early 2008. The infrastructure was already in place, and it paved the ground for the very impressive growth that ensued.

As for the “pro market” policies you referred to, only some of the policies pursued in 1990s were actually “Chicago school” reforms. In his second term, then President Carlos Menem deviated far from the classical economic proposals that helped spur the country’s growth earlier that decade. In some ways, his policies were an exception to the so-called Chicago rules more than they were an example of them. Menem engaged in massive deficit spending and largely turned his back on the more disciplined reforms he himself had implemented in his first term. You do not have to hate Menem to point out the flaws in his government. Nor do you have to hate Kirchner to highlight the flaws in hers. The point here is that both Menem and Kirchner have done some good things and some bad things for the country. There is nothing wrong with pointing out the shortcomings of either government. Meanwhile, it is possible to highlight these problems while also recognizing that there have been some successes in both.

6)

In your next comment you focused on a series of stories in which “serious economists” highlighted positive outcomes related to Kirchner policies.

My response: Great. As I said before, there have been some very impressive achievements in Argentina since 2002. The country’s rebound surpassed almost all expectations and defied predictions. Nestor Kirchner deserves credit for a good deal of this. But all of this is actually beside the point. It is merely a Red Herring that diverts attention from my initial point. My original post addressed the substance of Cristina Kirchner’s government, not the historical merits of her predecessor’s policies, some of which were quite effective.

More specifically, your response was a reply to the following statement of mine: “To wit, no serious economist in Argentina believes that poverty has done anything but become worse over the past year.” That sentence refers only to what serious economists think about poverty. Yet you failed to touch this point. Instead, you quoted a whole slew of stories about things that have little to do with today’s increasing poverty levels. This conversational point is not about what happened between 2003 and 2007. It is a conversation about what is happening right now and how Cristina Kirchner’s policies are affecting the country, and particularly how they affect poverty. While the investments you mentioned are welcome and praiseworthy, most were planned before Cristina came to power.

Inflation is wiping out many of the gains made during the years you’ve sought to defend. Moreover, Cristina’s unpredictable policies and her antagonism toward the business community are discouraging new investment right now. This does not mean that nobody is investing or even that the overall economy is not doing well, but it does mean that Argentina is not taking advantage of the moment and reaching its potential. Things could be worse. But they could also be much better, and that is the point.

7)

You cited “serious economist” Joseph Stiglitz and noted that he “defended the soybean export duties as a way to fight inflation.” This is true. But it is also beside the point. Farmers are not asking the government to eradicate export taxes entirely. Kirchner gradually has been raising taxes on farmers since he took office. And while farmers have complained about these taxes, it wasn’t until March 11 that they decided to engage in a massive national strike. Stiglitz was asked in broad terms about Argentina’s economy and about export taxes in general. He was not asked specifically about the March 11 decision to impose a sliding scale export tax, unannounced, on farmers just as they were beginning the soybean harvest. In some ways export taxes make sense, and I understand the logic behind them. I also agree with Stiglitz that they can help curb domestic inflation. The question here is not whether they should exist, but rather what form they should take and how and under what conditions they should be applied. The key to Stiglitz’s interview was this remark: “There are plenty of countries which intervene in the economy with taxes that keep the price of basic food under control. If done in the right way, they work.”

Farmers here are protesting not because they want to overthrow the government or because they want to eliminate taxes all together, but because they do not believe the taxes are being “done in the right way.” They want to “dialogue” with the government about how to implement the taxes in a way that also gives them an incentive to boost production. In the farmers’ view, the taxes are too variable, too unpredictable and too high. When the government demonizes farmers and calls them “golpistas,” it cheapens the debate, coarsens public discourse and makes lasting, constructive consensus harder to achieve.

The government easily could have avoided this extended conflict by sitting down with farmers and working out a genuine compromise. I do not know any farmers who enjoy being on strike or who want the strike to continue for long. Most of these people are not politicians or enemies of the state. They are simply hardworking Argentines who want to go about life. Of course, they have their own interests to protect, as do all factions in any society. Moreover, they have sometimes exaggerated the deleterious nature of government policies. But this does not make them villains of progress or right-wing conspirators who want to overthrow the government. If the government really wants to target the small group of wealthy “pools” (as Cristina calls them), it might want to impose higher income taxes specifically on these groups.

I remember seeing those interviews with Stiglitz (they also were published in La Nación and Cronista) and thinking, “These journalists are failing to ask him important specific questions.” Why not ask him if he thinks it’s wise to falsify inflation data or to devastate the nation’s formerly respected national statistics institute? Why not ask him if it’s wise to change government policies from one day to the next, week after week, year after year? Why not ask him if it’s wise to threaten to jail business leaders who take issue with government policies? Argentina has accomplished some very impressive things in recent years. The question are: 1) What is the current government doing now to build on these accomplishments? And: 2) Can it do better?

8)

As for the wage increases you mentioned, this is correct. There have been plenty of wage hikes, most of which actually have further fueled inflation. Unfortunately, most of those increases have not reached the poor. The results of most collective bargaining agreements have not had much of a trickle down effect, and the other increases have taken place mainly in jobs held by middle and upper class workers. The poor, who work mainly under-the-table and have no private health insurance or other tax-free benefits, have not seen wage increases similar to their counterparts in other sectors. Meantime, prices of virtually all food items have risen constantly since 2002.

9)

I am curious, Fernando. It is evident that we do not see eye to eye on all matters political. I see nothing wrong with this. Indeed, education is only possible if we contrast, compare and challenge our ideas and the assumptions that underlie them. But I do not know about you. You seemed to indicate that political dissent is equivalent to personal disdain. You called on me earlier that I admit that I hate Cristina. I specifically addressed this comment earlier (see above exchange), but you neglected to reply. Why?

AN INVITATION:

I have a proposal for you. Why not write a post here and explain to readers specifically why you think Cristina Kirchner is a good president? You could defend the policies she has proposed since coming to power and explain why they are the best policies for the country. I offer you this space to do this. This could be very interesting and educational for readers, and for me.

Cordiales saludos,
Taos

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