Argentina: Inflated Ego with Inflation Rates to Match

Author: Keely Kerring, Johns Hopkins

9/29/14

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There is an old joke Argentinians have about themselves: “Debemos reconocer que los argentinos son una raza superior. ¡Son dioses! ¡Están en todos lados pero nadie los puede ver!” Paraphrased in English, it says “We need to recognize that the Argentinians are a superior race. We are gods! We are everywhere but no one can see us!” Argentinians tend to view themselves as superior because of their strong European ancestry. However, simply identifying with their European background has not exactly transcended the country into the lap of luxury—they are in the midst of a severe economic crisis, and it is only one of many that the country has suffered in the past century. Although the typical Argentinian ego has become a running stereotype across the continent, it has made the current economic crisis, and the corresponding social reaction of the Argentine population, particularly interesting.

 This pretension is not completely unfounded. Argentina is one of the most richly endowed regions in the world in terms of natural resources. It boasts vast lands in Las Pampas for harvesting wheat, corn, and soybean, as well as some of the largest sources of petroleum and natural gas in South America. Additionally, it has historically been one of the most politically powerful, if not the most powerful nation in South America. However, in recent years, their inflated ego has become matched only by their growing inflation.

 Argentina has an annual inflation rate of 15%, and this figure is expected to reach up to 30% before the end of Kirchner’s term in 2015. In mid-September of this year, the exchange rate was 8.45 pesos per US dollar, up from 5.8 in October 2013.The informal, or ‘blue’ dollar rate, attained through underground exchange houses hidden throughout Buenos Aires, is 15.42 pesos per dollar. Since April, Argentina’s unemployment rate has risen to 7.5% from 7.1%. Brazil, in comparison has an exchange rate of 2.4 reais per dollar. Brazil and Argentina, being South American neighbors of somewhat similar size and quantity of resource endowment, were once on par with one another, but in recent years Argentina has been completely surpassed economically.

Discussions for the 2015 budget have only begun in Argentina but have already been criticized as overly ambitious, estimating a GDP growth of 2.8% and an exchange rate of 9.45 pesos per USD. The devaluation of the peso in particular has sparked controversy; soybean prices, for example, are at an all-time low, and production will continue to decline in exportation because of high prices unless the peso is devalued further. For this reason, maintaining the 9.45 exchange rate seems unlikely. Many predict growth in 2015 to also be very unlikely, especially considering a serious lack of foreign investment.

The economic future for Argentina is bleak for the foreseeable future, and social reactions have in turn been firing on all fronts. Argentinians are expressing anger towards Cristina Kirchner, the nation’s controversial president, and at the United States for their part in the debt default. This anger, however, is being overshadowed by disillusion with the grim prospects for economic growth, unemployment, and currency devaluation.

Protests by workers and anti-government groups have erupted throughout Buenos Aires, certainly on a weekly basis, and sometimes more frequently. Depending on the groups protesting, transportation and productivity in the city has been repeatedly slowed or shut down. Many are demanding increased wages, such as customs workers who held a strike from September 24th until the 28th. Earlier in the month grain inspectors went on strike demanding higher wages. Other groups of unionized workers have held theirs as well, and they have resulted in suspended public transportation services around the city. Many of these strikes occur in the Plaza de Mayo, located directly in front of Argentina’s equivalent of the White House—the Casa Rosada, official workplace of President Kirchner.

Argentinians frequently express the same sentiment when asked about the economic crisis. One in particular, a woman from Buenos Aires’ middle-upper class, states “We are a rich country with plentiful and valuable resources, why do we continually have these economic crises?” Others blame the government which has continually limited success through high taxes on exports, controls on imports, and efforts to keep foreign investment out. Many Argentines also complain that Kirchner has done little to allocate spending to the places where it is needed most. Kirchner and her Peronist Party administration are certainly blamed in particular for the economic crisis, by some more than others. From Argentina’s upper-middle class to blue collar taxi drivers, the sentiment is the same; Kirchner has been described as “absolutely crazy,” “untrustworthy,” and that “it is time for a change from her policies and leadership.”

The United States has also been the target of negative sentiment by Argentinians because of its part in the most recent debt default. It is not uncommon to see anti-US street art such as “Go Home Yanqui!” in large letters on the sides of buildings. Additionally, protests have erupted outside the US Embassy. The most recent one was by auto parts workers for US owned companies with factories in Argentina, demanding the “rehiring of about 60 of their colleagues,” and was predicted to have roughly 100-200 participants. But, as one woman I spoke with said, right now, the US is the enemy. Next year, it might be France. The year after that, maybe England. The real problem, she said, is us, our own government is to blame.

One does not need to see these protests, to understand the passion driving the unrest. A walk down the busiest streets of Buenos Aires is enough to notice the extent of the economic crisis in Argentina. Shoe stores, clothing stores, book stores, and supply stores are all plastered with the same diagonal signs on their storefront windows: “¡Liquidación!” Left and right, retail stores are going out of business. Though there is currently an anti-American sentiment in Buenos Aires, Argentinians are unable to discriminate against dirt-cheap prices in this economy. For this reason, American chain restaurants like Subway and McDonald’s, which offer the same inexpensive prices in Argentina as they do in the United States, always, without fail, have lines running out the door during lunch and dinner hours. Pricier and more chic Argentinian cafes cannot compare in attendance.

 

Keely is a 3rd year undergraduate studying International Relations at Johns Hopkins

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