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Home Publications Blogs Beat the Press The NYT Can't Find Anyone to Say Anything Good About Argentina

The NYT Can't Find Anyone to Say Anything Good About Argentina

Sunday, 23 October 2011 21:47

That is sort of striking since its President Cristina Kirchner seems headed for re-election with a clear majority of the votes. Argentina has also enjoyed the strongest growth over the last decade of any country in Latin America. Nonetheless all 5 of the NYT's sources in an article discussing the election were critical of Kirchner.

This quote deserves special mention:

"'This election really seemed to defy the normal rules of politics,' said Michael Shifter, the president of the Inter-American Dialogue in Washington. 'But that is what happens when things are going well in the economy and there is a dearth of alternatives.'"

It really should not have been hard to find someone who has positive things to say about President Kirchner. It appears that the NYT is relying on a narrow range of sources who are more in tune with Argentina's creditors than the majority of the Argentine population.

The article at one point comments negatively about the state of Argentina's economy, noting that growth is expected to slow to 4.6 percent next year. This rate would still be almost a full percentage point faster than the average growth rate in Brazil over the last decade. Brazil is described as a positive contrast to Argentina in the article.

Comments (12)Add Comment
Not surprising, considering NYT support for coups against leftists
written by Charles, October 24, 2011 1:25
The New York Times (and Washington Post and others, to be fair) have failed to condemn coups against a number of leftist leaders. Chavez, of course, where they actively cheered the coup. But also Zelaya of Honduras and Aristide of Haiti, where they provided cover for the coups. The mainstream media were intensely critical of Lula, as well, even though capitalism has never done half as well as under him.

The more one knows about international law and about what we actually do in Latin America, the clearer it is that our media do not listen to anyone outside of the wealthy classes. This should not be a partisan issue. The issue is whether we actually support democracy, or whether it's a word we use meaning something like "do what we tell you to do."
Greece & Argentina
written by fairleft, October 24, 2011 3:37
What a great successful story Argentina is, and all because it did something very very bad, it said screw you to the international bankers and their enforcers, the IMF and World Bank. Instead of bailing out the banks who'd made bad investments in Argentina, it defaulted and bailed out its economy. There's a lot of mainstream worry that the story will get out and inspire the wrong crowd.
written by freebird, October 24, 2011 10:01
This recent article gives a view spanning a longer time history than most I've seen (by Scott Grannis Oct 19 if link doesn't work):
The current regime is mentioned in the context of being accused of manipulating inflation statistics. Dr Baker, any comment on the four "lessons" in the last paragraph?
written by skeptonomist, October 24, 2011 10:02
Good luck determining the normal rules of Argentine politics. It was Cristina's husband Nestor who was originally elected in 2003 with only 22% of the vote, and when his term ran out in 2007 Cristina took his place. Obviously Nestor and his policies were popular (he died a year ago), but it may be difficult to actually know what Cristina's capabilities are. In any case Argentines are certainly pleased with how their economy has been run since 2003, though the rest of the world may not be so happy.
written by Todd Tucker, October 24, 2011 10:44
I would count "incumbents benefiting from a strong economy" as among the "normal rules of politics."

And, ditto on skeptonomist's observation - there is no such thing as normal in Argentine politics. There's an old joke in Argentina:

A reporter was interviewing Juan Peron in exile, and asked him to describe the political preferences of the population of Argentina.

Peron replied "Look, it's is more or less like this: 40 % are radicals (centrist party), 30% are conservatives, 20% are Socialists and 10% are Communists." The reporter, somewhat startled, asked: "But how can this be? What about Peronists?" Peron responded, "Ah, no buddy. We are all Peronists."
..., Low-rated comment [Show]
written by Charles, October 24, 2011 1:01
I don't know if Dean Baker will reply on inflation, so I will. Calafia makes at least one statement that is nonsense. He states that "currency cannot depreciate relative to other currencies without there being a corresponding rise in inflation in the fullness of time."

Currency depreciation is only reflected in traded goods, while inflation is reflected in all goods. So, if trade is a minor part of a country's GDP, a currency can drop precipitously without any significant effect in inflation. So a correct statement would be that currency depreciation generally (not always, since the seller has the choice of selling the product cheaper) results in import inflation. And this effect may be offset by many other factors.

We see this poor understanding about how the economy actually works now, where people who should know better keep screaming "inflation! inflation!" even as heavy downward pressure on wages is exerted by the rotten employment situation. Have the prices of imports like oil risen over the last decade? Even assuming that a significant portion of the peak/valley prices is due to the ebb and flow of speculation, yes, they have. Whether that is due to greater demand, a falling currency, or speculation, it appears as inflation in the index. In that same decade, inflation has been very, very subdued.

I should point out that it is no surprise that Calafia Beach Pundit, a disciple of the "late Jude Wanniski, Art Laffer, and Larry Kudlow." is also dead wrong about something so basic.
Hey, Skeptonomist
written by jp, October 24, 2011 6:42
Nestor Kirchner won the 2003 election with only 22% of the vote because his opponent decided to drop out of the run-off election. Kirchner actually came in second place during the first round and former president Carlos Menem came in first with 25% of the vote. Menem, who was responsible for the economic collapse in 2001, dropped out because he knew he was probably not going to pick up any more votes.

Cristina Fernandez de Kirchner won the 2007 election.

Finally, it's obvious to state that if CFK was a right-of-center candidate she would be receiving praise from the usual suspects like Michael Shifter. NYT and WaPo, not to mention right-wing blogs, would refer to this election as ultimately a blow to Hugo Chavez' influence.

One more thing, I wish Argentina's response to its 2001 economic collapse and the resulting policies enacted by the Kirchners would be part of the factual debating when talking about government spending and problems with debt.
written by Gus, October 25, 2011 11:29
I followed the link Freebird left to Calafia Beach Pundit's blog, left a comment there, received confirmation that it posted, and it has subsequently disappeared (presumably due to the moderator's disagreement with the views expressed). So I'll leave the comment here:

Interesting post -- a few questions/comments.

You write: ". . . for those Argentines who worry that the peso is overvalued today relative to the dollar, yes it is."

By what measure do you reach this conclusion?

If we are talking about "overvalued" in terms of the price of goods, how do you distinguish between the effect of the exchange rate and the other policies that impact the price level, mainly the various protectionist schemes (e.g., licencias no automaticos), flood of ultra-cheap credit for the short term (e.g., cuotas sin interes), pro-consumer political games (e.g., lcd para todos), anti-industry practices that destroy supply (e.g., price caps and export restrictions on staples like beef), and the general instability that encourages consumption over investment?

And, paradoxically, while I would agree that Argentina is rapidly becoming less competitive due to its increasing cost structure, that the currency is overvalued in dollar terms is belied by the fact that the price of goods are exorbitant relative to local incomes. Imagine how expensive goods would be relative to local incomes at 5-to-1 (where we're almost at in the informal market, and where we'll soon be officially with the K victory out of the way) or even 6-to-1? We're already looking at iPhones that cost 7000 ARS (or, say, about 10% of the annual salary of a reasonably well-paid professional).

My point is that, yes, there obviously is inflation in Argentina, costs are high, and a few years back (2003 through 2006, maybe 2007) the peso seemed undervalued against almost all major currencies, but I don't think it necessarily follows that the peso is overvalued against the dollar. Nor do I think that the "Argentina case" supports the argument that there exists a necessary causal connection between a cheap and/or declining currency and future inflation. Rather, there are a host of other factors, both internal (e.g., protectionist policies) and external (e.g., demand for soy from China), that impact whether an economy will experience inflation. Thus, concluding from the "Argentina case" that inflation in the US is just around the corner seems, in my view, to be a tad simplistic.
written by Mariana, October 25, 2011 1:55
Cristina Kirchner's victory is not unexpected by any means. The economy is doing well, wages are keeping up with inflation, relatively speaking, and the low-income population receives plenty of welfare benefits to prevent them from falling into long term poverty. But a huge sector of the middle class and well educated are also very happy with her.
As an Argentine with parents who are deeply supportive of Cristina, one thing that is worthy to mention that has not been said here before is that Argentineans don't necessarily vote with their wallets. Voting in Argentina, a country with such long history of dictatorships and undemocratic governments, is often framed by other variables, such as the state of the welfare state, the strength of the unions, and even its human rights policies.
The most unprecedented human rights policies have been undertaken by the Kirchners. Both Nestor and Cristina worked very hard to overturn some of the earlier regulations in regards to immunity. Hundreds of perpetrators were not persecuted and horrible crimes were allowed to be forgiven. That changed under their administration and now we see the over turn of many convictions, 70 and 80 year-old dictators finally being prosecuted and sent to jail and finally, the grandmothers of the disappeared can reunite with their grand children who are now in their 30s.
These policies are not something to ignore easily and that trumps the economic factors in a country that had a huge loss of a generation that was systematically disappeared.
A booming economy based on an economic model that goes against free market orthodoxy
written by Sams, October 25, 2011 4:37
Thanks, Argentina is a really important success story.

The sad thing is these NYT reporters don’t even know how completely trapped they are in conventional thinking. These folks are rooting for Argentina’s model to fail, but it seems like a misreading of the situation.
Kirchner is "Left Wing" ?
written by H-Bob, October 25, 2011 5:27
Kirchner's party is the successor of the Peronist party (originally a combination of labor and fascists).
When I recently visited Argentina, prices of ordinary goods & food were about the same as the prices in Denver. My guide said that apartment rents were 40%+ of income but nobody could afford to buy homes as mortgages required over 50% down and interest rates were over 15%.

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Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.