Back in May, the Economist wrote a critique of Cristina Fernández, president of Argentina.  Argentina is an unnecessarily complex country.  Let me explain my point of view. Any conversational bore, including me, will inform you that Argentina was once one of the wealthiest countries in the world. And now it just isn’t. It’s annoyingly poor. Not grindingly poor, just ANNOYING. Well, it annoys me anyway. This is a land replete with land, livestock,fruit, vegetables, Arable crops, petroleum, Hydro Electric Power, beautiful countryside. It has a well educated population, and for such a huge country, a small population too. It should be wealthy. And it once was. In 1900, its GDP  per head was $2,756.00 The most recent figures put this income at $6,575.95 . Which means that in one hundred and eight years of economic growth, and (inflation), they just about succeeded in doubling their dollar income.

Currently, Argentina is going through an economic boom,  buoyed up by high commodity prices.  But this winter has seen a bizarre mixture of strange tax hikes on agricultural exports, and an even stranger battle between farmers and Government which left supermarket shelves more or less empty.  Partly because of this battle, and partly due to, well, who knows, inflation is a real problem here. According to The Economist:

To tame inflation and stabilise the economy, the government needs to allow the peso to appreciate, curb spending growth and energy subsidies, and raise interest rates. The longer such measures are postponed, the more painful and unpopular they will be.

Well, I agree. The Government here subsidises the price of fuel to the extent that the monthly household fuel bill is less than UD$ 10, meat prices are fixed, Petrol costs are ridiculously low. It’s not that the intention of such policies are wrong. But the outcomes are wrong. Argentinians are noticibly more addicted to meat and air conditioning than their far wealthier Spanish cousins. Energy is valuable and difficult to come by. Government policy here effectively encourages people to squander resources that countries will gladly go to war over. And Argentina does have an energy supply problem. Last year, Argentine industry ground to a halt as supplies of gas faltered. The Government here maintains the low price of meat, in part, by restricting exports.  These restrictions and price controls and subsidies mean that the economy just cannot develop as it should.  Argentina just needs to become less complex. This hopeless muddle of Goverenment policy doesn’t work. Perhaps the most invidious effect is in people’s minds. People seem to think that Goverment is there to allow them to consume 60 Kg of meat a year, and to consume power without any price restraint whatsoever. But this message is unreal, and decadent. De-scrambling  this mess, as the Economist article implies, will be painful. I don’t expect any change soon, and in the meantime, Argentina will fail to reap its massive potential.

In the next few days I’ll probably write a bit more about cooking, and my very personal insights into Argentina and its economy.