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Monday, March 13, 2006

Populism gone terribly awry

That seems to be becoming the theme of the decade for South America (except for Chile, thanks to Milty and the Chicago Boys). Anyways, Argentina just imposed one of the dumbest economic policies I've read about in awhile. The jist of it is, Argentina is going to ban exportation of its most profitable good: beef. Essentially what will happen is supply will spike in the short-run because of overproduction (as has already happened). Then producers will cut back on their production because they are losing money. This will cause the price to shoot back up again (it would be hilarious if it went above the value now which is possible if there are economies of scale). The huge downside is that Argentina is losing its most profitable export which is going to do nothing for an already debilitated economy.

Long live the Bolivarian revolution...

-Mr. Alec

PS I am reading Amy Chua's World on Fire right now to get an alternative take on globalization, especially as it applies to South America. Expect more on that soon.

posted by Alec Brandon @ 8:55 PM   1 comments

1 Comments:

At 6:55 PM, Blogger Alec Brandon said...

Mihai,

The World Bank and IMF have held billions over these governments for the past 20 years in order to force liberal economic policies. The result has not been what we expected. I don't think anyone KNOWS why, but it is stupid to claim that a trade policy that comes 15 years after trade liberalization is an example of anything.

In fact, I would argue that the recent rise in populism/socialism in South America is because the liberalization we forced on them has not achieved much. Market economies are not fun, especially when you get all of the harms with none of the wealth and economic growth it is suppose to promise. This prompts people to reject the sacrifice and turn to what they know, which has historically been socialism in South America.

This doesn't mean that South American countries never adopted full on proper economic policies. That is all.

More to come on this.

-Mr. Alec

 

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