Viva el peso.

Great news! Argentina has finally decided to do something about its rampant inflation. At the surely mild suggestion of their Interior Trade Secretary, Argentine supermarkets have kindly agreed to freeze prices for two months. If only they’d thought of this sooner, they would’ve prevented the double-digit annual inflation of the last few years.

Price caps in Zimbabwe and Venezuela have worked wonders over the last few years, so they’re bound to be just as effective in Argentina. And in our own experience, price caps on gas back in the 70s miraculously saved America’s economy from rising inflation and made gasoline so much easier to buy. I’m sure the Argentines will see similar success in stopping inflation and fixing their economy.

Sadly, I’m not in a mood to keep the snark up for more than two paragraphs.

11 comments

  1. What’s your take on “Why Nations Fail” by Acemoglu and Robinson? If you have already commented on this, then please proceed to heap scorn upon me. It seems like a neat theory and does state that geography matters to some extent for failed states. The model seems to fit for a couple of nations I’m profiled in a class of mine, both in Africa.

    And what does Khan Noonian Singh have to do with any of this!!!?!?! Sorry, I got distracted.

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  2. I haven’t read Why Nations Fail yet, so I’ll have to add it to the reading pile. However, I think geography explains a great deal about the failure of various states throughout history. In short, the less hospitable or passable the terrain, the less likely a state will emerge and flourish there.

    How about this: the less McDonald’s or Wal-Mart wants to build in a given location, the less likely a state will flourish in that location. What do you think?

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  3. I would see that as a posteriori indicator of a flourishing state. The thesis of Why Nations Fail is that states with extractive institutions/forces are more likely to fail to the degree of those institutions/forces. So if King Muhammed VI of Morocco decides to heavily tariff all import beef to make his top officials rich, then McD’s isn’t coming in. And you can follow that logic for Wally World and other external investment. The growing concept of “ominous debt” makes it less likely that any investment (capital-wise) into a nation with extractive policies will be profitable if that nation further de-stabalizes and the new leadership shrugs off the debt. (see Africa)

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  4. The nations that turn expansionist in WNF are already established polities that have had successful stable institutions in some form. They then extract from conquered lands and when they leave the lands, the “self-determination” of those new polities often mirror the extractive forces of the occupying (now evacuating) forces. So, I can’t remember an instance of a successful expansion by an internally extractive polity in the book.

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  5. The book posits that proposition only if there is no change. This seems a little too easy for me, I guess. How to reverse these policies is difficult and unique for each situations. What type of external efforts are needed? What is allowed? Is there enough internal impetus to do anything useful? Blah blah blah. It’s a difficult problem. I wrote a couple of papers addressing issues in the Kivus of Eastern DRC and Sahrawi’s of Western Sahara. The solutions always seem “pie in the sky” and unlikely to develop with ease.

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  6. In essence, you can’t just turn off the communism/socialism and expect everything to improve magically… you need secure property rights and titling (esp. of land) for markets to function, you need property (again, esp. land) to be legally severable, etc.

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