With friends like these…

NC has a post up that takes Krugman to task for peddling outdated theories w.r.t. the trouble Argentina has experienced recently.

But I am sorry to say that but that Krugman might be wrong doesn’t make the introduction to this post right. Regarding

its aggressive pro-labor, redistribution-oriented policies

I’ve just come back from a 10-weeks stay in Argentina and if the police and teachers have to strike to see increases of their below-1000 euro salaries (at Belgian supermarket prices), “pro-labor” seems to take a newspeak meaning. If these strikes are commented on by the cabinet chief Capitanich with statements along the lines that the national government will not give in to those demands and that doing so would throw the salary structure for public servants out of whack (because supposedly medical diplomas need to be rewarded, police work not so much), one can’t even blame this on the regional governments (as I tried in the beginning).

Furthermore

Yet as this post shows, the government ran surpluses in eight of the past ten years.

This might work as a repudiation of the “living beyond means” claim but the MMT-reader in me can’t help but notice that this also means that private sector wealth has shrunk or at least not increased as fast as it could have. So I am not sure about the “redistribution” either. But yeah, Capitanich is very proud of the fact that Argentina has a lower public debt ratio than the US.

Finally, regarding Pilkington’s

[…] and then they would step in with well-enforced wage and price controls. Such controls, if history is to be any guide, are often less popular than inflation […]

When we left, the national government had just announced price controls on a number of supermarket items. Add to this the capital controls (best represented in the existence of the “blue market” exchange rate) and they’re at least trying to use well-known measures.

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This entry was posted in deficit spending, developed countries, economic policy, inflation, public debt, standards of living. Bookmark the permalink.

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