Wednesday, February 12, 2014

Argentina: A Deadly Mix of Totalitarian Thuggery and Business Cowardice

This weekend's Wall Street Journal published an article by Taos Turner on price inflation in Argentina. What I take away is that the country is in a state of internal warfare.

The Pertinent Fact:

According to the article, Argentina's public is now confronted with 30 percent annual price inflation.

The Cause and Cure, according to Argentina's Ruling Class of Thugs:

Friends of Cristina Kirchner have created propaganda posters accusing CEOs of large retailers of gouging the public. The gaudy creations now paper the walls of large cities. The caption reads: "THESE ARE THE PEOPLE WHO ARE ROBBING YOUR SALARY." Below an unflattering photo and the CEO's name and company is written: "They are increasing the price of everything to take your money." (The modern equivalent of Wanted-Dead-or-Alive posters?)

Elsewhere, individual consumers are encouraged to report any "unfair pricing" through an 800 number or via a government-provided app on smartphones. (Sounds powerful and scary, but I am curious to know who will do what with the information.)

Kirchner's cabinet chief, Jorge Capitanich, denies that macroeconomics have anything to do with Argentina's price inflation. He states that all the economists blaming the government's economic policies are prejudiced. He is sure of this, he declares, because he knows all of them and "[t]hey are all undercover agents." (For whom, he doesn't say.)

The Asininely Feeble Response of Retailers:

"In January, retailers agreed to freeze prices on about 200 products ranging from detergent to condoms."

[Audible gasp.]

That's it? No riposte? No counterargument? Not even the slightest attempt at self defense? Just a whimper and capitulation? I can here them now in their boardrooms: "Let's give them cheap condoms, that should do it."

No wonder totalitarians win. Their enemies are weak and short-sighted, and they cave in at the first boo.

[Thanks to for the image.]

Labels: , ,

Monday, February 10, 2014

The Law of Unintended Consequences

I always read John Mauldin's weekly newsletter, and in one was a quoted passage that made me gasp in disbelief:

"In the economic sphere an act, a habit, an institution, a law produces not only one effect, but a series of effects. Of these effects, the first alone is immediate; it appears simultaneously with its cause; it is seen. The other effects emerge only subsequently; they are not seen; we are fortunate if we foresee them.

"There is only one difference between a bad economist and a good one: the bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen.

"Yet this difference is tremendous; for it almost always happens that when the immediate consequence is favorable, the later consequences are disastrous, and vice versa. Whence it follows that the bad economist pursues a small present good that will be followed by a great evil to come, while the good economist pursues a great good to come, at the risk of a small present evil."

– From an essay by Frédéric Bastiat in 1850, "That Which Is Seen and That Which Is Unseen"

I gasped, because I had two simultaneous thoughts:

1)  What a simple, commonsensical, yet ingenious remark.

2)  How can it be that Bastiat wrote this in 1850, and we still don't get it?

Good grief.

[Thanks to Impactedbygrace for this image.]

Labels: ,