Price Controls in Argentina, Again!
The New York Times ran a just-the-facts story about Argentina's increasingly egregious price controls--beginning in browbeating, moving to controls on beef, spreading to all consumer goods, and ending in export bans--that somehow failed to report any information on central-bank policies, as if price increases and the money supply have nothing to do with each other.
Ah but the story was balanced because the reports added: "Orthodox free-market economists regard price controls with distaste. They argue that such measures, though meant to benefit the poor, distort market forces and, as producers are forced to absorb increased expenses without compensation, lead to reductions in supply and investment that end up hurting not just the farmer or factory owner, but also the consumer."
There are many things wrong with that paragraph, including the suggestion that this opinion is that of some sort of religious tribe that adheres to doctrines regardless of the circumstances, as well as the idea that the producers themselves bring about shortages because they aren't being sufficiently compensated at the controlled price. Greed!
But what is especially interesting is the failure of the reporter to make the proper connection between the country's "remarkable" growth rates--wow, 9% annually for three years!--and mysterious appearance of rising prices. A click through to the Argentina Central Bank shows M2 increases of 36%, 33%, and 25% in 2003, 2004 and 2005, with the latest data showing 20%+ increases.
Comments (7)
Yancey Ward
Of course, if government set the price of the NY Times at 25 cents per copy, we could welcome the editorial staff of the paper into the orthodox camp.
Published: April 4, 2006 10:36 AM
Stefan Karlsson
Madness, of course. While the ban of beef exports have indeed succeeded in bringing down beef prices in the short term as Argentinian beef producers have had little choice but to dump their already produced beef at rock-bottom prices, it will of course detroy the incentive for future beef production, thus reducing beef production, which will produce a new equilibrium where domestic beef prices are high and no export revenues exist.
But I guess that the export ban should at least make them immune from the charge of being mercantilists.....
Published: April 4, 2006 11:00 AM
George Gaskell
it will of course detroy the incentive for future beef production
Wait, are you saying that those who promote this sort of price control are failing to account for its effects over a sufficiently long period of time? That such policies have secondary and tertiary effects that are the opposite of and at least equal in magnitude to the immediate effect?
Henry Hazlitt, call your office.
Published: April 4, 2006 1:08 PM
Lisa Casanova
Don't be so surprised. I was taught in a grad-level political science course that price controls didn't work because people failed to cooperate with them and cheated by selling on the black market, as though some kind of giant act of communal will could make price ceilings effective.
Published: April 4, 2006 8:00 PM
Paul Marks
Oh another "New York Times prints ignorant statist story" article.
I have thought long and hard why free market Americans read the New York Times.
After all I do not read the Guardian newspaper in Britain.
The N.Y.T. prints nonsense because it is a leftist newspaper, printing nonsense is what it is SUPPOSED to do.
The only explinations for why free market people continue to write formal articles on N.Y.T. nonsense is because either they think newspapers should be "objective" or they think that much of the public still think that.
Perhaps one day the public will understand that the media (newspapers, T.V. stations or whatever) are about the spreading certain ways of looking at the world.
If one approves of freedom one should allow the leftists to have their newspapers and T.V. stations - as long as they allow us to have ours.
How to show that I am wrong.
Simple send the article into the New York Times and have them print it (I have written this many times).
"But they would not print it".
Yes - that is the point.
Published: April 5, 2006 4:55 AM
Luis
We in Argentina have seen this movie so many times in the past that it is really amazing that so many people still insist this time it will have a happy ending. I guess that if we all really concentrate hard this time and wish upon a star, we will be able to control inflation by sheer willpower.
Published: April 8, 2006 6:32 PM
Sam
Not only the NY Times but every article I could find on the subject just talks about the strike, the banging pots, and the food shortages.
They casually mention the tax, price controls, and export bans.....but then say absolutely nothing else. As if they can all just sit down and share some empanadas it will all work out.
I am getting so tired of this 3rd grade level journalism where nobody gets to the "meat" of the situation. (pun intended) :)
Published: April 2, 2008 12:15 PM