Inflation in the U.S., the economy in Argentina

12Sep08

I just got back to Buenos Aires from a month-long trip in the states, where I spent a good amount of time hearing friends and family discuss the U.S.’s recent economy woes and rant about inflation. When I came back to Buenos Aires, however, my luggage was heavier than when I came in because of all of the goods I’d brought into Argentina for friends.

The inflation rate here has been about 25% for the past four years. Prices here, as around the world, are adjusted due to scarily-high import taxes and the strength of the currency. The value of the peso is 1/3
that of the dollar; since corporations want to make the same amount of profit, they ‘dollar-ize’ the prices, even though salaries haven’t caught up: a good income here is about 30,000 pesos. The Starbucks that just opened here charges 13 pesos for a latte. A Big Mac extra value meal: 18 pesos. A can of Pringles: 11 pesos. Can you imagine paying $11 for potato chips?

In addition to the blanket 20% import tax, there’s an 80% import tax on ‘luxury items,’ which seems to include anything with a computer chip. I brought back a breast pump for an acquaintance who’d just
given birth, purchased on Amazon.com for $25. The price here? 400 pesos. The cheapest MacBook: 7,000 pesos.

These nuns would have an easier time finding virgins in an OB/GYN clinic than good deals on electronics in Argentina.

You can get a Wii in the U.S. for $300, but in Argentina, 300 pesos buys you one video game. In addition to the 100% import taxes and currency conversion of 3-to-1, the relative cost of living for many basic goods is about 6x higher than it is for Americans. That’s inflation, and locally-produced goods aren’t immune to these prices, because locals’ expenses are inevitably linked to something abroad. Obviously, people here have less stuff.

I’m not saying that government inaction or economic ineptitude, which president Cristina Kirchner is clearly showing, is acceptable. What I’m saying is that the potential “change” in standard of living for so many Americans, including my friends and family, is laughable, and that even my most liberal, educated friends were frighteningly clueless about what life is like in other countries. For every American family considering getting rid of its second car, there are hundreds upon hundreds of families in the world unable to afford even one, for whom the cries of Americans feels a bit hollow, like Paris Hilton decrying a raise in her private plane’s fee. Yes, it’s harsh but it’s the truth.

The upside of all of this so-called inflation in the U.S. is that I hope, and I believe it will, make Americans rethink how they perceive of consumer goods. Buying stuff just for the sake of buying stuff (replacing something that’s not broken just because there’s a new model… because there’s always going to be a new model) is rarely done here, and people are far less wasteful and impulsive with their resources. Boredom doesn’t have to be soothed with mindless consumption. People shouldn’t automatically be judged based on what they own or what they’re wearing. Nor should we place our sense of self-worth in what brands or items we buy, or use goods as excuses for actions: buying a gym membership never turned someone into an athlete, just as a newer camera never made someone into a photographer.

Even if you don’t think you’re impulsive or buy needless things, just think to yourself next time you’re about to pay for something: what if this was 6 times as expensive?

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Tags: Argentina, Buenos Aires, computers, economy, import, inflation, money, taxes