My in-laws left Argentina 30 years ago and still have much of their family there. I showed this article to them and their reply was simply, "the US is heading this way. We've seen this movie, and we don't like the way it ends."
Lessons from Argentina's Crazy Economy
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Re: Lessons from Argentina's Crazy Economy
#12Earlier quoted context omitted.
I'm not Argentinian, but based on the article it seems like there is plenty of regulation as it is. The problem is that these regulations change like the direction of the wind, and are unevenly enforced, and easily dodged via bribery.
Bribery is also something of a safety valve. When the state stands in the way of (otherwise peaceful and voluntary) exchange, paying a bribe may be a better outcome than not having these productive activities happen (indirectly as well, the state may benefit from increased tax revenues later on). Of course, some bribery can be evil, but the problem is not corruption itself, rather the power that fosters it is.
At least part of the issue, from what I can tell from the article, is that the majority of the people cheat on their taxes, so the Argentine government has to raise taxes in order to get enough revenue to pay operating expenses, which leads people to cheat on their taxes more, which...
Re: Lessons from Argentina's Crazy Economy
#13Does anyone think that something like bitcoin could help these people out? It seems like the government there is not doing its job and providing infrastructure to conduct business. Why not use a distributed payment system?
The problem is not that it's too hard and expensive to transfer money here. It is hard and expensive if you do it legitimately (like we do), but a huge fraction of the economy is underground. Like a third.
The problem, if I had to sum it up in a soundbite, is that you can't trust anybody. And so nobody trusts you. Unless you're family. You can imagine the effect that has on the competence of officials and executives.
The crazy laws are a big problem, but not as big as the endemic non-government corruption. Bank financing? We had to get a personal recommendation from our accountant to open a corporate bank account.
Bitcoin isn't going to help with that. If anything, it will make it worse.
The funny thing is, living here is pretty good, if you can afford the bare minimum needed to survive.
Re: Lessons from Argentina's Crazy Economy
#14I thought this part was pretty funny:
> "...I wasn't going to put all of my risk in Latin America again in my life." At the end of 2002, he left the company and moved his family to Miami.
I think Miami is a lot more Latin American than Buenos Aires.
Re: Lessons from Argentina's Crazy Economy
#15Earlier quoted context omitted.
Bribery is also something of a safety valve. When the state stands in the way of (otherwise peaceful and voluntary) exchange, paying a bribe may be a better outcome than not having these productive activities happen (indirectly as well, the state may benefit from increased tax revenues later on). Of course, some bribery can be evil, but the problem is not corruption itself, rather the power that fosters it is.
At least part of the issue, from what I can tell from the article, is that the majority of the people cheat on their taxes, so the Argentine government has to raise taxes in order to get enough revenue to pay operating expenses, which leads people to cheat on their taxes more, which...
yes, you couldn't be more right with this.
I am from Argentina and I found this disturbing: "taxes on commercial profits in Argentina add up to an effective maximum rate of 108 percent"
But also very true.
I wonder what would happen if the Argentina government reduced the taxes (because for the past 10 years I feel they've only gone up)
Would that encourage businesses to pay taxes instead of doing everything 'en negro'? It would encourage me.
As an entrepreneur I want to pay taxes but they are extremely high, punishing me for the corruption that surrounds me
Re: Lessons from Argentina's Crazy Economy
#16It's surprising that business owners are complaining about inflation. I always thought its the fixed salaried employees who usually complain (because their salaries don't scale as fast as the inflation).
Re: Lessons from Argentina's Crazy Economy
#17It's surprising that business owners are complaining about inflation. I always thought its the fixed salaried employees who usually complain (because their salaries don't scale as fast as the inflation).
High inflation means you can't get loans and have to spend money immediately.
Also, those salaried workers have rights. If you can't pay them, the government shuts you down.
Re: Lessons from Argentina's Crazy Economy
#18A big problem is the lack of regulation, IMO. That owner who is doing things "en negro" hurts the rest of the country and should be fined accordingly. Since no one takes a big step forward to stop it, people see their colleges do it and the trend continues. Inflation is also pretty bad, but I don't think it falls completely on the shoulder of the Government. Some items are simply overpriced. I'm not talking between a…
"That owner who is doing things "en negro" hurts the rest of the country and should be fined accordingly". This is a chicken/egg issue. People try to avoid taxes also because past governments confiscated their savings. Speaking from the entrepreneurship perspective, there is a big issue having employees, if you fire them you need to pay a salary for each worked year. So a employee with 10 years of work receives 10 sa…
This is a very good point, entrepreneurs have a lot to loose and history has taught them to be wary of the Argentinian government. Can't say I blame them. I suppose it's up to the government to "show" them that they can be "trusted" again.
Re: Lessons from Argentina's Crazy Economy
#19A big problem is the lack of regulation, IMO. That owner who is doing things "en negro" hurts the rest of the country and should be fined accordingly. Since no one takes a big step forward to stop it, people see their colleges do it and the trend continues. Inflation is also pretty bad, but I don't think it falls completely on the shoulder of the Government. Some items are simply overpriced. I'm not talking between a…
Who would do the fining?
Hint: The people who run the government make their living by taking bribes and other acts of corruption that are a result of their regulations.
In the US, corruption on the transactional level (ie. lobbying congress, etc is out of scope here) is an exception that ultimately results in a government official going to jail. In a place like Argentina, corruption is a hidden tax that is reflected on nearly every transaction.
Re: Lessons from Argentina's Crazy Economy
#20It's surprising that business owners are complaining about inflation. I always thought its the fixed salaried employees who usually complain (because their salaries don't scale as fast as the inflation).
High inflation means you can't get loans and have to spend money immediately. Also, those salaried workers have rights. If you can't pay them, the government shuts you down.
aah.. sort of like the credit crunch then.. it kind of feels counter intuitive because the usual cycle would be:
a) credit crunch with loss of demand leading to deflation
b) governments pump money
c) money loses value pushing inflation higher..
d) Governments try hiking rates and pull back money..
But some how in this case it seems the order is all jumbled up..