If you've ever wondered...

When we're talking middle class and working class in Argentina, how much are these people actually making? And what does it cost to live here?

This week, the government announced a raise in the legal minimum wage to 1200 pesos per month (around $400usd) starting in August and 1240 pesos per month as of December. Prior to this, minimum wage had been 980 pesos/month (around $325usd). The new wages come out to about 6 pesos (or $2) an hour. In a meeting earlier this week, workers unions defended the raise and vied for more while representatives of business attempted to dissuade the hike. At least 2 million workers earn less than this and are working in "black" or off the books, unlikely to be affected by the new minimum wage.

According to conservative think-tank Equis, the basic necessities for an average family cost 1435 pesos ($480)/month. Inflation is a reality and though it appears to have slowed down in the past few weeks, things aren't getting any cheaper. Furthermore, with a rise in tourism and city-wide construction of condominiums and high cost apartments, rents within the city have soared. Just to give you an idea from personal, anecdotal experience, it's difficult to find a basic apartment for any less than 600 pesos/month and even that is a precious find.

It's almost impossible to get reliable statistics for these things at the moment though. The INDEC, the national entity in charge of keeping track of things like inflation, has lost all credibility this year (consistently announcing zero or minimum inflation when it was obvious to the average consumer that prices were going up). The government, along with several well-respected economists, is in the process of devising a new system.

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Argentina from the Outside

The worst possible scenario for the government has become reality. The Senate finished their vote this morning sometime around 4am. (It was around that hour that I finally gave up listening to speeches for both sides and fell asleep!) The vote divided the Senate down the middle. 36 senators supported each side of the tariff issue. In cases like this, the vice president is the one to decide, leaving Argentines last night with a white knuckle finish. The Argentine vice, someone we haven't heard much about over the last few months, is Julio Cobos. And while Cristina Kirchner is from the Front for Victory (FPV), Cobos is originally from the UCR (the Radical Party, which despite its name is conservative). In fact, Cobos' party kicked him out for running on the ballot with Cristina. And she was making a gamble to ensure more votes and a broader appeal (they won the national elections with 45% of the vote), a strategy which at this point, perhaps the Kirchners are regretting. Cobos was left with the very difficult decision of voting against the government he forms part of and putting the presidency in a very weak position or, voting true to his conservative background (and undoubtedly beliefs). Cobos chose to vote against the proposed tariffs. "History will judge me," he apparently said, when casting his vote.

Curious to see how this was playing out beyond Argentina's borders, I hunted down the report on last night's events on the New York Times website. As expected, it has a definite slant to the right (something I was only able to see clearly in the Times after having lived here for a good period of time). I thought it might be interesting to post some reflections on the "other side" of the slant so you can compare "both sides" of the story. You may need to go through a free sign up process to access this link to the article. (Please let me know if it doesn't work and I can paste the entire text here.)

Writing from Rio de Janeiro (in Brazil, by the way), the Times predictably portrays the president and her party in domineering, authoritarian terms, something they've been doing since Néstor Kirchner was elected (in 2003). It seems that when American interests don't like a foreign power, the default is to portray them with hints of despotism. Here, the Times sets up the opposition between, on the one had, the government (associated with words like "imposed", "angered" and "control") and, on the other "rebellious farmers" who would be "forced to give up more of their profits". The two sides, clearly delineated, there is little room in international media for subtleties or complexities.

"Mrs. Kirchner and her husband, former President Néstor Kirchner, who leads the Peronist bloc, have justified the higher taxes as important to redistribute the country’s wealth and hold down Argentine food prices. But the Kirchners have widened divisions in the country by portraying the farmers’ strikes as a political threat, calling farm leaders 'greedy' and 'coup plotters.'"

This paragraph is interesting as it sets up a false opposition. The first sentence is, in my opinion, quite accurate. This is what the entire conflict has been about from the government's point of view. However, one reading the Times would be lead to believe that in fact, the goals of more equitable wealth distribution and regulation of food prices are negative precisely because they increase divisions in the country. In fact, these divisions (in blunt terms, between those who have and those who don't) have been present in greater or lesser degree since practically the creation of Argentina as a country. These are the similar divisions exploited by politicians associated with the right wing dictatorship of the 1970s to justify the disappearance of thousands of dissidents. And the fact that the right may oppose more equitable wealth distribution and regulation of food prices is natural (since it's their pocketbooks being threatened). But the latter does not lessen the value of the former.

Another important detail is the "farmers". An interesting (albeit not surprising) choice of words to describe the agricultural sector opposing these reforms. The situation in Argentina these days has little to do with small family farms. In fact, close to 70% of these "farmers" live off of rents they're paid for their land which is leased out to those who farm it using the latest technology in what are more like large corporate farming operations than anything else. The small independent farmer trying to make a living off of his land is a disappearing breed here. The "farmers" protesting are, for the most part, making windfall profits off of rising international soy and grain prices; the wealthy getting wealthier. Therefore, though it may sound totally out of place to call a mere "farmer" "greedy", the adjective is not entirely unfounded in this case. Add to that the right wing political orientation of many and not entirely implausible connections to the last dictatorship (not to mention the history of this country) and "coup plotters" suddenly doesn't sound so extreme.

Further Reading: If you can read Spanish, here's an excellent article by Alfredo Zaiat explaining how the farming of land has been highly specialized and technological. "Farmers" have long been replaced with something that more closely resembles corporate "food producers".

Senate Debate: Government vs "Campo"

The Senate is currently debating the export tariffs. What's in play here is more than simply how much to charge in tariffs. What's in play is the proposed economic and political model of the current and previous government (the two Kirchner mandates). Yesterday there were two huge marches in the city representing the two sides in the debate. One took place in front of the Congress building in the center of the city. An estimated 95,000 people attended, the large majority of whom were there as part of workers unions (which here are much more politicized than in North America). They mostly arrived by bus or public transportation. Meanwhile, across town, a vast proportion of the comfortable middle and upper classes showed up in unprecedented numbers. An estimated 225,000 people. Impressive for a sector quite unused to demonstrating their convictions in street demonstrations. Instructions for how and where to park were passed on through the mainstream media by concerned politicians wanting to make sure there would be room for everyone's cars. The demonstration, tellingly took place in Palermo, a hip middle class neighbourhood, at a monument donated to the country by Spain.

If anything can be read into these numbers (and believe me, journalists and politicians have been doing plenty of that for the last 24 hours) it's that right-wing opposition to the government and the model it proposes is getting stronger and more unified. The word "coup" -mostly to deny that the protests have any threatening element- has been circulating over the last several days. Don't get me wrong -I think that democracy is currently comfortably installed in this country. (One could read these protests and the massive numbers as precisely an expression of the fact that democracy is quite healthy here at the moment!) But in a country that has seen 6 coups in less than 50 years (1930-1976), this word has a certain threatening edge and carries echoes of a not-to-distant past.

If the Senate does pass the law on tariffs, the government will have a small triumph, confirmation that the country may be ready for the changes it proposes. There is no guarantee, however, that the agricultural sector (producers, exporters, landowners, etc) will not return to roadblocks and other means, protesting (after the fact) that the bill was unconstitutional. On the other hand, if the Senate produces a no vote, the outcome will be very bad news for the government. It will mean a strengthened opposition and one that knows it has the support it needs to continue pressuring a weakened government, one that since its third month, has had this as its one major issue.

The session in Senate began around 10am this morning. It continues as I write and will probably go on until past midnight tonight when the final vote will take place. 72 senators will vote and currently they are tied at 35, 35 with 2 undecided. Whatever it is, the only thing guaranteed about the final outcome is that it will be close.



I leave you with photos from the march that took place in front of the Congress building yesterday afternoon:

The Economics of it All (Part 1)

The following is a translated excerpt of a presentation made by Aldo Ferrer, Professor of Economics at the University of Buenos Aires before the House of Representatives in Congress on June 25, 2008 regarding the conflict between the agricultural sector and the government. Ferrer is one of the country’s leading economists and is part of the Fénix Group which was formed in the year 2000 by Argentine economists seeking to design an economic model for the country which could offer an alternative to the neoliberal policies promoted by the Washington Consensus. His presentation before Congress offers an interesting summary of and take on the conflict and he’s able to see the situation from a much broader perspective than that reflected in the daily papers. He also touches (in the second half... to be posted soon) on some similarities that Argentina shares with Canada and other countries which you might find interesting.

I hope you’ll forgive any errors and awkward phrasing. My knowledge of economics is somewhat limited and I did this translation quickly. The original (in Spanish) can be found here.

I’m posting the (unrevised version) of the first half of his presentation tonight. The translation still needs some correcting (which I hope to get to as soon as possible) but if you don’t mind braving the rough wording, feel free to have a go at it now. Tomorrow there are two important protests planned –one for each side of the issue (or rather a rally and a counter-rally). The bill was passed from Congress to Senate and is being debated in Senate tomorrow afternoon. At this point, it is very close and no one is able to tell what the results will be. In addition to this, representatives and others associated with the producers have made public statements to the effect that even if it’s passed, they are not willing to comply and claim the unconstitutionality of the proposed export tariffs. The rallies tomorrow are planned to coincide with the announcement on the results of the debate.

* * *

Mr. President, Representatives of the House, Ladies and Gentlemen, the topic we are here to discuss, that of the tariffs, in my opinion, has up until now been discussed from only one perspective, that of the redistribution of earnings, the distribution of an income that is coming not only from individual production but also from a situation of high prices on the world market, and the increase in earnings from exports.

The debate has been whether or not it is fair to distribute this income in order to defend food prices on the domestic market and have a more equitable distribution of wealth or, if this income belongs wholly to those who produce the export goods.

In my opinion, this approach is insufficient because implicit in the topic of the tariffs is the prior and very important problem of the productive structure of the country. Development in today’s world is a process based essentially on the use of science and technology, in the management of knowledge and with the goal of augmenting worker productivity throughout the social and economic fabric of a modern nation. Several conditions are necessary in order for the incorporation of science and technology to produce development in modern constructions. One of them is to count on an integrated and diversified structure that is able to incorporate diverse sectors of modern production from the conversion of natural resources to leading edge technologies connected to biotechnology, information technology and the production of capital goods.

If this does not take place, if a system does not have a sufficient level of diversification or ability to incorporate and produce knowledge, it is unable to develop under modern conditions. This is also closely linked to the development of national systems of science and technology. Only countries with integrated, diversified and complete structures that cover a variety of productive sectors, have systems that are strong in science and technology. There are no exceptions in this sense. There is no scientifically and technologically advanced country without a productive structure with those characteristics.

Therefore, the development of the country requires –as stated—a structure with these characteristics, one that cannot be sustained in one sector alone. For instance, it cannot rely solely on the production of primary goods. Nor is there any developed country in the world which relies solely on the transformation and income from primary goods. Countries rich in oil, copper, minerals or tropical resources are not able to leave an underdeveloped state unless they manage to develop a complex and diversified structure. In our particular case, the agro-industrial chain, with all the direct and indirect employment it generates, represents around a third of the employed workforce. If we are unable to rely at the same time on industry as a base, we will be unable to provide work and social welfare for a population of 40 million. In other words, unless we can rely on an integrated structure we will never be able to reach fully employment, we will only be able to take care of less than half our population.

We must face the fact that, as the great economist (as well as engineer and businessman) Marcelo Diamand has said, the Argentine economy is structurally unbalanced. By virtue of a great wealth of natural resources in the country and high efficiency shown by many producers that are using the latest technology, we have an agricultural sector that, as some like to say, is a “precision agriculture” in many areas. The fact that many rural producers are employing cutting edge technology is revealing. Today, in contrast to some time ago, agriculture is no longer an activity of low “knowledge employment”. Rather, agriculture is on the technological frontier which has allowed, on the other hand, the extremely important development that this sector has carried out on the natural resources which this country counts on.

However, it so happens that the Argentine economy is part of the world market and the relative prices on the world market are not the same as our domestic prices. If we were to transfer the prices of the world market to our domestic market, we would be determining our productive structure with respect to price indications on the world market.

One can also take the opposite example, of relatively different prices in a highly industrial region such as the European Union. Precisely because the European Union wants to have an integrated structure and advanced agricultural industry, it applies a common agriculture policy to which it devotes much of the resources in the region. If it weren’t to do this, there would be no European farming. It has rightly decided to defend its primary production with a common agricultural policy in order to assure its food supply and social integration.

Given our relative underdevelopment, we are in the opposite situation. Therefore, because a modern State has the obligation and right to administer international prices within its own borders with the objective of national development, which consists in maintaining a diversified and complete structure, from the production of natural resources to a diversified service industry and the aim to manage development, incorporate knowledge and technology and, as a consequence, to grow. This forces us to confront our unbalanced structure, one in which...

[Here, Professor Ferrer was interrupted by proponents of the agricultural producers and other opposition obligating the House to take a recess and resume later in the afternoon.]

9 de Julio -Día de la Independencia

On this day in 1816, 6 years after the Revolución de Mayo, delegates from various provinces and regions throughout the area met in the city of Tucumán to sign the Declaration of Independence of the United Provinces of South America, the former Viceroyalty of Río de la Plata. Most delegates were priests and lawyers from Jujuy, Salta, Tucumán, La Rioja, Catamarca, Santiago del Estero, Mendoza, San Juan, San Luis, Buenos Aires, Córdoba, Charcas, Cochabamba, Tupiza y Mizque. (The last two are regions in Upper Perú.) To get to Tucumán they had to make the journey by horse-drawn carriage. From Buenos Aires to Tucumán, this journey would have taken roughly a month. They met in the house of Francisca Bazán de Laguna which was declared a national monument in 1941.



Two years prior, in 1814, King Fernando VII, had returned to the Spanish throne following Napoleon’s invasion. This generated an odd situation for those who had supported the Revolución de Mayo in 1810 as many had vyed for independence in the name of the King of Spain (who had been temporarily removed by Napoleon). With Fernando back, they could no longer fight for independence in the name of the King since Spain wanted to regain control over its colonies. Those who were truly loyal to the crown (and who had opposed the Revolución, supporting Spain’s colonial hold on South America) were making gains and planned to attack the army general José de San Martín, interrumpting his monumental campaign to liberate South America, invade Argentine territory and take the city of Buenos Aires.

In April of 1815, an uprising brought down the government of Carlos María de Alvear, the second Supreme Director of the United Provinces of Río de la Plata and a staunch Unitarian. His (dictatorial) rule had lasted only three months. Those who ousted him, demanded a meeting of Congress, of all the delegates representing the United Provinces. The session began in March of 1816 with 33 delegates present. Some regions were unable to send representatives because they were intercepted by loyalists to the crown or were involved in a war on the Brazilian border. Most Federalist regions that sent delegates were emprisoned by Unitarian agents.



The declaration they wrote declared their unanimous desire to break the “violent relations that tied them to the King of Spain, regain the rights that they had lost and declare themselves a nation, free and independent of Fernando VII and his successors” in the name of “the authority of the people we represent”, the “Heavens, the nations and men throughout the globe”.



One week later, in a secret session, the oath was modified to read: “...independent of Fernando VII and his sucessors and any other foreign domination”.

The declaration was also translated into Quichua, one of the many indigenous languages spoken in the region.

Current Events: Government vs Producers Continued

At this very moment, proposals on what to do about the export tariffs as well as a couple of additional laws are being presented before Congress in a special session which began yesterday afternoon after negotiations with the main organizations representing the producers failed to produce consensus. The presentation in Congress continued on this morning and will end in a vote. Although the producers, with the support of some opposition parties (the UCR –the radicals-, the CC –the Civic Coalition-, PRO –the party backing Buenos Aires’ conservative mayor-- and some members of the socialist party), had requested a 150 day delay on the proceedings, the debate still went ahead. At the moment, it is only speculation whether the government will have enough votes to get the resolution passed. Special exceptions for small and medium producers have been added to the text of the original proposal and some minor concessions have been made. In total, something like seven alternative proposals were presented by different parties and interest groups. But the government is hoping for enough support to get it’s own proposal passed.

Mario Llambías, the president of one of the four organizations that represent the producers, the CRA (Confederación Rural Argentina), although he had originally supported taking the debate to Congress, has recently declared that if the proposal is passes, he will consider it unconstitutional. Meanwhile, among the other three organizations, the once united front is showing internal divisions.

What remains to be seen is how the vote goes, whether the resolution is passed and, if so, whether the producers will respect the decision of Congress.

Update: After a session that lasted 19 hours, the government's proposal was passed. The vote was close as expected. 129 in favour, 122 votes against and 2 abstained from voting altogether. The proposal has to go before the Senate now. Producers still oppose the bill despite the fact that the government has made several concessions in their favour.

History: A Country's Beginnings (Chapter 1, Part II)

The struggle between Federalists and Unitarians divides the new country. The eastern provinces of Buenos Aires, Santa Fe, Entre Ríos and Corrientes are dominated by the Federalists while the rest, the “interior” of the country, is Unitarian. Eventually, by the early 1830s, the Federalists win out and all (now) fourteen provinces sign the “Federalist Agreement”. In theory, all provinces share equal power. However, by the mid 1830s, the governer of Buenos Aires, Juan Manuel de Rosas, begins to dominate the governments of the other provinces. Through diplomacy, or where this fails, sheer and sometimes brutal force, he manages to get sympathetic governors in strategic positions throughout the country. By 1851, he’s the “Supreme Chief of the Argentine Confederation” and quite a dictatorial one. While his power grows, his opposition grows as well. In 1852, he’s overthrown by an anti-Rosist alliance and is forced to seek exile in England where he remains until his death.

With the end of Rosism (as it was called), the majority of provinces agree to compromise their sovereignty in favour of becoming a Nation. The anti-Rosists come together to form the Partido Liberal (or Liberal Party) which takes power. The main opposition, however, is a man named Justo José de Urquiza and his followers. Urquiza, once the governor of Entre Ríos province and a supporter of Rosas, had taken up the opposition and helped to overthrow him when Rosas made policies that were harmful to his province. Now, though he had helped overthrow Rosas, his bid for power was still seen as similar to his predecessor. Urquiza is chosen as president of the Confederation. Over the conflict, however, Buenos Aires separates from Confederation and the new capital of the country becomes Paraná.

A year later, in Santa Fe, the country finally gets a national Constitution, although without Buenos Aires. In the following years, Buenos Aires does quite well economically, thanks to a thriving export business in wool and leather. The Confederation, on the other hand, doesn’t do so well without its former capital.

Tension grows. There’s war in 1859. Urquiza and his troops win and Buenos Aires is reincorporated. But there’s war again in 1861. Buenos Aires wins under the leadership of a man named Bartolomé Mitre, who then becomes president. Buenos Aires, under Mitre’s leadership, dominates the country, once again.

In 1865, Mitre signs an important agreement called the Triple Alliance Treaty, with the neighbouring countries of Brazil and Uruguay which leads the three into a long and unpopular war against Paraguay. The latter is unable to resist against the three more powerful countries and loses much of its territory and most of its male population, as well as the war. For Argentina, however, this war marks an important step in its consolidation as a nation: for the first time, its troops from all provinces fight together as a national force, rather than distinct and divided provincial powers.

Under the later presidencies of Sarmiento and Avellaneda (more about them in future posts), the country becomes more united through the construction of a national railroad system, economic development and the arrival of more immigrants from Europe.

By 1880, the country looks pretty similar to the way it does today. Buenos Aires (city) becomes the “Federal Capital of the Republic of Argentina” and a couple of years later, La Plata, a small nearby city becomes the capital of Buenos Aires province. It has both a national currency and a national army. One could say that by 1880, the complex process of the founding and consolidation of the country has come to a close. However, much lies in store for this new nation...

Based on the series Historia de un país Argentina siglo XX.