RE: ARGENTINA

[carlos.lastra@xxxxxxxxxxxxxxxxx (Carlos Lastra)]

Dear PKT'rs:
	Unfortunately, I joined to this debate a little bit late, since I was out of town, but very enthusiastic.
	I think that in order to understand the Argentinean phenomena, some things have to be said.

	The sharp increase in the GDP is mainly the result of an important growth rate since 1991 (with a clear decline in 1995 what was called the tequila effect), and the strong appreciation of the domestic currency after the currency board (convertibilidad) was implemented in 1991. Today, Buenos Aires, is one of the most expensive cities in the world, and for sure, the most expensive in Latin America. But also, smaller cities and towns in the provinces are also very expensive. 
	That Argentina has an income per capita of around 8.000 dollars is quite reasonable. But what should be said is that the average income of the highest 10% of the population in relation to the average income of the first decil, that used to be 9 to 1, today is around 23 times. And we know how much rich people lie about their income.
	Unemployment skyrocketed from less than 6% in 1990 (in the middle of a recession) to 18%, and today is 16.7%. 68% (official figures) of the new employment are under temporary basis. The deregulation of labor markets (a la Malaysia) left a great number of workers out of business. If you are over 45 years old you have no hope. The social welfare reaches less than 12% of the unemployed. 
	Poverty, measured by the indirect method (incomes) is around 30%, lower than the one in October 1989 true, but as a base year, that was the year of the hyper inflation with 5.000% yearly. In 1988 was less than 14%. 
	If one uses the direct method (Unsatisfied basic needs), poverty has increased by two. Argentina is a country where the historically high rate of school retention has declined during the decade. Infant mortality increased in half of the provinces. Malnourishment reaches 35% of the kids in the north of the country. All this in an economy that grew 40% in terms of GDP since 1991!!! This is the miracle.
	The thing gets more complex when one concludes that poverty is realy heterogeneous, with empoverish middle classes and structural poors, both needing different solutions.
	It is true that the country needed serious structural changes, but the sudden opening of the economy, privatization of public services with no regulatory framework (or a very relaxed one), plus the lack of industrial and social policies, turned this country, characterized by its strong, massive middle class, into a polarized society, with a constant deterioration of income distribution, where the wages account for less than a quarter of the GDP, and the top 20% of the population captures 55% of the value added (again official figures).
	I do not want to go longer on other things, but if I wouldn't be Argentinean, I would consider this country a very interesting one to study. Here I see teachers earning U$D 350, retired U$D 150, workers U$D 200, with all the pain that these causes. Social, sectorial and regional polarization. A text book dual society.
	It is true that this government made a sort of revolution. Dramatic opening of the economy, deregulation, rising value added tax and lowered income tax, promoted financial speculation, privatization, real appreciation of the domestic currency, etc. etc. But being in my 40's and coming from other decades, for me revolution has other meanings. 


Daniel Kostzer
dkostzer@xxxxxxxxxx
Universidad Nacional de Tucumán
Argentina