09 April 2008

Eye of the storm II: The papers

A few more things about the farmers' strike, or as Página/12 calls it, the agricultural businessmen's lockout. The strike, lockout, or whatever you call it, is now on hold while the leaders of the movement wait for their call to negotiate with the government.


Página/12 cover, March 26, 2008

La Nación cover, March 26, 2008

Covers of Página/12 and La Nación for March 26 (the day after Cristina's inflammatory first speech, the cacerolazos in upper-class Buenos Aires, and the disbanding of Plaza de Mayo demonstrators by Luis D'Elía's thugs).

Since the subject of Página/12's word choice came up, here's something I meant to say before. I was appalled by Página's coverage of the conflict. I'm well aware that Página is a leftist newspaper, and like all media, they select news and editorialize on them from that perspective. I'm a lefty myself, not a radical, but in general I'm in agreement with that perspective.

Sometimes Página's op-eds go over the top and I don't like that; I don't like how certain people in their staff see 1970s' politics, or class struggle, or whatever their pet subject, in every bit of current news. To balance that, I read La Nación, which is right-wing and anti-government, but also has a few really good writers, alongside some whose opinions make my stomach turn.

Well, my discovery these days was that Página/12 is obviously, visibly, on the pay of the national government. Página's coverage of the strike/lockout was so deliberately skewed, so unctuously pro-government, so grossly anti-strike, so monolithically defensive of Cristina, that I can't be convinced that ideology alone is responsible. I felt angry. The rest of the media coverage was sloppy, partial, sensationalist, sentimental..., as usual. Even La Nación didn't dig so much in the trash. Página's was a pro-government campaign, almost as subtle as Luis D'Elía screaming his hate for the rich.

The fact is, I'm a "salad bar"-type political pragmatist. I tend to distrust and discount the opinions of people who are in the extremes, but outside of those, I applaud anyone, from the left or the right, who comes up with a good idea, or something that looks like a good idea. I had a deep distrust of Néstor Kirchner when he ran for president. I changed my mind as he did some really cool things, like renewing the Supreme Court, facing up to the utility companies that wanted to triple their fees, maneuvering around the defaulted bond-holders who would see the country broke to get paid, and repealing the laws that prevented the torturers and murderers of the last dictatorship from being tried. Then he started channeling Juan Domingo Perón or something (that is, Perón minus the articulateness and good diction in speeches) and the worst elements in his government acquired power, and then he passed it all on to Cristina, who has been doing exactly the opposite of what should be done since Day 1.

All this time (getting back to the subject) I heard Néstor and Cristina criticizing the media for this and that. Néstor K once said the media should inform objectively instead of doing opposition politics (that is, kill the editorial section, kill political analysis — just repeat whatever the government officially communicates to the press), and more than once he pointed at specific journalists and specific papers. Cristina is even worse. For all her supposed communicational talents, she sounded remarkably stupid, to me at least, when she tried to make a sarcastic comment — "It seems as if the media were forbidden from printing good news." The Kirchners never understood journalism, maybe because in Santa Cruz the media were few and were controlled by their friends and cronies.

Up to the export tax crisis, Página/12 was (so it seemed to me) rather neutral, not in the sense that it didn't editorialize, but in the sense that it wasn't systematically putting out an apology of the government. La Nación, on the other hand (so it seemed to me) was always trying to poke holes in everything the government did. Granted, as of late Página would have real trouble finding something good to say about the government, and the ideological strain was showing; and La Nación was enjoying a free ride on the scandal rollercoaster, so it came out as more objective (negative spin wasn't necessary) and didn't look so clearly anti-government.

When the countryside rose, Página/12 suddenly shifted gears (or so it seemed to me...) and launched an all-out offensive against the critics of the Kirchner administration. Even the witty Rudy & Paz comics became bitter, unfunny attacks on the "oligarchy". You could count a half-dozen headlines each day, every one of them a long editorial piece, pointing out the many sins, past and present, of the participants in the protest — and not one objective criticism of the idiotic measure taken by the Ministry of Economy which had caused all the trouble in the first place.

It got me really mad. I've gone mad with La Nación over the coverage of certain episodes by specific writers, here and there, and I'm accustomed to see through its supposed objectivity into its rotten conservative heart. But I didn't expect this from Página: a whole paper, which used to cover a variety of topics seriously when appropriate, or with well-placed irony and sarcasm in other cases, turned overnight into a government propaganda machine. Not for a left-wing government, but for an administration that's fast turning us back to old-style fascism. I can barely read it anymore. In fact, since the campo crisis started, I almost don't read about it in the papers — I pick and choose only the shorter informative articles, and quickly skip over the editorials.

It's all bare ideology out there now. Dialogue, compromise and solutions seem to have been banished.

5 comments:

  1. Barbara20:50

    One of the things that fascinates me about this crisis is realizing just how selective the media coverage is. (Not that it wasn't selective before --- I probably just didn't know it.) Events that are clearly newsworthy just haven't been reported, although they are described by eyewitnesses in blogs or reported in conversations.

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  2. Pablo – I’m a lot more pessimistic than you. I think that a meltdown is already in progress, and that we’ll see that retrospectively.

    The current situation is more like the lobster in the pot where the water is gradually being heated. The lobster doesn’t realize it’s a fait acompli until it’s too late. It may be that Argentina’s goose [not swan ;-) ] is already cooked. Economies are like ships – they have so much momentum that any change in course takes a long time to be reflected in results.

    Even ignoring the current Campo vs. CK situation, both the internal Argentine economy, and the world economy are in precarious shape. Much of the current cash flow into the Argentine economy has been the result of record commodity prices (soybean, wheat corn, beef, etc), and the retenciones placed on them by the Federal government. If the current high demand/price weakens (as seems likely if there is a global recession), the country is going to be in a difficult position.

    I believe that the urban support for the farmer’s plight could evaporate in an instant if CK indicates that unless the increase in retenciones is supported, then the IVA sales tax will have to go up.

    Inflation has been increasing every year since 2002. Even though the INDEC figures were probably reliable until 15 months ago, I believe they still gave an underestimate of the increasing cost of living in Argentina.

    For example, on a personal level, the expensas for my apartment in BsAs were 26% higher in 2007 than 2006. Last year inflation was at least 25% judging from what I had to spend on living expenses. I believe that inflation this year will be much higher. I’ve seen increases at Jumbo and Easy of 10-30% just in the first quarter alone. My ABL taxes for 2008 are 2.45-fold higher than 2007. My Bienes personales taxes have likewise increased 1.6-fold.

    In many ways I think that NK’s policies have exacerbated the current situation. The freeze on gas and electricity rates beginning in 2001 resulted in no infrastructural investment. There have been nationwide energy shortages in the past couple of years. The coming winter will tax the distribution network even more given that there will be less gas available than last year. I guess the government is hoping that it won’t be so cold.

    The government has continually boasted of the economic expansion (principally in the farming sector), and the increase in government revenues (from retenciones). However, none of this money seems to be have been used to improve the country’s infrastructure (e.g. roads, transportation, education, etc.) which has been in decay for such a long time. Coupled with this was the government’s continual ignoring of the Paris Club debt. Until that is resolved, why would anyone want to invest in Argentina? That, together with the ruling by fiat that has become a hallmark of CK. Daylight savings – we’ll start that next week. Retenciones – they’ll be increased immediately, right before the crops are ready to be harvested. A profitable business could become a liability in an instant.

    Any country that maintains a fixed currency peg (in this case against the US$), risks both social and economic turmoil when it’s no longer supportable. It was true during the 1:1 peg, and it’s true today with the 1:3 peg. Look what happened last time. The piper will have to be paid someday.

    The government mantra has been (and I believe CK reiterated it a couple of weeks ago), that the peso has been keep artificially weak. This seems to have been generally accepted with no real validation. I’ve not been a believer. In fact I responded to your April 16 2007 blog Economic divination in Argentina with the following comment:

    “So, according to Pablonomics, the best currency strategy would be to convert dollars (and dollar-denominated assets such as real estate) into pesos … and wait for the peso to strengthen. I’m not sure that even the most ardent believer would however be prepared to take the risk …”

    The dollar has been weakening for several years against the euro, but the inflation rate in Argentina has been much, much higher.

    I remember that four years ago my real estate agent’s girlfriend asked me for some economic advice. She was working for Aerolineas as a flight attendant based in Madrid, and being paid in euros. She wanted to know whether she should convert any of her euros into dollars or pesos. My advice was, that if Bush was re-elected, she should not consider converting ANYTHING into dollars, or pesos. I sincerely hoped she followed this advice.

    In the past couple of weeks some economists have compared the similarity of the problems faced by both Venezuela and Argentina, and that both countries may be faced with devaluing their currencies.

    Whatsoever a man soweth, that shall he also reap.

    /rant off
    flame suit on

    John

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  3. John, I hear what you are saying but trust me - it is not that different in other countries at this time. I can base my words on the numbers from Lithuania, Italy and New Zealand. In Lithuania (and it is a part of EU) inflation (official) is over 15% but it is higher than that, the bread went up in price 100% since last year, other commodities too. In New Zealand food is nearly 80% more expensive than it was 18 months ago, petrol was 1.35 then and it is 1.85 and steadily heading for $2/ltr mark. No that different in Italy neither. So leaving all politics on the side, I think whole world is heading to the same place - faster or slower. Those that depend least from buying anything will be better off in the next few years at least. I have already bought a small car in place of my big SUV, people will have to learn to change their habits to keep the living standard from degrading badly.

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  4. What *I* have heard, though I haven't researched by myself, is that we're heading for the end of cheap commodities. Oil is running out. It may fluctuate depending on the political context, but things aren't getting any better on that front. It would take Iraq to stabilize, Iran to elect a non-Islamofanatic government, Venezuela to get rid of Chávez, and both Israel and the US to make a political U-turn in many areas. Beef is also going to rise, because it's inefficient. When you take grains that could feed your children and give it to your cows and then eat those cows, you waste 80% of the energy. We in Argentina can still keep a lot of cattle because there are lots of empty space, but that won't last. Hell, nowadays you can see cows grazing on the low-lying mosquito-infected islands opposite Rosario, where any flood would kill thousands (it happened last year), because the good pastures elsewhere have been taken up by crops.

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  5. I’ve never considered commodities to be “cheap.” Generally in a free market economy, prices reflect what the market will bear. Gas prices in Western Europe for example have been extremely high for years, mainly because of government taxation.

    While the price of food and oil has increased everywhere (higher demand = higher prices = higher profit), the cost of food production has not increased nearly as much as the price. While one could reasonably argue that since oil is a finite commodity, and as the supply dwindles the price should increase (although of course the cost of production has remained relatively stable). We shouldn’t forget that the production of oil is controlled by a cartel.

    My point was that food is not the only sector in the Argentine economy that is undergoing inflation. The price of everything is rising steeply, and quickly. I gave the example of the 60% increase in Bienes personales taxes, and the 145% increase in ABL taxes that I have to pay in 2008. This all because my property’s value has been reassessed – using an unknown and seemingly arbitrary method. The government applied a special multiplier for valuation in what it considered “richer” barrios … you get the idea. Shouldn’t the price that people pay to buy the property be a measure of its value for taxation purposes?

    In the US, my county property taxes, my state sales and income taxes, and my federal taxes are unchanged (I live principally in California). The cost of food remains essentially unaltered. Why can I buy fruit imported from Chile (in the northern winter) cheaper in the US that I can buy it in Argentina? Why is milk cheaper at my local supermarket in the US than in BsAs (considering that the household income in my US zip code was $116,000 in 2005 …).

    Tomas, since I’m a New Zealander I pay taxes there too. They remain unchanged. There are 5 generations of farmers in my family so I am quite familiar with the agricultural sector. I remember when the prices for New Zealand’s agricultural exports took a nose dive in the 70s, not to mention the 50% cut in oil available to New Zealand in the oil crisis. And even though food and gas prices may be increasing in NZ, the Consumer Price Index (CPI) was 3.2% for 2007. Argentina was 6-9 TIMES that amount.

    I guess my major point is, is that if we are (or will shortly be) seeing a global recession, then the price for agricultural commodities will weaken because the Chinese and Indian consumers won’t be able to afford to pay as much. Maybe it won’t fall much, but I think any fall in the amount of money the Argentine government is extracting from the agricultural sector could be disastrous. Who knows? Since there is so little transparency in Argentine it’s very difficult to predict (or take measures to mitigate problems) in advance.

    I don’t disagree that the long-term trend is for higher commodity prices, just that there will be ups and downs along the way, that reflect the micro (country) and macro (world) economies. This is where Argentina is at risk, because of lack of economic diversification. What happens if there is unfavorable weather? What if there is an outbreak of FMV? New Zealand got into a similar situation when it’s principal export market (the UK) disappeared when the UK joined the EEC (the precursor to the EU). Farmers had to accept lower prices for their exports.

    In fact the global demand for both oil and food is fueled mainly by the increasing prosperity of the inhabitants of India and China. China is facing massive inflation (which is starting to result in higher prices for Chinese-manufactured goods in the US). Only because China has a repressive authoritarian regime can it enforce both social and economic handcuffs on its population. China’s explosive growth won’t go on forever. There is increasing pressure on the yuan (it reached a high against the $ yesterday), meaning the end of cheap Chinese-made goods. Even in Argentina, many of the imports I see are made in China – but of poorer quality and higher in price than those imported into the US.

    John

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