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Argentina’s Protectionism

Image comparing a free-trade shop and a shop under protectionism

Not content with ruining their beef industry, Argentina has decided to take their protectionist agenda to the next level.

In an effort to curtail dropping foreign reserves, the BBC reports Argentina is taking drastic steps to reduce on-line shopping. “Restrictions already include a 35% tariff on credit card transactions abroad”.

Of course, the government isn’t doing this to be malicious — just like they weren’t with beef. But this move is just as likely as the previous one to achieve the desired results (that is to say, not at all).

Argentina has a long history of economic difficulty. In fact, the currency is so bad, that it quite literally approaches the inconceivable. From 1944 to 2013, the average annual inflation rate was 205%. Think that’s a typo? Or miscalculation? Or that it’s the total post-war inflation, not the every year number? It wouldn’t be hard to think any of those things. But nope. The Argentine peso has dropped thirteen (13) zeros since 1969. That is to say, a peso today is worth less than one ten-trillionth of what it was 45 years ago.

Argentina has endemic, chronic economic problems. But protectionism doesn’t work. Going down their present path is only going to strengthen the dólar blue.

Posted in Economy, Global Business.

Chris Richardson has strong opinions on just about everything. Just ask.