Argentina muddles its economy

Washington Post:

Inside a busy church hall early Friday morning, many of the 60 men waiting for a free breakfast tilted their heads upward to watch news flashes periodically scroll across a wall-mounted television.

"Government in Crisis . . . Minister of Economy Quits . . . Price of Food Increasing Worldwide . . . "

This country, in theory, should be protected from the global food crisis. Argentina's government touts steady economic growth, and in recent years the country has become a top exporter of the same grains, vegetable oils and beef that are now in such high demand.

But instead Argentina is becoming a symbol of the far-reaching effects of global food inflation. Like other developing countries that depend on agricultural exports, Argentina is struggling mightily to figure out how to protect local food sources without breaking the backbone of its economy.

"This country is in chaos right now," said José António Oliveira, 54, who said he has been eating at the church food kitchen in recent months because he can't afford food at today's escalating prices. "They tell us the economy is growing, but what's growing is hunger. The food kitchens are always full now because prices are going through the clouds."

Inflation -- and the government's efforts to control it -- have magnified existing fissures in the economy. The government and the country's agricultural producers for years have had a troubled relationship, but now they are locked in a full-scale war. Citizens are choosing sides, increasingly divided over an economic strategy praised for stimulating growth and cursed for fueling inflation. A lack of reliable economic data undermines constructive debate.

In March, President Cristina Fernández de Kirchner announced the third tax hike in six months on exports of soybeans and other products -- part of an overall strategy that aims to keep local food prices low and generate revenue.

That revenue, she said, would allow the government to redistribute the agricultural sector's disproportionate wealth to the people most vulnerable to price hikes.

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This is the kind of economic idiocy you get when control freaks are in charge of government policy. The arrogance of Kirshner's belief that the government can redistribute income better than the people who earn it is outrageous socialism that has ruined economies across the world. By robbing the farmers of their profits, they are also robbing the country of the investments they would make in expanding their business or buying goods that would benefit others in the economy.

These leftist forget that people in the economy survive and make a profitable living by selling goods and services to the wealthy. What Argentina is suffering from is not so much inflation as from a government with an inflated ego. The country would benefit most from letting the farmers sell their products for what they can get for them on the world market and then let them reinvest in Argentina. By sucking up their profits and reinvesting them in the sink hole of government handouts they increase inflation and make things worse for almost everyone.