Inflation is the hot new buzzword within the US news cycle as the effects of COVID are hitting American consumers when it comes to everyday prices. This rise in prices might be new to Americans, but it is something that has been affecting Argentinians for decades. Currently, Argentina is facing some of the world’s highest inflation, with numbers reaching into the triple digits in February 2023. This crisis has had a serious effect on the average Argentinian who must choose between their food and housing to survive; a choice which has left many people homeless and seeking shelter at at the Jorge Newbery international airport, commonly known as Aeroparque, in Buenos Aires.
In a recent Washington Post article by Patrick Gillespie entitled: Why Argentina’s Inflation Is Up Over 100% Again; Gillespie goes into a detailed account of the recent history of Argentina’s economy and the many errors made that have led to the economic disaster the country finds itself in today. Through his analysis of looking at the initial 2018 currency crisis to the current political and environmental pressures facing the country, he frames his argument on a macroeconomic scale. One way he supports his argument is by looking at the recent IMF loans. In response to the 2018 currency crisis when the pesos lost half of its value against the dollar, the IMF loaned Argentina $57 billion, but the deal failed to stabilize the country which was in the midst of an election. Then COVID occurred and the new President, President Fernandez, printed more money for cash handouts and salary handouts, only compounding the already growing inflation crisis. In 2022 President Fernandez and the IMF agreed on a new $44 billion deal with a new set of stipulations, but the old repayment schedule for the old $57 billion deal still stands. This boils down to the new IMF loan funding an Argentinian program to pay off the old IMF loan. This macroeconomic lens is interesting considering that the way the Argentinian government is currently combatting the crisis is through much smaller forms of defense with targeted price freezes and a ban on firing workers. Gillespie depicts Latin America as a government structure and almost as a hypothetical country. What Gillespie does not focus on is how the unstable economy effects Argentinians on a more microeconomic level, specifically looking at the individual consumer.
Another source of coverage comes from an Al-Jazeera article entitled: Buenos Aires airport turns into unofficial homeless shelter which takes a close look at how the recent inflation levels in Argentina are effecting the average individual. To do this the article lists a series of quotes from individuals living in the Buenos Aires airport. One couple interviewed had been living in the airport for two years and chose to do so because they had to choose between paying for food or paying rent. The number of individuals living in the airport has shot up within recent months because of the recent surge in inflation. Through this article the focus is very microeconomic, looking at an individual consumer and the difficult choices they have to make and the real impact that those choices have on their lives.
The two news stories differ in the way that they choose to analyze the economic hardships that Argentina is facing. This is important because this determines the scale at which the reader is viewing the economic problem. Macroeconomics takes a top-bottom approach, looking at the big picture. This is great when looking at a long run solution, but it can also be dehumanizing. There is a great quote from economist John Maynard Keynes which says, “In the long run we are all dead.” Economists can create long-run plans to approach problems, but the immediate needs of individuals within that economy are going to reject that plan if it does not benefit them directly. On the other side, microeconomics is a bottom-top approach, looking at the individuals which make up the economy. This is great when looking at a short-run solution, but it can lead to band-aid fixes, not addressing the deeper problems. In the end, the issue should be approached from both lenses as the best solution lies in a balance between the two.
Something that neither of the articles talk about is how part of the reason for Argentina’s economic hardships comes from the country’s colonial past. In the Washington Post article the reporter mentioned how a historic drought is adding to the inflation crisis because it is causing a 3% drop in GDP. This drop is due to the drought ruining soy, corn, and wheat crops which make up 3 of Argentina’s key commodity exports which are essential to supporting the economy and providing jobs. As we learned in class, a result of colonialism is a countries economy surrounding the export of raw goods. This is true for Argentina where agriculture makes up around 7% of their total GDP whereas in the United States of America, agriculture makes up less than 1% of total GDP. This stronger reliance on raw materials within the entire country’s economy makes from a less stable economy. By not taking this into account both articles do not address the deeper issue at play, which when ignored, can make it hard to find a possible solution moving forward.
Sources
“Buenos Aires Airport Turns into Unofficial Homeless Shelter.” Housing News | Al Jazeera. Al Jazeera, April 7, 2023. https://www.aljazeera.com/news/2023/4/7/buenos-aires-airport-turns-into-unofficial-homeless-shelter.
Gillespie, Patrick. “Why Argentina’s Inflation Is up over 100% Again.” The Washington Post. WP Company, April 6, 2023. https://www.washingtonpost.com/business/2023/04/06/why-70-inflation-is-just-one-of-argentina-s-problems-quicktake/0d56242a-d499-11ed-ac8b-cd7da05168e9_story.html.
World Bank. “Argentina: Share of economic sectors in the gross domestic product (GDP) from 2011 to 2021.” Chart. September 16, 2022. Statista. Accessed April 10, 2023. https://www.statista.com/statistics/314743/share-of-economic-sectors-in-the-gdp-in-argentina/