During the past few years the Cristina Fernández de Kirchner government in Argentina has been playing fast and loose with economic reporting in the country. At the same time the government has been attacking the independence of Argentina’s media.
The cooking of the economic books and attacks against free media are linked and have an impact on U.S. jobs.
According to official Argentina government figures, a person can survive on six pesos a day. (US$1.30 on the official rate, US$1 on the black market.) The problem is that six pesos only gets a person a small sweet cookie. A more realistic number, said one university study is 24 pesos.
In addition, private economists say the country’s annual inflation is 24%. The official rates is 10%.
Since 2007 when the Kirchner government has ordered INDEC, the official statistic agency to fudge the inflation numbers, few people have taken the official numbers seriously. For example, The Economist stopped the INDEC numbers as part of their weekly index on inflation.
Now, the IMF is stepping in. The BBC reports that Argentina could face sanctions from the IMF unless it starts producing reliable growth and inflation figures. IMF chief Christine Lagarde gave Argentina until 17 December to address the problem.
Using a football (soccer in the US) analogy, Lagarde said the IMF was giving Argentina a “yellow card” but was facing a “red card” if it doesn’t straighten up.
“We had to choose between the yellow card and the red card. We chose the yellow card. If no progress has been made, then the red card will be out,” she said.
But getting the government to stop lying to itself and the rest of the world is only part of the issue.
Along with forcing the once-honored government statistics agency to “fudge” the figures, the Kirchner government has also been harassing the independent media. The same media that dares to report that a person cannot survive on six pesos a day.
The Kirchner government uses tax law, news print supplies, and anti-monopoly legislation to attack its critics. Freedom House ranks the Argentine media as Partly Free. Besides the government actions, there have been physical and other types of attacks on members of the media, including the murder of community journalist Adams Ledesma Valenzuela.
Why is this important to Main Street America?
One word: Jobs.
For businesses to operate reliable and accurate information is necessary. Especially important are accurate reports of inflation and economic growth.
The top five exports to Argentina from the United States (2011) are:
- Fuel Oil: US$1,300 million
- Organic Chemicals: US$857 million
- Petroleum products: US$496 million
- Plastics: US$478 million
- Computer Accessories: US$464 million
Other key exports include telecommunications, civilian aircraft, pharmaceuticals and industrial machines.
Predictably, the top-5 states exporting to Argentina reflect where those products are strong (2011):
- Texas: US$2,563,263,155
- Florida: US$1,738,007,600
- Illinois: $483,396,402
- California: $443,545,461
- Louisiana: $411,135,903
Without trade to Argentina, each of those states would be so much weaker economically. (And that has a direct impact on US jobs.)
To sell these items to Argentina, the U.S. companies have to have accurate and reliable economic numbers. Other companies hoping to sell to Argentina need these same accurate and reliable numbers.
But with government manipulation of the official statistics and a campaign to intimidate the independent media, getting accurate and reliable numbers seems far-fetched.
Transparent government policies and independent media in other countries have a direct impact on what happens in the USA.
If U.S. firms cannot rely on the numbers they get from Argentina, they may not consider selling to that market. That could mean fewer new jobs in the American economy.
And fewer jobs means a bleaker Main Street, USA.
For Argentina the pressure is building to at least correct the transparency issue.