If you have traveled internationally, you know that every country requires visitors to fill out a customs form concerning basic information and goods that are being brought into the country. On Argentina's form, we were required to provide information about the mobile phone we were bringing into the country. Garv, LG, and I discussed why they did that but then we soon forgot about it.
On Sunday evening in Buenos Aires, we were riding in a cab on the way to a restaurant. During the ride, we passed a Walgreens-like pharmacy and I noticed that there was the largest signage for tampons I'd ever seen. Then I forgot about it.
On Monday evening, we did a walking tour and at one of the stops, which was a street in a high-end neighborhood that previously had designer stores, the guide discussed Argentina's economy. These companies left because Argentina had implemented a policy that limited companies from profiting from imported goods without exporting goods of equal value (or something like that). So many companies did not do business in Argentina because it was too difficult to make money there. Two of the consequences of that policy is that one can not buy an iPhone in Argentina and that a few months prior, Argentina had a tampon shortage. Now the customs form and billboard made more sense....Our tour guide had a iPhone which she had bought in Chile and "smuggled" into Argentina. It doesn't seem too hard to "smuggle" everyday consumer goods into Argentina because the customs agents did absolutely no inspection or asked any questions when we went through. (An aside: There was MUCH less security flying between Santiago and Buenos Aires than Des Moines to Minneapolis.)
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| This is a picture from our walking tour that really has nothing to do with the content in this blog post. But it needed a picture The people on the left were a couple from Dubai via the Ukraine and India. |
Check out some of these headlines:
Argentina: What the tampon shortage says about the troubled country
iPhone Drought Continues in Argentina
Venezuela is running out of toilet paper
Russia declares war on cheese, western food
The common element is that in each of situations, the policies of an authoritarian or semi-authoritarian government lead to a shortage or a sharp increase of prices.
Critics of free market economies claim that the obvious conclusion of such a system is that it will devolve into a crass consumer culture in which everything is commodified and people are overly materialistic. But then they ignore alternative that over-regulation can lead to a lack of iPhones, tampons, toilet paper, cheese, and viable options with which to save money. The latter had a tremendous impact on our trip. And made it really cheap!
In Chile, if we purchased something, we'd usually use our credit card, the credit card company would do the exchange calculation from Chilean Pesos to USD, and that would be it. In Argentina, the way the monetary system works, that would be a rip-off. There are two exchange rates in Argentina. The official rate, which is the rate our credit card would use, was around 9.9 pesos: $1. This rate does not float like other currencies because the government wants to maintain the illusion that there isn't rampant inflation. There is, however, rampant inflation so there is a second rate, called the blue rate (basically the black market). The blue rate was a much better deal for us since we could buy about 14.6 pesos: $1. Here's the best example of how much we could save by exchanging US dollars for Argentine Pesos at the blue rate.
(Math teachers: Feel free to turn this into a story problem!) For four nights, our total hotel bill was 4200 pesos. If we paid with a credit card, it would use the 9.9:$1 rate and in USD our total would have been $424. However, by paying with cash we bought on the street, at the 14.6:$1 rate, our total was $287. We saved $137!
Acquiring that cash was an interesting process--one that LG was not a fan of! In certain areas of the city, there are "cambio guys." Cambio means "change" in English. There were several cambio outfits near our hotel. The first time Garv bought pesos (using only $50 or $100 bills), we just went off to the side of the street and he pulled the money out of his jacket. And LG HATED it!!!!!! She was reassured, however, when our tour guide on Saturday said that is was ok to do. Also, the next few times Garv exchange money, we went to offices which wasn't as shady. That's because the Argentine government knows their real rate isn't realistic so the authorities look the other way.
What do the cambio guys do with the US cash? They sell it other Argentines who use it as a form of savings because the inflation rate is so high that pesos don't hold their value. American dollars hold their value so that's why Argentines want them. And they're willing to buy them from tourists.
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| This picture also has nothing to do with the content of the post. We went for a jog through a park and along the water on Saturday morning. |
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Argentina has had many problems with money and inflation and debt and defaults throughout its history. One of the explanations for this is that Argentines do not vote based on ideology or management ability but on force of personality. And they like bold, strong individuals who may implement crazy fiscal and monetary policies that lead to inflation, no iPhones, and a tampon shortage. The most dominant figure in Argentine politics was Juan Peron, who's probably better known in the rest of the world for being Evita's husband. Evita is still revered as seen in the picture below. Is there a connection between Evita and the financial problems? No. But I somehow had to find a way to actually have pictures in this post that were connected to the content of the post.
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| There's a lot going on in this picture. Evita is on the building eating a sandwich. Actually she's singing into a microphone. I took this picture in the middle of an 18! lane avenue. And all the bikes are Kawasaki riders collecting toys. |
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| LG and I from the balcony at Casa Rosada (Pink House), the president's office. We're one balcony over from where Evita sang or whatever. I haven't seen the movie. |
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Buenos Aires is big, grand, exquisite, complex, European-like, and passionate. During our trip we experienced all of those things...Long taxi rides, magnificent views of the boulevard, European-style architecture, money-changing, beef, pizza, wine, tango....
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