Analysis of the Argentinian Economy and Government
Uploaded by spootyhead on Mar 06, 2007
Analysis of the Argentinian Economy and Government
The article “Argentine Government Says It Can’t Pay Its Workers”, by Larry Rother, is about how the Argentine Government has not collect enough taxes to pay more than half a million employees. The scarcity principal is in effect in this situation, because the government has a limited amount of money to give to its employees. The people of the country are becoming outraged because the president gave himself a raise to 1500 pesos a month which is the highest amount a government official can be paid. When you put that into perspective, its seems very inefficient because there are people who are getting no money which is vital to keeping them and their families alive, and the most wealthy people in the country are continuing to get richer. One method the government is using to try to solve the problem by producing more pesos as a quick fix. One of the problems with this solution is that it could cause inflation and lower the overall value of the Argentinean peso.
A decrease in the value of the peso, would Argentinean businesses would be unable to compete in the world market because their money would have no steady value. As the value of the peso continued to drop, businesses would have to find ways to cut costs and make more money. This would entail workers being laid off and prices being raised. If the market was perfect, price increases would be unacceptable and the businesses would cease to exist. This would thrust the economy into a downward spiral and take years to repair. The other proposal to help the situation was to tax businesses that were projecting big earnings in the future. This would raise the 2 to 3 billion dollars the government needs to pay the salaries of the employees. It was also proposed that the government put a twenty percent levy on gas companies. The problem with this was that the gas companies raised their prices at the pump in defiance of the president’s calls for their price restraint. The last proposal in this article was for a tax on agricultural exports.
The government is proposing these taxes as “one time taxes.” The president was sworn in last month though, and is already unable to pay...