False Economy - Alan Beattie [150]
Over in talks on industrial-goods trade, Argentina was showing what happens when you mollycoddle manufacturers for more than a century. We saw in the opening chapter how Argentina's idea of industrializing was to create a cozy, artificial environment for manufacturing industries to thrive, protecting them from competing with one another by establishing internal regulations and licenses, and from external competitors by taxing imports.
Argentina still maintains high external tariffs on manufactured goods, and at the Geneva talks, Buenos Aires argued vociferously against a deal that would have involved reducing the world's industrial tariffs. As the developing country it now is, rather than the rich country it once was, Argentina was allowed to leave those tariffs at higher levels than advanced economies like the EU and Japan. But with a Peronist government in power, whose first instinct was always to placate urban working-class voters, doing anything that might distress the country's industrial sector was too big a risk to take.
Not that Argentina's government was running short of ways to return to old battle lines or stoke up long-standing prejudices. By the time the trade ministers met in 2008, a global crisis in food had been raging for a year. Rising demand had combined with low stocks and interruptions in supply to send prices spiking higher. This in itself owed something to trade politics. Global demand for grain to be made into biofuel had been artificially boosted by the U.S. farm lobby. As we saw in the chapter on trade politics, the political clout of Iowa and other midwestern states helped ensure that U.S. ethanol came inefficiently from domestic corn rather than cheaply from environmentally beneficial Brazilian sugarcane.
Argentina, which remains a highly efficient farm exporter, should naturally have reacted to this by ramping up exports to the global market as much as possible. But that might have allowed farmers to reap large profits. The government wanted either those profits or simply cheap food directed to Argentina's urban poor. Just as Peron himself did, Cristina Fernandez de Kirchner, Argentina's president (and a former senator for Buenos Aires), reacted to the situation by imposing big tax hikes on the exports of soybeans and other farm produce.
The taxes had the opposite effect to that intended. They sparked strikes and protests by farmers across the country and brought much grain and beef production to a halt. Cattle farmers had already been angered by bans on beef exports in 2006 that were similarly aimed at increasing the supply to the domestic market. Rather than make beef cheaper for Argentina's urban poor, this ham-handed attempt to corral the farmers meant there was no beef at all for Argentina's urban poor.
Just as Peron himself had been obliged to ban the purchase of beef on certain days to conserve supply—this in Argentina, one of the great cattle-raising nations of the world—so the supermarket meat displays in Buenos Aires in 2008 had to be filled up with pasta. And just as Peron had accused the landowning families of treachery and greed, so did the heiress to Peronism. Cristina Fernandez branded the strikers "protesters of abundance." Farmers, she said, should act "as part of a country, not as owners of a country."
Her caricature of Argentina's farmers as an oligarchic elite is decades out of date. By the 1990s, not a single traditional landowner