Argentina News Roundup: 28th January 2014

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The City Government cleared away street vendors from Once on Sunday (photo:  Alejandro Santa Cruz/Télam)

The City Government cleared away street vendors from Once on Sunday (photo: Alejandro Santa Cruz/Télam)

Police clamp down on street vendors in Once: This morning, Metropolitan Police officers cleared vendors from the streets of Once neighbourhood as part of an ongoing crackdown on informal commerce in the area. The police shut down four newspaper kiosks that were selling fake CDs on Av. Pueyrredón and raided a warehouse that allegedly stored illegal merchandise used by street vendors. On Sunday, the police had removed some 30 vendors from around the Once train station, but some returned the day afterwards.

Sanctions for hiking administered prices: Cabinet Chief Jorge Capitanich today confirmed that the government would take action against businesses that raise the cost of products included in the ‘Precios Cuidados’ plan, which administers the prices of basic consumer goods. “The government has many tools,” Capitanich told reporters this morning, “and apart from fines, these include closure in extreme cases.” Also today, representatives of major franchises selling electrical appliances confirmed that they would be “responsible” with prices and would ensure stocks remain at normal levels after last week’s devaluation.

Protests in Puerto Madryn: Workers from the fishing company Alpesca are continuing to block the main roads in and out of the Patagonian town of Puerto Madryn in a dispute over unpaid wages. Representatives of the Food Industry Union (STIA) rejected an offer from the provincial government of Chubut to pay a one-off subsidy of $4,500 to maintain “social order” until a final solution was reached with the South African-owned company, and continued to block the national highways 1 and 3. Two international cruise liners, carrying around 7,000 tourists, were unable to dock in the port as scheduled today due to the protests, costing the city an estimated $3.5-4m, according to local press.

National deputy Jorge Obeid dies: National deputy for the ruling Frente para la Victoria (FpV) party and ex-governor of Santa Fe, Jorge Alberto Obeid, died today aged 66 after battling a prolonged illness. His seat in Congress will be taken by Eduardo Seminara, vice-rector at the National University of Rosario.

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6 Responses to “Argentina News Roundup: 28th January 2014”

  1. Eugene says:

    Police clamp down on street vendors in Once:
    The market place triumphs in spite of the government. Supply and demand, even in the North Korean worker’s paradise, has kept that country from complete collapse. Perhaps it will do the same for Argentina.

    Sanctions for hiking administered prices:
    Small manufacturing companies will be driven out of business by price controls. Only large multi-nationals who can afford to absorb losses will profit as they begin to dominate the market. Then there will be complaints about multi-nationals. Then the shops will be empty.

    Protests in Puerto Madryn:
    If I owned that South African fishing company, I’d relocate to the Falklands.

  2. Werner Almesberger says:

    What we have in Once is organized crime, not the kind of free market we want. And it’s about time the government does something about it.

    I live a few blocks southwest of the trouble zone and thus get to cross it if I decide to walk to or from the center. The sidewalks there are full of street vendors with hardly any room to push past them. So you’re forced to walk on the street, amidst traffic. And each time I cross that area it’s a little worse.

    The few spots they’re purging now are even nastier. I give them a wide berth in any case. There have also been reports of robbers attacking people trapped on the sidewalks.

    The police operation seems to be well planned, attacking on several levels, and also appearing with a show of force. I guess they learned their lesson from the Borda incident.

    What I find incredible is that people actually buy from such vendors. I think there’s a law obliging customers to obtain a receipt for any purchase. It would be interesting to see that get enforced in such an area. Customers have very little to gain from buying from illegal street vendors, so the threat of getting fined may work wonders for motivating them.

    – Werner

  3. Eugene says:

    Instead of outlawing street vendors, regulate them a little! They wouldn’t be there if there weren’t people who wanted their products. Presumably shops where the government can tax and regulate merchants into bankruptcy are not providing goods and services people want. Street markets have been around since the beginning of time.

  4. Werner Almesberger says:

    Eugene, there are legal stores right next to the street vendors. (With the exception of a few meters where there simply isn’t room for anything else.) The offer is there and the street vendors always have the option of opening a legal business, just like the shopkeepers did.

    The legal businesses are what the street markets of old have evolved into.

    If your goal is to bring down taxation and government control, this is a lousy place to start. The conflict there is not between noble savages vs. an evil and corrupt government but a conflict between wealthy criminals and their pawns vs. common people. Some of those common people are shopkeepers, their employees, and the overwhelming majority simply wants to use the sidewalk to go elsewhere.

    Of course there is a “demand”. After all, they have a massive cost advantage over the legal businesses. But if you give in to that, all you get is a race to the bottom. The legal shops feed the middle class. Would you rather see these people live in the street as well, to be able to compete ?

    – Werner

  5. Eugene says:

    My point is that a need has arisen that consumers are responding to by voting with their wallets. Clearly there is something wrong with the government’s fiscal policies viz. mortar-and-brick businesses if these illegal markets are so popular. In the normal course of events, these vendors would be a fringe element, but apparently they have become a major issue. The solution is to regulate them; protect the legal open-air merchants, license them, in other words, recognize that this is a phenomenon that is not going away simply because the police showed up one day, because the stalls will be back the day after. And if the police force them out of Once, they will set up in another part of town and consumers, and their money, will follow them there.

    Everyone wants to join the middle class. It is the class of merit, change and progress.

  6. Werner Almesberger says:

    Eugene, you could view this as a variant of the Prisoner’s Dilemma [1]. The customer who buys at a legal shop spends more money but unless most others do that too, will still have to suffer the streets packed with vendors. So the only reason why they wouldn’t do this is that a) they disagree with the quality of the products being offered or b) they’re not thinking strictly in economical terms.

    The latter is called “principles” but evidently they’re lacking there. Note that even the Indy appears to promote this sort of opportunism in a colorful interpretation of what happens during many subway staff protests, “if […] you’re super lucky, staff will wave you through the barrier without you having to pay.” [2]

    I don’t think many customers would follow the street vendors to more remote areas. They pick their place because a lot of people pass through this area. Also, if they were relocated to an area where there is space and no immediate unfairly disadvantaged competition, then the problem would be considerably smaller. There are illegal markets of that sort that draw relatively little negative attention.

    Regarding them not being the fringe element they should be in theory, one explanation would be that it’s worth their time even with diminishing returns. E.g., if their basic needs are already covered through some welfare program then any peso they can make on the side is a win. I.e., their break even point may be very close to zero and they can choose not to worry about opportunity costs.

    If they’re on welfare they may also not be very interested in having their situation legalized as this may kick them off welfare. This is known as the “welfare trap” (*) where the system discourages people from seeking (legal) work, especially if available jobs pay less or only marginally more than welfare.

    (*) The solutions for that, by the way, lie in the extremes: either eliminate welfare entirely (Ayn Rand’s wet dream) or pay a basic wage to everyone. The latter is being discussed in more and more countries as a way out of increasingly convoluted, unfair, and inefficient welfare systems.

    By the way, if you consider demand a justification for any transgression on the supply side, then you must also condone theft and robbery. Stolen goods can be fantastically cheap. Most societies take a dim view of this kind of trade anyway since people tend to value not being robbed higher than the opportunity of entering a criminal career or to buy cheaply at the fence shop.

    – Werner

    [1] http://en.wikipedia.org/wiki/Prisoner's_dilemma
    [2] http://www.argentinaindependent.com/insideargentina/practical-information/practical-information-/

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