From “loco to muy loco”: Argentina bets on price controls

As our readers know, Argentina is in bad shape.  It should not be.  It is a rich country with an educated population, strategic location and the 4th largest GDP in Latin America.   

Great tango, delicious beef but lousy politicians.

In yet another aggressive move against private enterprise, Argentinean officials introduced a new bill to the Senate on August 5: the New Regulation of Production and Consumption Relations.  

This legislation aims to replace the current governing Law of Supply by establishing limits on prices, production levels, and profit margins, and has already received harshcriticism from certain industries.   

The Kirchner administration’s goal with this proposal is to “prevent abuse and the misappropriation of the value-chain surplus.”

The existing law has been in place since the military dictatorship of 1974, which established prison sentences for business owners convicted of “induced shortages.” The principal difference with the government’s new proposal is that it provides further state control over the market in the form of price controls. Once signed into law, it will legally codify the government’s current agreement with suppliers and distributors of products subject to the Careful Prices program. 

“It is essential to observe the behavior of the price system and the extent to which economic concentration allows certain economic groups to abuse their dominant position,” reads the proposal. 

In addition, the bill further defines the state’s role in “defending the interests of consumers in order to make the price and quality of services consistent with offers proposed by companies.”