Topsy Turvy

I am trying to get my head around the announcement from Argentina that it will increase taxes on luxury goods ''in order to make more money available for imports that will improve domestic output.'' OK, so the Government will have more money, and the people who buy expensive toys will have less money. How is that going to increase ''useful'' imports? It must have to do in some obscure way with the fact that the peso (at its official rate) is grossly over-valued against the dollar and inflation is far higher than the Government admits. It won't work, anyway: Argentines have had decades of practice at getting around official currency restrictions imposed by spendthrift governments, and are famously inventive at it. One good thing the Government did this week, at least, was to open negotiations with Repsol over compensation for … Read More »