Tuesday, January 6, 2009
There is nothing quite as effective as traveling to help take the focus off one's own problems. We in the USA are fascinated with ourselves and our situation to the almost-complete exclusion of the remainder of the world. Traveling abroad helps us remember that it's a big world out there and other people live in it. That is not to say that the USA is not important, but there are only 3 of us for every 5,000 people on this planet. We should try and keep that in perspective.
As an American, I have to work pretty hard to overcome my own egocentrism. For example, when I return to a place a have not seen in a while, I expect it to be the same as when I left it—frozen in time like the last snapshot of the last visit.
I returned last week to Buenos Aires for the first time in 18 months. I had expected to find it just as I had left it. I had a Brigadoon-like fantasy that this city and surrounding environs of 12 million people would begin to sleep as my plane left the runway only to reawaken upon my return. Well, things changed.
While in the USA, we have been stung with inflation, Argentines have been mugged. Eighteen months ago, I enjoyed a strong dollar and low prices. I returned to a slightly stronger dollar and significantly higher prices. Even the American dollar has not kept up with Argentine inflation. The American dollar (US$) had about the same value in the USA as the Argentine peso (AR$). A moderate family income in both countries is $50,000. In 2007, US$1.00 was about AR$3.10. So, my dollars went three times as far. Today, the US$1 is worth AR$3.45. But is has hardly kept pace with Argentine prices.
I went to Balcaarce, my favorite café, and reacquainted myself with my old friend, Leo. I order my usual breakfast that once cost AR$6.90. When Leo brought the check, he warned me, "Es mas." It was more, now AR$10.90. My 12% stronger dollar did not keep pace with the 63% increase in the cost of an Argentine breakfast.
Prices for almost everything have gone up. A bus ride that cost AR$.80 now costs $AR1.00 and, it was just reported today, it will go up to AR$1.20. A coin shortage will only complicate that situation. Gasoline in the US has fallen to below $2.00 a gallon while here is has risen to over AR$4.00—and Argentina does not import oil.
To be fair, many of these prices had not risen in seven years since the Argentine Financial Crisis peaked in 2001. The Kirchner administration (first Nestor and now Christina) had produced an economic miracle and Argentina's economy boomed. But so did inflation. Government economists cherry-pick data to announce an "official" inflation rate of under 10%, but independent data reveal it is closer to 20% a year. From what I have seen, it would cost me 30% more to enjoy the same standard of living today that I had in my six months here in 2007.
We can't freeze time, and we can't keep things from changing. Even if we could, we'd never know the perfect moment to hold.
When I return to the USA in two more weeks, I'll find my life exactly as I left it. If I stayed here for another 18 months, I'd also return to pretty much the same financial, social, political situation. I can't say the same for Argentina. We Americans are blessed with a remarkably
stable and incredibly wealthy country. I seem to need to leave it to appreciate it, sometimes.
There is nothing quite as effective as traveling to help take the focus off one's own problems. We in the USA are fascinated with ourselves and our situation to the almost-complete exclusion of the remainder of the world. Traveling abroad helps us remember that it's a big world out there and other people live in it. That is not to say that the USA is not important, but there are only 3 of us for every 5,000 people on this planet. We should try and keep that in perspective.
As an American, I have to work pretty hard to overcome my own egocentrism. For example, when I return to a place a have not seen in a while, I expect it to be the same as when I left it—frozen in time like the last snapshot of the last visit.
I returned last week to Buenos Aires for the first time in 18 months. I had expected to find it just as I had left it. I had a Brigadoon-like fantasy that this city and surrounding environs of 12 million people would begin to sleep as my plane left the runway only to reawaken upon my return. Well, things changed.
While in the USA, we have been stung with inflation, Argentines have been mugged. Eighteen months ago, I enjoyed a strong dollar and low prices. I returned to a slightly stronger dollar and significantly higher prices. Even the American dollar has not kept up with Argentine inflation. The American dollar (US$) had about the same value in the USA as the Argentine peso (AR$). A moderate family income in both countries is $50,000. In 2007, US$1.00 was about AR$3.10. So, my dollars went three times as far. Today, the US$1 is worth AR$3.45. But is has hardly kept pace with Argentine prices.
I went to Balcaarce, my favorite café, and reacquainted myself with my old friend, Leo. I order my usual breakfast that once cost AR$6.90. When Leo brought the check, he warned me, "Es mas." It was more, now AR$10.90. My 12% stronger dollar did not keep pace with the 63% increase in the cost of an Argentine breakfast.
Prices for almost everything have gone up. A bus ride that cost AR$.80 now costs $AR1.00 and, it was just reported today, it will go up to AR$1.20. A coin shortage will only complicate that situation. Gasoline in the US has fallen to below $2.00 a gallon while here is has risen to over AR$4.00—and Argentina does not import oil.
Many businesses in my adopted barrio of Recoleta have closed and there are more empty storefronts that there were in June of 2007. Almost all restaurants now charge a cubierto—cover charge—of between AR$3 and 5. That keeps them from having to change the prices on menu items. Others have begun to put menu prices in pencil. A bottle beer that cost AR$8.00 in a restaurant in 2007, now costs AR$14.00. A load of laundry was AR$7.00 when we arrived in 2007, but soon went up to AR$9.00. It is now AR$11.00.
I can only imagine what would happen in the USA if our standard of living saw increases this large this fast. The only thing that has seen this level of increase in the USA is gasoline—and that has since gone down.
To be fair, many of these prices had not risen in seven years since the Argentine Financial Crisis peaked in 2001. The Kirchner administration (first Nestor and now Christina) had produced an economic miracle and Argentina's economy boomed. But so did inflation. Government economists cherry-pick data to announce an "official" inflation rate of under 10%, but independent data reveal it is closer to 20% a year. From what I have seen, it would cost me 30% more to enjoy the same standard of living today that I had in my six months here in 2007.
We can't freeze time, and we can't keep things from changing. Even if we could, we'd never know the perfect moment to hold.
When I return to the USA in two more weeks, I'll find my life exactly as I left it. If I stayed here for another 18 months, I'd also return to pretty much the same financial, social, political situation. I can't say the same for Argentina. We Americans are blessed with a remarkably
stable and incredibly wealthy country. I seem to need to leave it to appreciate it, sometimes.
1 comment:
An example of the difference between purchasing power parity (PPP) and exchange rates...
http://en.wikipedia.org/wiki/Purchasing_power_parity
-Tenaya
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