As an Argentinian, here are my two cents on this matter:
1) From reading this article, one could asume commercial
and financial regulations change by the hour, while in
fact is the opposite.
We have a gargantuan commercial code of byzantine
complexity that has not really been modified in the
last 50 years.
We also have a terribly regressive and unfair tax
system that includes 21% VAT even for food products
and wealth tax even for salaried employees with
more than 1400 dollars of monthly income.
2) It is my sincere wish, from the bottom of my heart,
that "entrepreneurs" (I doubt they deserve the honor
if being called that) who operate "en negro" rot in
jail.
They are bringing all of us down with their disregard
for the rule of law and they are increasing the costs
of doing bussiness for those of us who pay taxes.
Regardless of the recurrent crises, starting up a
successful tech company here is possible, as proven
by Globant, OfficeNet, MercadoLibre, et al.
My in-laws left Argentina 30 years ago and still have much of their family there. I showed this article to them and their reply was simply, "the US is heading this way. We've seen this movie, and we don't like the way it ends."
> "the US is heading this way. We've seen this movie, and we don't like the way it ends."
I grew up in post-communist Romania, and I've also seen this movie before. Immediately after 1990 (the fall of communism) money started losing their value. At the beginning money were losing their value by "only" 40-50% per year, to a maximum of ~150% inflation rate in the late '90s. It was only in the mid 2000s' that the inflation rate first dropped to single digits.
I can still remember reading Malthus in high-school, and about how he was saying that the middle-class people are always the worst affected by the economic crisis. What can I say? My parents went from a secure, middle-class position (apartment, car, country-house) to relying on subsistence-agriculture in the space of maximum 10 years. And they weren't the only ones.
Relax, things are a lot better now (even for me, I'm on HN, ain't I? :)). What I'm talking about happened 10-15 years ago.
And congratulations for choosing Cluj. I'm usually trapped in Bucharest but I'm happy that tomorrow I'll go to Sibiu for a 4-day vacation. It's only a 2-h drive from Cluj I think, I highly recommend it for when you have time to discover the rest of the country :).
I've been to Sigishoara, which was really nice. I really look forward to seeing more.
The first week here, I had this conversation...
My work friends said: "That is worth checking out, there is a nice lake over there." I yawned and told them that I've seen lakes before, but "the mountains around the city looks really cool". They looked confused and said "Uh, do you mean the hills?"
But frankly, I'm not that curious about Bucharest. :-)
I do wish there were more gypsy music bands around Cluj.
It is a bit embarrassing to like "muzika popular", which seems to be the most uncool thing around? (-: Otoh, it might help make me popular with the girlfriend's 70 year old mother... :-)
My 2 cents :)
The article gets right both the inflation and the corruption problems in Argentina. However, it seems to be a bit biased, as it shows only one real case of success and several failures, and the fact that one of the interviewees is the son of a former Minister of Economy of Argentina (Domingo Cavallo), whose economical model was the main cause of the 2001 crisis, which the author seems to have forgotten to mention in the article.
I've worked in both argentinean and US founded companies here in Argentina, and the reality, at least from my experience, is that the economic environment isn't as hostile as the article describes. I've been in companies that made millions (dollars, btw) and I've also seen some that lost everything (specially in the 2001 crisis), but the truth is Argentina is a cheap country for investment and with a lot of highly qualified man power. I have to agree, investing in Argentina is kind of a bet, and making your company work well involves a lot of work, but, specially if your objective is to export the product/service, it might provide an awesome ROI.
In terms of culture and lifestyle, yeah. Many people call Miami "the Capital of Latin America." Buenos Aires is not particularly representative of Latin America, it's more like a hybrid between LatAm and Europe (you probably agree).
In terms of economic stability, Miami is still part of the US so it's less risky for running a business. Not the greatest place for a startup, but a good compromise for someone who wants to travel to South America frequently.
Could it be you're (gasp!) not informed instead of it being "non-sequiturial"?
Saying Miami is more Latin American than Buenos Aires is stereotypical and prejudice because this statement suggests there is something intrinsically Latin American about Latin America. Latin America is a huge space (a population of 580,086,590 which the parent seeks to generalize), there are various cultures and subcultures, various languages and dialects. Whatever J. Lo has brainwashed people into thinking is "Latin American" is not all-encompassing and should not be representative of it.
Thus, Buenos Aires is just as very Latin American as La Paz or San Juan or Rio de Janeiro or Havana.
The fact that more Italians immigrated to Argentina does not make them more "European", since Spain, the country that colonized most of Latin America is European. Since its colonization, Latin America adopted a lot of traditions from Spain and the rest of Europe, thanks to many Latin American governments asking for more European immigrants to "fill the void" and work the land. However, not all countries adopted the same traditions to the same degree and some preferred other European traditions (that could also be shared with Spain, Portugal and the rest of Western Europe).
Thus, the statement "Buenos Aires is not particularly representative of Latin America, it's more like a hybrid between LatAm and Europe" is wrong because most of Latin America includes Europe in its transculturation, acculturation, syncretism, miscegenation and hybridity.
Most of Latin America has not just Latin influence but also a lot of American influence. The people are brown not just because they're Moorish or African by ancestry but also because they're American. Most of them speak Spanish, French, or Portuguese, but a substantial number speak American languages like GuaranĂ, Mapuzungun, Quichua, Aymará, Nahuatl, or Haitian Creole. Most of them practice Catholicism, but in a heavily syncretized form with Catholic saints corresponding to American gods, and a substantial number of them still practice American religions.
But all of those things are true only to a tiny extent in Buenos Aires, and a more noticeable but still small extent in the rest of Argentina. This is what genocide looks like.
So I wasn't saying that Argentina is more European than Bolivia, Puerto Rico, Brazil, Cuba, or Miami because it's less Spanish. I was saying that Argentina is more European than Bolivia, Puerto Rico, Brazil, or Cuba because it's less American, because none of the things I said in the previous paragraph are true here, and they're still true in those places. The most distinctively American thing about Buenos Aires is that everybody drinks yerba mate.
By the way, Diego grew up here in Buenos Aires, where I also live. So however much you may disagree with our conceptions of what "Latin America" means, you can't blame poor J. Lo for them.
"Thus, the statement "Buenos Aires is not particularly representative of Latin America, it's more like a hybrid between LatAm and Europe" is wrong because most of Latin America includes Europe in its transculturation, acculturation, syncretism, miscegenation and hybridity."
If you travel to different Latin American countries you'll realize the difference beyond any forced formalization/logic of a statement.
Kragen, I agree it is much more Latin American in the social aspect, but definitely not in the way of doing business and it is much safer to live in as well.
Miami's murder rate is 19 murders per 100 000 people per year. Buenos Aires's is under 5. Therefore, it is much safer to live in Buenos Aires. That's another way that Miami is more Latin American.
I haven't tried to do business in Miami, so you might be right about that.
Thank god Uruguay's not Argentina. This article is why i've refused to open up an office on the other side of the river. Argentina's an amazing country where just about every institution in society is in some sort chaotic collapse.
A big problem is the lack of regulation, IMO. That owner who is doing things "en negro" hurts the rest of the country and should be fined accordingly. Since no one takes a big step forward to stop it, people see their colleges do it and the trend continues.
Inflation is also pretty bad, but I don't think it falls completely on the shoulder of the Government. Some items are simply overpriced. I'm not talking between a big store and a simple corner store, I mean between two big chains you can see price differences of 50% or more sometimes. Again, taking advantage of the lack of regulation.
And we don't all see the U.S. as THE economic model, far from it.
"That owner who is doing things "en negro" hurts the rest of the country and should be fined accordingly". This is a chicken/egg issue. People try to avoid taxes also because past governments confiscated their savings.
Speaking from the entrepreneurship perspective, there is a big issue having employees, if you fire them you need to pay a salary for each worked year. So a employee with 10 years of work receives 10 salaries if he's fired.
This is a very good point, entrepreneurs have a lot to loose and history has taught them to be wary of the Argentinian government. Can't say I blame them. I suppose it's up to the government to "show" them that they can be "trusted" again.
The way the system is set up is that, overwhelmingly, it was (still is?) impossible to run a private business in large compliance with the law. The alternative to non-compliance is death (businesswise). The aggressor here is the state and not the private individuals.
Bribery is also something of a safety valve. When the state stands in the way of (otherwise peaceful and voluntary) exchange, paying a bribe may be a better outcome than not having these productive activities happen (indirectly as well, the state may benefit from increased tax revenues later on). Of course, some bribery can be evil, but the problem is not corruption itself, rather the power that fosters it is.
At least part of the issue, from what I can tell from the article, is that the majority of the people cheat on their taxes, so the Argentine government has to raise taxes in order to get enough revenue to pay operating expenses, which leads people to cheat on their taxes more, which...
Hint: The people who run the government make their living by taking bribes and other acts of corruption that are a result of their regulations.
In the US, corruption on the transactional level (ie. lobbying congress, etc is out of scope here) is an exception that ultimately results in a government official going to jail. In a place like Argentina, corruption is a hidden tax that is reflected on nearly every transaction.
Does anyone think that something like bitcoin could help these people out? It seems like the government there is not doing its job and providing infrastructure to conduct business. Why not use a distributed payment system?
The problem is not that it's too hard and expensive to transfer money here. It is hard and expensive if you do it legitimately (like we do), but a huge fraction of the economy is underground. Like a third.
The problem, if I had to sum it up in a soundbite, is that you can't trust anybody. And so nobody trusts you. Unless you're family. You can imagine the effect that has on the competence of officials and executives.
The crazy laws are a big problem, but not as big as the endemic non-government corruption. Bank financing? We had to get a personal recommendation from our accountant to open a corporate bank account.
Bitcoin isn't going to help with that. If anything, it will make it worse.
The funny thing is, living here is pretty good, if you can afford the bare minimum needed to survive.
Government? what a joke! please visit Argentina, it's a beautiful country but there is a big disconnect between the different Governments and the reality.
It's surprising that business owners are complaining about inflation. I always thought its the fixed salaried employees who usually complain (because their salaries don't scale as fast as the inflation).
aah.. sort of like the credit crunch then.. it kind of feels counter intuitive because the usual cycle would be:
a) credit crunch with loss of demand leading to deflation
b) governments pump money
c) money loses value pushing inflation higher..
d) Governments try hiking rates and pull back money..
But some how in this case it seems the order is all jumbled up..
Deflation is different -- basically everyone gets scared and stops spending money. As a result, the "velocity" of money slows down and prices drop in a race to the bottom. (The best example of this was the car market in 2009. If you had cash, you could get unbelievable deals on cars.)
With inflation, there is plenty of money out there, but evaluating risk gets difficult. High inflation tends to have a snowball effect, so you don't want people owing you money -- think of it as compounding interest in reverse. So you end up with informal contracts... "Give me a car today, and you get 15 goats or hunks of aluminum in July."
A creditor wants informal contracts, because like in the US, paper money is "Legal Tender for All Debts, Public and Private." But to have informal contracts, you need a personal/trust connection... and that encourages corruption and nepotism.
1) From reading this article, one could asume commercial and financial regulations change by the hour, while in fact is the opposite.
2) It is my sincere wish, from the bottom of my heart, that "entrepreneurs" (I doubt they deserve the honor if being called that) who operate "en negro" rot in jail. They are bringing all of us down with their disregard for the rule of law and they are increasing the costs of doing bussiness for those of us who pay taxes.