A response from Argentina re Doug's original post on currency boards:
"Thanks, That is right on the money. This dollarization thing will be useless unless they (Argentina Govt.) focuses on other aspects of its economy. The country has strict labor laws that chokes it by not giving companies a freer hand with its employees. You have "till death do you part" employment over here because it is much cheaper to keep them than to fire them. Because it is so hard to fire people you also have companies with illegal employees (they pay them cash and have the employees bill the company - like consultants). Actually, they pay everyone in cash over here but the employees (in black) don't get any benefits. You would think that in this case the employee can charge more but just the opposite happens.
"There are many other problems but all of them have to do with fixing the economy from within. It is very messed up over here and it doesn't help any having the presidential hopeful talking to the Pope to see if he can pursuade the lender countries to forgive the debt that Argentina has with them. Argentina has the money to pay that debt off. All that accomplished was to close the door to any more lending to this country, for the time being. It was more of a political move than anything else.
"Another stupid act was this 1% tax on transportation. The government imposed a 1% tax on the value of automobiles, trucks, boats, airplanes, etc. to pay for a pay increase to teachers (grammar, university). Only about 30% of the population paid it and everyone else complained and protested so what did they do? They paid the teachers about $37.00 extra and said that they were going to postpone the tax."