> Temporary President Saa said "A devaluation would mean reducing the
> salaries of workers." And most Argentinians seem to agree with him --
> default is popular, and devaluation is not, which seems in part to have
> determined the government's course. But I was wondering how true this is.
> In a country where trade forms a relatively small part of the economy,
> wouldn't devaluation have a relatively small effect on inflation (and thus
> real wages)? And even a smaller effect on non-luxury consumption? Not
> that I'm for reducing wages even a small amount. But I was wondering if
> this widespread conviction that devaluation was bad for wage-earners --
> when it seems their main problem at the moment is unemployment -- was in
> part the result of a successful PR campaign by richer owners of assets,
> and creditors, who would be hurt more. (I understand that if there was a
> simple devaluation, everyone who had debt in dollars would be hurt, which
> includes all homeowners, but I'm assuming a pesification devaluation that
> would hurt creditors instead.)
>
> On the other hand, if I'm wrong, I was wondering what major factor I was
> leaving out of account in figuring the effect of devaluation on wages.
Unemployment may well be 20%, but that still means that 80% are employed and paid in dollars or equivalent pesos. Assuming a pesification of all domestic debts (credit card, mortgage, all installment payments, all debt secured by domestic assets, all debt on the books of domestic banks) & then a devaluation, these employed workers would still find themselves worse off precisely as against certain "richer owners of assets": - those whose capital is in financial instruments abroad, their income in dollars; - the less well-to-do property possessors who are sitting on hoards of dollar currency removed from the banks under "convertibility" in the last half year (the amount is enormous), even if they have not moved it abroad; - the owners/managers of the exporting sector of the economy that gets paid in dollars or equivalent; - the various foreigners (Spaniards and North Americans) employed by international corporations.
If I'm right that the wealth (and to a considerable degree income) of the richest individuals is by now wholly in dollars, devaluation would only further aggravate the existing outrageous inequality. And insofar as there is a class of individual wealthy owners of Argentine real property or other assets not readily dollarizable, they're the new government. Rodriguez Saa owns lots of real estate acquired while he was Governor of San Luis from sources other than his salary or prior wealth.
john mage