INDECent

What the decline of a hallowed institution says about Argentine politics, and why Chavez shares the blame.

The Economist recently announced it will no longer publish inflation figures supplied by the Argentine government because of chronic underreporting of official figures—by half, according to just about every independent surveyor—and the politicization of INDEC, Argentina’s official statistics agency. Here’s part of the explanation:

What seems to have started as a desire to avoid bad headlines in a country with a history of hyperinflation has led to the debasement of INDEC, once one of Latin America’s best statistical offices. Its premises are now plastered with posters supporting the president, Cristina Fernandez de Kirchner. Independent-minded staff were replaced by self-described “Cristinistas”. In an extraordinary abuse of power by a democratic government, independent economists have been forced to stop publishing their own estimates of inflation by fines and threats of prosecution.

For decades, INDEC functioned as a state-run statistics bureau largely free of state meddling, a rare bird in Latin America. This allowed INDEC to suckle bright young academics like Raul Prebisch, he of the Prebisch-Singer thesis, and an intellectual forefather to import substitution industrialization.

I’d like to add a postscript to the article, and it concerns the regional context: Hugo Chavez has wrecked institutions across much of Latin America. As Javier Corrales, professor at Amherst College, argues, Chavez has finagled “the export of corruption.” In Argentina’s case, Chavez anteed up for Argentine bonds that no one else would buy, thereby allowing Nestor Kirchner to refuse payment to the IMF. Chávez bought more bonds under Cristina’s watch, and then offered some sweetheart trade deals through ALBA membership. Finally, there’s “maleta gate,” in which a Venezuelan man got caught at the Buenos Aires airport with $800k in greenbacks: the money’s origin is widely thought to have been Chavez; the destination, Kirchner’s re-election coffers.

Of course, the Argentine people are the main losers from INDECs decline—they get the nuisance of 20-plus percent inflation. This could also mean the loss of opportunity for the next generation of academics like Prebisch, who won’t be able to cultivate their talents without leaving the region for the US or Europe. In sum, without Chavez’s backing the Kirchners wouldn’t have been able to bend state institutions so completely to their political gain.

Graphic from washingtonpost.com