Cancel
Advanced Search
KEYWORDS
CATEGORY
AUTHOR
MONTH

Please click here to take a brief survey

Argentine Economics And Maker Culture
Ethan Zuckerman, 2 Apr 09

I had a lot of air miles. Rachel had a lull in the Jewish religious calendar between Purim and Passover. We hadn’t taken a “real” vacation - i.e., not one built around my speaking engagements - for about four years. And so we went to Argentina.

Neither of us knew much about the country, except that friends who’d gone came back raving about the beauty of Patagonia, the cosmopolitan buzz and atmosphere of Buenos Aires. And the steak. The wine and the steak.

In other words, our friends had headed to Argentina to find a place where their battered US dollars still packed some punch, where we wouldn’t find ourselves blowing the day’s budget on breakfast, as we’ve done in the past in Britain. We went to Argentina because, for those of us paid in dollars, it’s cheap. Like, “best steak dinner you’ve ever had, for two, and a bottle of excellent wine for $30 cheap.”

And being obsessed with economics, I spent our romantic vacation together asking my loving wife to help me read labels in Argentine grocery stores, trying to get a sense for what proportion of products were local versus imported. (Were she not in training to become a rabbi, the woman would be a saint.) And now that we’re flying back to the US, I’m not planning on remembering my Argentine experience by sorting through Patagonia photos, or re-reading Borges. Nope - I’m looking forward to looking up Argentina’s historical interest rates and trying to understand the softness of the Argentine peso and it’s effect on something I care deeply about - food - and something I could care less about - fashion.

As a tourist in Argentina, it takes a while to understand money - it’s a little complicated. The money changing booths in the airport warn “No hay monedas” - we don’t have coins. It’s not entirely true - they do, and they’ll give you a few when you change money, but they don’t want you to show up with a ten peso note and ask for ten one peso coins. You’d like to do this, because the buses which make the vast city (10th largest in the world, population-wise, by at least one account, which I hadn’t realized until we walked for four hours and covered less than 1/100th of the part of the city on our map) navigable only accept coins. There’s a coin shortage in Argentina, and people hoard coins; cashiers at supermarkets will beg you to give some coins so they don’t have to issue precious ones to you, and waiters will simply round the bill to the nearest 2 pesos, the size of the smallest bill.

But here’s the thing - the bus fare (and the subway fare, which fortunately can be paid in bills) is roughly a peso for a long ride, less for short ones. That’s about $0.27 US cents, or roughly an eighth of what I’m used to paying in US cities. This might be the sign of a progressive government that subsidizes public transport as a benefit to the working class and to promote environmentalism. But the taxis are cheap, too - our first twenty-minute ride across half a dozen neighborhoods cost roughly $6, and I found disoriented for a moment, as said fare would take you roughly one subway stop in Boston.

And then there’s the food. It’s uniformly excellent, if a bit limited in what’s available. And it’s unbelievably affordable for those of us who have hard currency. Our first night in Buenos Aires, before we figured out how to order, I assumed we’d need two $8 entrees to be well-fed. The steak I’d ordered was half a meter in length and required two platters to carry it to me.

I mentioned that the menu is a bit limited - Maciej Cegłowski offers a poetic sample Argentine menu, which turns out to be good preparation for what to expect: empenadas, steak, a little pasta (usually homemade), the occasional green salad, ice cream or dulce de leche for desert, and lots of red wine. It’s a menu that features Argentine agriculture to great benefit. Or the sort of menu you’d gravitate towards if importing food from other countries was prohibitively expensive.

I started thinking things were a bit strange when I noticed an Italian restaurant advertising the fact that they used a particular dried pasta imported from Italy. The pasta in question - DeCecco - is fine stuff, but I buy it for $2 a box at my local supermarket. This restaurant was charging a steep premium for these noodles, roughly twice what they charged for handmade. In the US, where labor is at a premium, “handmade” almost always means “expensive” - in Argentina, handmade means local, which means cheap, while the imported noodles demand a premium.

So that’s where Rachel and I began searching labels for national origin. Many nations are self-sufficient for much of their agriculture - it’s a precarious situation to be in if you need to spend hard currency for your staple food, for instance. And even in this connected world, at least three-quarters of economic activity in a nation like the US is domestic. But the import premium in Argentina is stark - imported cheese runs 4x the cost of domestic cheese, and god help you if you insist on drinking Evian water, at roughly 8x of any domestic brand.

Most fascinating to me were the flip-flops. As an American raised in the late twentieth century, I automatically assume that anything made from plastic and designed to be semi-disposeable is made in China. But the 9-peso ($2.50) flip-flops were made in Argentina, a fact that took me back to Ghana in the early 1990s.

When I lived in Ghana for the first time in 1993, the Ghanaian cedi was extremely weak. In the year I lived in the country, the currency fluctuated between 500 and a thousand to the dollar, implying an inflation rate of 100% a year. (The real rate was actually much lower - the currency bottomed out around Christmas, when everyone was trying to buy dollars so they could purchase Christmas presents from abroad - once the holiday ended, the currency strengthened significantly. You know you’ve got a ightly traded currency when seasonal demand is the most important macroeconomic factor affecting its price…)

For a country of 18 million (at the time), Ghana produced a surprising amount of stuff. The ubiquitous plastic buckets we used for drinking and bathing water, the plastic plates we served meals on, the aluminum pots, the scrub brushes and brooms? All made in Ghana. This didn’t make a great deal of economic sense - Ghana probably could have imported plastic goods from China at a lower price than from running a plastics factory. But “import substition” was one of the dominant economic policies of the day, the idea that goods should be produced locally to encourage local industry, and imports should be taxed heavily to encourage consumption of the local goods.

Import substition has a tough track record. The few development economists who think it’s a good idea might point to Brazil as an example of a country that put up steep import barriers and ended up with strong domestic companies like Embraer. Others might point to South Korea, which nurtured a domestic steel industry behind fierce trade barriers. But as my late mentor Dick Sabot explained to me, South Korea did something governments almost never do - they required the domestic companies to continually increase quality until they were competitive with international steel producers. Most nations simply protect their domestic plastic industry, which turns out shoddy, overpriced buckets until smugglers figure out how to bring in superior, cheaper Chinese goods.

(In my original draft of this post, I had a paragraph explaining that I was sure that Argentina wasn’t doing anything as stupid as conciously seeking a policy of import substition - they were just suffering the lingering effects on their currency of their 1999 economic crisis and massive default in 2001.

Turns out the Argentine economy is even more screwed up than I’d thought and that Christina Kirschner’s policies include import substitution through import and coercive export tariffs. Remember those farm protests last year against Resolution 125, which increased levies on soybeans? (Of course you do.) Soy’s an export crop for Argentina, and the Kirchner government wanted to a) benefit from global high grain prices and b) persuade farmers to grow domestic staples like wheat or corn, to help lessen dependency on imports. Farmers really didn’t like being told what to plant, and began blocking highways with their tractors.

Wow. Punative export tariffs and import substition. Laying blame on evil exporters dumping their goods on local markets. Do their economists wear bell-bottom suit pants?)

Argentina experienced a pretty good decade in economic terms in the 1990s. With the Argentine currency pegged to the dollar, it was fully convertible - you could take pesos to the bank and convert them into dollars. As a result, Argentina experienced the same low interest rates and low inflationas the US did, and saw widespread economic growth.

But currency pegs are tricky things - they force you either to control government spending or to borrow heavily, and Argentina did the latter, issuing massive bond issues. They also can keep your currency artificially strong in respect to their neighbors - when financial shocks to Mexico, Russia and Southeast Asia ended up hurting Brazil’s currency, Argentine imports became unaffordable, and government debt increased further. Investors began shorting Argentine bonds, and the government eventually defaulted on almost a hundred billion dollars of debt, tanking the country’s debt rating and making future borrowing much harder. (The country’s debt rating is currently a B-, miles away from investment grade and well below the ratings of much lower development countries, like Ghana.)

While the country isn’t experiencing the steep devaluation it did in 2002, it is seeing significant devaluation and accompanying inflation. While the government reports inflation of about 9.3%, some international analysts believe it’s basically lying, hiding an actual inflation rate of 20% or higher. Let’s assume the currency is now devaluating at roughly 20% a year. An Argentine grocery store selling French cookies has to take a real gamble: it borrows Euros to buy the product, and has to sell them for pesos quickly enough to pay back the loan before the peso devalues substantially. Are you sure you wouldn’t just prefer some nice Argentine dulche de leche?

What this means to a gourmand like me is that Argentina is a paradise for cheap, good Argentine food, but that I’m never going to find a good, cheap curry joint in Buenos Aires. That’s not just because of ethnic patterns of settlement - the economics make it virtually impossible, as a cuisine that required lots of imported ingredients would lead to exorbitantly expensive meals. (We went out for sushi - purely for research purposes - and ended up paying through the nose for a meal that wasn’t especially good.)


A “department store” in Palermo Viejo

But there are some fascinating non-culinary implications to this situation as well. Wander around shopping malls in the Middle East and it becomes clear that European - especially French and Italian - brands dominate fashion consciousness well beyond their borders. No one would ever accuse Porteños of being anything but fashion forward… but those fashions don’t have a lot to do with what’s being put out on European labels. As with what’s on the menu in the restaurants, the fashion flavor is decidedly local.

We spent a pleasant Sunday evening in Palermo Viejo, a neighborhood filled with cool restaurants, trendy boutiques and a healthy scattering of craft markets and street cafés. Sipping (local, pretty good) beer, we watched flocks of teenage girls flit between the local “department stores”.

These stores are pretty simple affairs - long, warehouselike spaces lined with clothing racks high and low. Each two-meter section of rack is topped with a simple, sometimes hand-made sign, advertising the designer’s label. And they’re frequently manned by the designer or a friend, which means that if you really love the “Viva La Evolucion” shirt featuring Che Guevara with a monkey face, but want it in an extra-large blue, you can ask the designer if she could make you one and bring it the following week. Transactions are in cash, there are no receipts unless you ask, and I didn’t see anyone charging any sales taxes. I assume that designers pay the managers of the space a monthly rental for their rackspace, but there may be other arrangements - some of the most popular stores feature racks of clothing sold within bars, and I can imagine a synergistic relationship, where a hot designer sets up somewhere for free in the hopes that they’ll generate drinks traffic.


Fashion starts young in Palermo Viejo. Anyone think the Rolling Stones licensed their logo to this guy?

My total ignorance of fashion makes me an unreliable narrator, but it seemed to me - both from the traffic at these stores and the clothers the cool kids were wearing on the street - that it’s extremely cool to be dressed in locally made clothing. Hand-printed t-shirts are ubiquious on men, often featuring the logos of bands who would happily sue the designers into penury, if they could only find them. (The Ramones logo, refigured with Hunter S. Thompson in the place of the baseball-bat wielding Eagle. Lots of Beatles shirts on guys too young to remember the Beatles.) Colorful dresses on women, often asymmetric, looking both home-sewn and carefully tailored. Supremely funky shoes and handbags, and not a Coach, Gucchi or Dolce and Gabbana in sight.

Our friend Sophia, who’s been leading the expat life in Palermo Viejo, explained her interpretation of the phenomenon over a predictably lucious steak and bottle of Malbec. “Salaries are really low, so everyone’s looking for a way to make a little extra money. So people started sewing, or knitting, or doing metalwork, and selling it to tourists on the weekend, as the tourists are the ones with the money. But because Porteños really like fashion, it’s become at least as common to sell to each other.”

When your currency is relatively strong, it’s inexpensive to buy mass-produced fashions from The Gap. When it gets weak enough, you might be better off buying a locally designed and sewn pair of jeans that’s been custom fitted for you. This isn’t unfamiliar for those of us who’ve worked in developing countries - one of the projects I try to undertake every time I go to Ghana is to bring clothes I really like to my tailor, and ask her to make me copies of those garments, which tend to come out nicer, cheaper and far funkier than anything I could buy in a store. But it’s pretty unfamiliar to see in a high-development country.

“The designers are figuring out the whole idea of exclusivity,” Sophia tells us. “Someone will be wearing a cool pair of shoes, and you’ll ask who made them, find the shoemaker and ask for a pair. And now the shoemaker will tell you, ‘I only made six pairs.’ In other words, while she could make you more, she won’t, because the six pairs that exist out there in the world are cool in part because of their exclusiveness.”

The result is something that would make Etsy devotees very happy, a whole youth culture based around the idea that handmade is cool. What’s fascinating me is the idea that this may have been less about cultural trends - the rise of “maker culture”, the desire to hack and understand the means of production - and more to do with simple economics.

It also suggests we might see an expansion of maker culture in the US if - as some economists predict - we see our currency weaken after the markets start to recover and it’s clear that we’ve flooded the economy with new dollars as part of various recovery plans. Stagflation isn’t a pleasant economic trend to live through, but if it means we’ll see wallets made from old Wonder Woman comic strips on the streets of Boston, well, that would be a partial consolation.

It’s possible that the rise of handmade as fashionable requires a certain population density. If everyone in your neighborhood decides that handmade shoes designed by your neighbors are cooler than Manolo Blahniks, it’s easier for you to think globally and shop locally. While Etsy benefits from the fact that somewhere, out there on the web, there’s someone who’ll pay $200 for your Star Trek corset, Palermo Viejo merchants benefit from local concentration - it’s pretty clear that young fashionistas are looking at each other and contemtuously thinking, “My god, is that machine-made? How gauche!”

If it’s true that Argentine economics have a major effect on diet and fashion, it raises questions for those hoping for the rise of creative economies and hyperlocal agriculture in countries like the US. I’m a big proponent of local agriculture, not because it makes environmental sense (because often it doesn’t), but because local food tastes great and supports my neighbors. Unfortunately, it’s really expensive - self-interested economics suggests that I’m going to buy factory-farmed chicken when push comes to shove instead of local, organic alternatives.

My guess is, so long as the US dollar remains the global reserve currency, it’s going to be tough for local food and fashion to become a mass movement instead of a conscious political statement. While that may not be great news for the makers, it’s probably good economic news - as much as I like the steak, I’d be pretty unhappy if the Obama administration started looking to Argentina for macroeconomic advice.

This piece originally appeared on Ethan Zuckerman's personal blog, My Heart's In Accra.
Bookmark and Share


Comments

Thanks for explaining the concept of Import Substitution, it's something a lot of Malaysians are familiar with. The auto industry and other nationalised industries present significant obstacles to development. For example, many people suspect Proton is the reason the government keeps dragging its feet on a strong public transport policy.

Maker culture has also made its way to Malaysia in the form of online boutiques and flea markets. Youth magazines spend a great deal of time highlighting the new websites in the scene.

Han


Posted by: Tshiung Han See on 2 Apr 09

A note on fashion: the present "hipster" trend was (if unconsciously) started by the thrift-store-scouring artists, and as this "thrifty, funky, 80's-90's" style grew more popular, high-end designers jumped on the bandwagon, selling "retro" clothes at premium prices, saving you the trouble of scouring through Goodwill and dodging smelly old ladies.

Second-hand and hand-made garments have always been a badge of authenticity among the punk, hippie and other counter-cultures. To these groups, "local" clothes are a counter-statement to the perceived vanity and excess of the glittery mainstream. The hipster trend of today seems to have missed the memo: their expensive, "faux-local" clothes are derivations of a style that once abhorred vanity

From what I saw in Palermo Viejo, hand-made clothes are not a counter-cultural statement, and exclusivity is not based on price, but the limited number of a certain design. Vanity reigned supreme on the streets of Palermo SoHo, but fashion was not the vehicle for class identity that it is in wealthier countries. To be fair, sleek-rimmed glasses on beautiful ladies are common in BsAs, but these women don't carry themselves with quite the prima donna conceit that you might see in Georgetown D.C. or the Upper East Side of NYC.

Argentina had a financial crisis that affected the buying power of every Argentine, so there may have been a measure of camaraderie, such that classicist vanity subsided and skills, artistic grace and social connections became the metrics of cool.

I see a similar camaraderie emerging in America: if someone is unemployed, they don't bear the same stigma, as onlookers recognize the current economic situation.

How can we build on this window of decreased classicism, and inject positive cultural mutations such that we may adopt a bright green future?

Green, as a business model for products and services built for the Grey economy, is dying. Passive consumerism is not the vehicle for sustainable development. Active, "prosumerism" and social media production will be the new vessel for regenerative design.

Through decentralized networks and local community groups, amateurs are already revolutionizing the way culture is created. I think stagflation will catalyze even more DIY, open-source style production. We have the capability to do high-quality work by sharing techniques and designs over the web.

So how do we support the DIY open-source community regeneration? DO IT! We've been having a craft-night potluck at our house (we are four straight guys!) for a few months now. Our less-crafty friends don't want to be left out of the fun, so they come and take up a new hobby, or rekindle a dormant one. It doesn't feel like work when you are hanging out with 15 friends, drinking wine and telling jokes!

Bill McKibben wrote in "Deep Economy" about how adding a social connection to a wealthy person's life creates much more value than additional income. An impoverished person living in a tribal community is already rich in social connections but welcomes new financial access.

Herein lies a great opportunity for cultural creatives and eco-social activist types: become friends with your hyper-individualist neighbor! Show them how being part of a community again enriches their lives immensely!

(Wow, that post took off....)


Posted by: Jay Standish on 8 Apr 09

This is happening now in Los Angeles. Empty big box stores become flea markets. These run seven days a week. Some of the booths sell clothing, that is made by the proprietor. There are custom boot booths. Even acupuncture. 'Made to order' seems to be making a comeback.


Posted by: dalea on 9 Apr 09

Taxis are not cheap to people making pesos!
I'm also surprised that for someone allegedly so interested in economics you didn't mention more about how inflation is affecting Argentines in other ways. The biggest omission is obviously that not everything can fall under the umbrella of the "maker culture," and you see the problems of this everywhere in Buenos Aires.

Let's say that $30K pesos/year is the average salary (which may be a bit high). Any old car might be $16,000 to buy, but $32K US within Argentina's borders once you add on all of their import taxes. After you do the currency conversion, a very plain car costs $155K pesos to buy, which is not cheap for someone making $30K pesos a year.

Of course it SEEMS great when all you're thinking about is how this will negatively affect people's ability to buy products from Nike and other corporations, but you're missing out on the other goods: in Argentina, all electronics, machines, recorded media, brand-name goods, books (printed in Spain or the US), many chemical products (facial cleanser, makeup, mouthwash) are also subject to these prices. Because setting up a cell phone factory in Argentina makes no economic sense to entrepreneurs, so people are stuck paying 5-6x more than we would, once you look at what they're making.

It's nice that you focused on what you perceive to be the romantic aspect of the Argentine economic nightmare, but these things are not purely done by choice--did you not notice the abundant ads for brand-name items there? They do sell the expensive stuff, too. And knowing they can't afford any of that doesn't make their micro-economy easier to swallow.


Posted by: Becky on 23 Apr 09

whatsup girls
I hope everyone are having a wonderful day!
makeup is one of the most needed items to us right?
well, i found this sweet site this morning where we can get free makeup samples of all the popular makeup brands.
covergirl, rawminerals and much much more!
http://www.covergirl.com/images/terciary1.jpg
Love the way you look!


Posted by: Bageroarelm on 22 Jul 09

Post A Comment

Please note that comments will remain open for only 14 days after the article is posted. While previous comments will remain visible, attempts to post new comments after this period will fail. This helps stop comment spam, so your forebearance is appreciated.

The Worldchanging comments are meant to be used for further exploration and evaluation of the ideas covered in our posts. Please note that, while constructive disagreement is fine, insults and abuse are not, and will result in the comment being deleted and a likely ban from commenting. We will also delete at will and without warning comments we believe are designed to disrupt a conversation rather than contribute to it. In short, we'll kill troll posts.

Finally, please note that comments which simply repost copyrighted works or commercial messages will be summarily deleted.

REMEMBER PERSONAL INFO?
Yes No

NAME


EMAIL ADDRESS


URL


COMMENTS



EMAIL THIS ENTRY TO:

YOUR EMAIL ADDRESS:


MESSAGE (optional):


Search Worldchanging

Worldchanging Newsletter Get good news for a change —
Click here to sign up!


Worldchanging2.0


Website Design by Eben Design | Logo Design by Egg Hosting | Hosted by Amazon AWS | Problems with the site? Send email to tech /at/ worldchanging.com
©2012
Architecture for Humanity - all rights reserved except where otherwise indicated.

Find_us_on_facebook_badge.gif twitter-logo.jpg