The Big Mac Subsidy

This week in Argentina I started investigating a new issue regarding one of the world’s largest fast food chain, McDonald’s. If I ask anyone in the United States what is “Mcdees” most representative product and most probably 11 out of 10 will say the BIG MAC.

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Well in Argentina it is quite different. The quarter pounder is actually the most sold product here. Some Argentines travel to the US without having ever tried a BIG MAC. Why you ask? Well there is a whole story around it that goes farther than just a simple hamburger. Its actually political.

This is The Economist research on the Big Mac:

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Here you can see that the July 2014 price of the Big Mac they recorded is at 21 pesos (2.50$ USD). This price is usually frozen until after the report is released. In present September 2014, the price is at 25 pesos (2.90$ USD).

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Yes the difference is minimal, yet it demonstrates a point. That point led me into digging more into the issue. A Slate.com article written back in 2012 started dismantling this issue, (http://www.slate.com/blogs/moneybox/2012/05/01/why_big_macs_are_cheap_in_argentina.html).

The writer of the article, Mathew Yglesias, spoke about the Moreno Big Mac. Moreno was Argentina’s economic minister up until last year. Having presided with Nestor Kirchner’s late gabinet and six years of Cristina’s term. He employed this neo-populist economic idea. Cutting imports and FDI. Regulating the currency by creating a black market dollar (the dollar blue). Also by controlling the INDEC, Argentina’s national institute of statistics and census, he was able to control the mensual inflation reports. When the inflation is by 30 percent per year, the INDEC will say it was only 7 percent.

So what is the point of the Moreno Big Mac? Basically hide Argentina’s real numbers. The Big Mac index is a somewhat reputed statistic in international economics, which serves to display under-valued or over-valued currencies as well as price parity per capita by using a product that is made and sold similarly worldwide. In other words, how the same good is valued throughout the world in comparison to the gdp per capita.

Hence, the effort to subsidize and freeze the value of the BIG MAC is valid considering this government. In the last several years the price of the Big Mac has not been parallel to inflationary numbers. Not even the ones given by INDEC. So how is Mcdonald covering the costs? Through what they call the Triple Big Mac. What is the Triple Big Mac? Its a Big Mac with one more tiny piece of meat, valued twice the price of the Big Mac. When entering a Mcdonalds you won’t ever see displayed or promoted the classic Big Mac, but a 55 pesos (6.54$ USD) Triple Big Mac:

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Carolina Suarez at the CEC Centro de Educacion al Consumidor (Consumer Education Center), an Argentine NGO looking to aid the consumer against similar injustices, states for Diario Hoy: “Is this perhaps a ploy to hide economic data? How much would it cost otherwise?…”

Cases like these demonstrate what this government is capable of doing. Its funny and yet disturbing at the same time.

Thanks for your attention, I’m off to BK.

Defender of the people

Carancho. Sort of Argentine word that has no english translation because it only happens in Argentina. It’s when a man jumps onto someones car in order to sue the person and receive money after a trial. In this case it’s a policeman and he’s jumping on the car of a protestor who earlier that day was leading a manifestation, in order to have a “reason” to arrest him.

Update: Last video was removed. Government has been censoring these footages. New video is up. It shows the sad situation of how we cannot even depend on the order force to protect us. Order, Equality and Freedom. The three trade-offs in a political agenda. It is hard to include all three. Yet, in argentina we seem to lack any of the basic construction of a “state to people” relationship.

 

This is the man that controls the “Gendarmeria Nacional”. Sergio Berni, our presidents new security minister.

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The rumor running around the hallways of the Argentine White house “La Casa Rosada” is that he is positioning himself to become Buenos Aires’s new governor (Don’t tell anyone). Such province is the size of France and holds half of Argentina’s population.

They are…

In order to briefly introduce this country. I will start by breaking down the two characters of this blog’s original default picture.

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On the left, “our” president Cristina Fernandez de Kirchner. On the right, “our” Pope, Francis. Two head of states that come from the same country, speak the same language, represent the same flag, yet reputed differently. While one uses extortion to get things done, the other uses dialogue.

But this blog isn’t to hate on a person. You can just google her and you’ll find sufficient evidence on my latter point. 

My main idea with this picture is to demonstrate how the country is formed by ups and downs. By people who want to help and people who seem to just want to see the country fall into pieces. “We” have had dictators, anarchists, thieves, and five presidents in one week (no exaggeration here). But also the country has had the best soccer player of all times, twice. For some time in the 20th century it was considered one of the greatest economy of the world. Argentina during that time was called the “farm of the world” (el granero del mundo). Having been one of the greatest meat producers and exporters in the world (now its Uruguay). 

So essentially, this country has great potential to become one day again an economically thriving country. However its socio-political bi-polarity have multiplied wrongs through the years.

In the words of this redundant sports phrase…

“You are only as good as your last game”

I AM…

My name is Hugo Doutre.

Starting today I will be blogging about the every day adventure of living in this far away country down in the souther cone of the earth.

First of all I will give some background information on myself. I am a french born 23-year old male. Son of southern french parents from small villages close to the spanish border I am the proof to how we are not born into our life yet we make it as we go. Nature vs Nurture. Having done kindergarden in Paris, elementary school in Napa Valley, middle school in Mendoza Argentina, high school in Buenos Aires and finally college in Boston; I have become a sort of frankestein assembled by all of these different cultures. Poli sci major, “futbol” enthusiast, music addict. I live to observe and absorb anything and everything I can learn from a given place.

Currently working for a consumer rights agency in the heart of the city of fury (Buenos Aires). I get to see from up close the corruption, the injustice and plain lack of common sense in Argentina’s political system. Many called me crazy to want to go back to a country that has just added a new debt default to its records. Call me morbid, but working in Switzerland for example would have been too boring as a political scientist.

Hopefully, you can all enjoy my rambling. I want to finish this egocentric introduction to your humble server with the words of one of Argentina’s greatest musician who left us this week. In my opinion it is the best way to denote Argentina in a nutshell…

“Del mismo dolor vendrá un nuevo amanecer”

“From the same pain will come a new dawn”

-Gustavo Cerati