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Feb 27th 2008

Alberto Fernández: Idiota.

Como si necesitaramos más pruebas que el gobierno kirchnerista no entiende los principios fundamentales de la economía…

Acá tenemos Alberto Fernández justificando el pedido del gobierno que las empresas den informes en cuanto a sus costos de producción para que “no haya abuso de precios.” Jajaja…

Los costos determinan el costo final de un producto o servicio. Por lo tanto, pedirle los costos me parece algo razonable en una Argentina que ha sufrido abusos durante los últimos años de empresas en desmedro del consumidor”, dijo el funcionario en declaraciones a Radio Continental.

No, Sr. Idiota Perfecto, el costo de producción no tiene nada que ver con lo que estás intentando controlar.

El precio del mercado se fija por la oferta y la demanda. Y punto. Una empresa entra o sale del mercado tomando en cuenta sus costos (comparando su costo al margen con el precio del mercado), pero los precios de una empresa no se basan (si son buenos empresarios!) en los costos de producción, sino en el precio que el mercado puede sostener.

Tontazo!

9 Responses to “Alberto Fernández: Idiota.”

  1. MIguel

    Has Chavez extended “la zona de reclamacion” all the way to Argentina?

  2. doug

    Jaja… Esperemos que no!

  3. easy to mock statements of particular officials in any government. but argentina is doing better now than when it was ruled by neo-liberal governments before the crisis, no?

  4. doug

    Brian,

    Just so you know, the spam filter caught your two comments to the Iran posts, but they should be showing up now.

    As to the Argentine economy, yes and no. (But, yes! It is easy to mock statements from officials, particularly Alberto Fernandez.)

    The Argentine economy has rebounded from the dark days of 2001-2002. It has been growing at a very respectable clip for the past few years, unemployment is much lower than it was during the crisis, etc.

    However, these bits of good news haven’t been because of any repudiation of neo-liberal policies. Much of Argentina’s growth has come from agricultural exports. And given the relative weakness of the dollar (the peso is officially targeted to trade at about 3-to-1) their exports have stayed very competitive on the world market.

    In addition, the underlying fundamentals of the economy are not strong. While the business cycle has certainly rebounded as expected, the “third rail” of Argentine politics, inflation, is starting to take off. The official government numbers show inflation between 8 and 9 percent for 2007 (not very good). Yet these numbers are widely disputed by just about everyone who doesn’t work for Kirchner(s). Every third party study I’ve seen puts inflation between 18 and 26 percent for last year.

    Why the big difference? In the run-up to the presidential election of Cristina Kirchner, Nestor Kirchner’s administration put pressure on INDEC (the census bureau of Argentina) to under report inflation. The bureaucrats at INDEC refused. They were fired. New management was installed. And the official numbers met government goals. Ta-da!

    But I digress.

    The Argentine economy has grown. Yes. But to your point specifically, it also grew during Menem’s “neo-liberal” and corrupt heyday.

    The solutions that Kirchner has implemented are short-term fixes (price controls, labor regulations, more public debt, etc) and never work in the long term for fostering economic growth. Already there is general unease among Argentines about the economy. As wage growth continues to lag behind inflation this unease will only increase.

    As a side note: I lived in Argentina from 1999-2001 and then returned in 2003 (four months), 2006 (six months), and have visited several times in 2007 and this year. I have the sense that, unfortunately, we’re probably a couple (a few?) years out from another serious recession. It can be headed off or softened if Cristina implements some serious reforms (easing labor regulations, clamping down on inflation, opening up trade). But I’m not holding my breath. With comments like this one from Alberto Fernandez it is obvious that they don’t understand where economic growth and strength comes from. Or even how prices work.

    As a second side note: For an excellent discussion of neo-liberalism and its perceived failure in Latin America, I highly recommend Gary Becker’s blog post from almost two years ago, Moving Left in South America.

  5. N Chung

    Pero el costo de margen es el de los costos totales de producción, no?

  6. N Chung

    “derivative” de los costos totales

  7. doug

    Chung,

    Right. Marginal cost is the derivative of total cost.

    Any profit seeking firm will, theoretically, continue producing and selling goods when their marginal cost is below the market price.

    Here’s a quick summary from Wikipedia:

    It is a general principle of economics that a (rational) producer should always produce (and sell) the last unit if the marginal cost is less than the market price. As the market price will be dictated by supply and demand, it leads to the conclusion that marginal cost equals marginal revenue. These general principles are subject to a number of other factors and exceptions, but marginal cost and marginal cost pricing play a central role in economic definitions of efficiency.

    Marginal cost pricing is the principle that the market will, over time, cause goods to be sold at their marginal cost of production. Whether goods are in fact sold at their marginal cost will depend on competition and other factors, as well as the time frame considered. In the most general criticism of the theory of marginal cost pricing, economists note that monopoly power may allow a producer to maintain prices above the marginal cost; more specifically, if a good has low elasticity of demand (consumers are insensitive to changes in price) and supply of the product is limited (or can be limited), prices may be considerably higher than marginal cost. Since this description applies to most products with established brands, marginal pricing may be relatively rare; an example would be in markets for commodities.

    If I’m producing and selling breakfast cereal in Argentina, for example, I can attempt to charge prices that Alberto would consider “un abuso”, but then one of two things happens: people stop buying my cereal, or I get fabulously wealthy because folks actually don’t feel abused paying for my deliciously addictive cereal.

    Of course, this second option is unconscionable for a lefty such as Alberto, and so he wants to examine the costs and profits of companies so that firms with unreasonably healthy profit margins will adjust their prices accordingly.

  8. N Chung

    Well, if a business compares its marginal cost to the market price, and the marginal cost is the derivative of total production costs (with respect to quantity), then Alberto is right in requiring companies to report their production costs.

    Now of course a company would be forced to exit the market if it can’t keep it’s marginal cost below the price. But I don’t think Argentina (or anybody) operates in a world of perfect competition. Companies can set prices, and the Kirchner government is investigating whether this is the case.

  9. doug

    Chung,

    Exactly. As I said in the original post, a smart company is going to compare their marginal cost and the market price:

    Una empresa entra o sale del mercado tomando en cuenta sus costos (comparando su costo al margen con el precio del mercado)

    Examining marginal cost relative to market price helps me decide whether to produce an extra widget or even leave the market.

    But if I’m cranking out widgets for $10/each and can sell them for $20/each, and then I find a way to cut my average cost in half I’m not going to suddenly underprice my widgets if the market will still pay $20 for them.

    In addition, it’s clear from the article that Alberto doesn’t understand the difference between marginal and average (total) cost.

    And, as you point out, that perfect competition isn’t at play (meaning, some firms will have brand advantages, there will be product differentiation, etc).