Something to Hide in Argentina? Kirchner Faces Criminal Charges after Cancellation of Poverty Statistics

EspañolYesterday, one of Argentina’s opposition parties, the Civic Coalition ARI (CC ARI), initiated criminal charges against President Cristina Fernández de Kirchner for cancelling the publication of official poverty statistics corresponding to the second half of 2013.

The CC ARI is known for its leader and founder Elisa Carrió, and she has taken up corruption as her chief priority. Those initiating the charges allege that the reason behind the move to cancel the publication of the figures, which the National Institute of Statistics and Census (INDEC) was scheduled to release last week, is that Kirchner’s government is trying to hide an increase in poverty levels in Argentina, caused by last year’s inflationary burst.

In a statement with La Nación newspaper, ARI CC leaders who signed the complaint said that “the poor in our country have disappeared from the social landscape, the state does not recognize them and has decided to deny their existence.”

The complaint is the latest episode in a fierce controversy that erupted when the INDEC announced on April 23 that it would not publish the data scheduled for release on that day, as indicated by the official calendar of the agency, posted on its website.

INDEC issued a statement the next day explaining that the cancellation was due to changes in the methodology for elaborating the consumer price index (CPI) implemented in January this year, which would have created technical problems in calculating the poverty figures that were going to be published.

But members of the political opposition and several non-governmental economic analysts asserted that the changes in the methodology for elaborating the CPI are irrelevant for compiling last year’s poverty figures.

“The alleged technical problems do not exist because they have to publish figures for last year, for which the previous system is still relevant,” said Gabriela Camano, national representative for the Renewal Front opposition coalition.

The controversy stems from the stark contrast between the poverty figures published for the first half of 2013 by INDEC — according to which poverty reached only 4 percent of the population during that period — and the much higher estimates of current poverty levels published by private-sector economists and other experts.

According to the Thought and Public Policy Institute (IPyPP), coordinated by economists Claudio Lozano and Thomas Raffo, 36.5 percent of Argentineans are currently mired in poverty. The same institute also estimates that there are 5 million people (12.1 percent of the population) who are hungry or live under extreme poverty.

Meanwhile, former INDEC officials affirm the private sector number and estimate that 15.4 million people live in poverty in Argentina.

In this context, the former Head of Prices for INDEC, Graciela Bevacqua, said the cancellation of the release of the figures was “shameful.” For her, the issue of poverty and inflation “has never been an issue of methodology, it is a data problem.”

La Villa 31, cerca del barrio de Retiro, Buenos Aires. Fuente: WikiMedia.
The Villa 31 shanty town, close to Retiro neighborhood, Buenos Aires. Source: WikiMedia.

However, the cabinet chief of Argentina, Jorge Capitanich said during an interview on the television program 6,7,8 that it is “absurd” that poverty levels are as high as indicated by the non-governmental figures.

“The policies driven [by the government of Cristina Kirchner] have substantially improved the quality of life of the Argentinean people,” he claimed.

Capitanich was referring to official figures showing that Argentina had poverty rates of 57.5 percent in October 2002, during the deep economic crisis the country was going through at the time.

Regarding the official statements, the IPyPP’s Claudio Lozano said “regardless of whether the government is willing to recognize it or not, Argentina is suffering the consequences of a macroeconomic adjustment process implemented by the national government this year through a strong devaluation of the local currency towards the end of January, along with the establishment of measures that force wages to lag behind inflation, and rising interest rates that are slowing down economic activity. [This] requires an X-ray exam of the social situation that allows for its measurement and characterization, as an essential first step to carry out the necessary changes to overcome the levels of inequality and impoverishment afflicting the Argentinean population.”

Factors Affecting Poverty in Argentina

We asked two economic analysts about the causes of poverty in the South American nation.

According to Iván Carrino, from the Progress and Freedom Foundation in Argentina, poverty arises from both short and long term causes.

“The long term cause is that we still haven’t found a sustainable growth model. All governments focus on the short term, and leave an economic time bomb set to explode in the face of the next government. So it is very difficult for investors who think in 20-year time spans to come here.”

Carrino said inflation was the cause that contributes the most to poverty in the short term. For him, “the government increased public spending rapidly and disorderly to revive the economy and lower unemployment. And it achieved both goals, but these policies also generated negative side effects: Argentina has one of the highest inflation rates in the world and not all incomes can grow at the same or higher rates than the general price level. As a result, many people were left behind economically, and unfortunately that’s what we see reflected in reliable poverty figures. I think [the spending via monetary expansion] was the worst mistake of this government, its most damaging.”

Meanwhile, Ivan Cachanosky, also of the Progress and Freedom Foundation, adds that besides inflation, poverty in the country of soy and wine is due to the mismanagement of social programs.

“The role of social programs is to help those who don’t have a job to enter the labor market. Paradoxically — although very common in Argentina — this is not what happens in our country. Social programs are becoming more widespread and embedded over time, and they are not increasing social mobility. The main problem is the incentives.”

Cachanosky offers an example to explain the role of incentives in the creation of poverty.

“Take the Universal Child Allowance, an allowance that is supposed to benefit the children of the unemployed. Families receive 80 percent of its total amount unconditionally, and only the remaining 20 percent is conditional on meeting the education and health conditions they have to provide for their children. Frankly, this does not seem a good enough incentive for kids to finish high school, and statistics show exactly that: fewer and fewer students going through secondary education. This impoverishes the population, because a person without a full secondary education will find it very difficult to enter the labor market, which is what generates social mobility. All these social plans in Argentina have achieved is preventing social mobility for people who need to enter the labor market the most.”

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