The Corner

First They Came For Armani . . .

Argentina’s withdrawal into economic isolation continues.

AP reports:

The world’s most luxurious designer brands are abandoning Argentina rather than comply with tight new government economic restrictions, leaving empty shelves and storefronts along the capital’s elegant Alvear Avenue, where tourists once flocked to see the latest in fashion.

Kenzo is the latest to go…It joins a long list of top luxury brands pulling out of Argentina: Emporio Armani, Yves Saint Laurent, Escada, Calvin Klein Underwear, Polo Ralph Lauren, Louis Vuitton and Cartier. The labels have become collateral damage as the government tightens its hold on the Argentine economy with measures aiming to encourage domestic production and capture more wealth to aid the poor.

For millions of Argentines it may make little difference: the Louis Vuitton handbags President Cristina Fernandez likes to carry would cost a month’s wages for a typical factory worker. But it is leaving hundreds out of work, and critics say it’s a symptom of broader problems that are stalling the economy…

Argentina’s populist government isn’t sweating the loss. Tourism minister Enrique Meyer’s response boiled down to a “let them eat empanadas” swipe at the nation’s elite. He suggested the labels are overrated and said their departure would have minimal impact on Argentina’s economy.

True in a way but, as AP notes, all this is part of the wider dysfunction caused by Argentina’s neo-Peronists attempts to (in some senses) detach the country from the global economy by the gradual introduction of a quasi-autarchy in which the most basic rules of the market are being increasingly ignored:

The import controls have reduced supplies to Argentine consumers who are desperate to spend or trade their pesos before they lose value, fostering an inflationary spiral and illegal currency trading, Castineira said.

The black market for dollars effectively devalues the peso, which now trades informally at 6.2 or more to the dollar—a steep discount from the official rate, but still better than watching inflation of 25 percent or more a year destroy savings.

In response to the dollar frenzy, the government created still more controls, requiring companies and individuals to get tax agency approval before buying the foreign currencies needed to move money out of Argentina. . . .

The situation is so grim that even historic, made-in-Argentina institutions are calling it quits.

The story of Argentina’s last century has been of the repeated destruction by its leadership of the wealth that should come this country’s way.

What a waste.  Could never happen here, of course. 

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