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Number crunching

by on November 21, 2011

For many Latin American nations, the truth that lies in statistics, rates, and all other types of general numbers can carry large amounts of political weight. Argentina’s national statistics bureau, INDEC (Instituto National de Estadistica y Censos), is a monolithic governmental agency charged with carrying out the census, providing consumer price indices, calculating inflation and unemployment, and other sorts of national and international data regarding Argentina and many of its non-financial official numbers.

In theory, organizations like this remain impartial, scientific observers and calculators. INDEC, as many have charged, has become the antithesis to this fair model with skewed statistics. In 2007, the former head Graciela Bevacqua was fired by President Nestor Kirchner after arriving at inflation statistics that were double the figures “demanded” by the administration. The harassment and fudging of numbers was being rebuked by their head, but since she was forced out a new head handpicked by the government went to the helm. INDEC, which once had semi-autonomy, now answered again to Guillermo Moreno, a man famous for his temper and such fiascoes as trying to ban all imported foodstuffs, punish foreign book publishers as Argentina hosted the World Book Capital, and act in many respects like a more vicious Rahm Emmanuel. (Full disclosure: he once threatened in quite colorful language one of my English students who was a consumer products executive for not meeting idealized production and investment quotas).

Naturally, this didn’t sit that well with many at INDEC. Since 2007, the index has reported inflation ranging between 7-9%. Bevacqua, not satisfied that the government would publish falsified numbers, started producing her own index at the University of Buenos Aires with 20 economics students. This set up a showdown, as this and other private indexes calculated almost 25% annual inflation. This divide weakened not only the Argentine government’s resolve to declare their ‘new-way’ policies as effective, but in the continual war between the government, bond-holders, and debt-holders. If Argentine inflation was being undervalued, so were the payments on people who invested in Argentina. This widespread speculation of cooked books even moved the International Monetary Fund to declare the private indexes as official statistics, due to doubt on the methods used by INDEC. As noted in the Washington Post, the differences in the inflation statistics point towards larger problems in Argentina: the lack of transparency with the economy, dragging their heels in complying or recognizing international obligations, and the expectations that government corruption is widespread. Here is a great graphic of what happened:

Inflation in Argentina has averaged less than 9 percent since 2007, the government contends. But economic consultants say the real rate is two to three times as high. <a href='http://www.washingtonpost.com/world/americas/a-quiet-battle-over-argentinas-inflation-rate/2011/10/29/gIQAEiUjYM_story.html'>Read related article</a>.

So, after all of these conundrums, the Argentine government had had enough with people spreading “lies” about other statistics, and through executive degree fined $125,000 to Bevacqua and her team for creating such contradictory inflation reports. The highly political act of now collecting data has led many statisticians advising foreign companies to quietly release their reports, while some others still freely give out their information.

Besides inflation, INDEC also measures such things as poverty. A report released today by the Universidad Catholica Argentina stated that poverty, especially in the Buenos Aires region, was almost double reported by INDEC. UCA found that 35% of Argentines living in the Buenos Aires area live under the poverty line, while INDEC reports 15%. This stems from a difference in measuring poverty, as INDEC says those living under 1,250 pesos/month ($292) are in poverty versus UCA/the Catholic Church which says the poverty line is at 2,150 pesos/month ($502). This large difference is due to not only the differences in measures of inflation, but of political rhetoric enforced by the government about their social programs. This same report pointed to 10% of the Buenos Aires region’s population living in shanty towns, an embarrassment for the government.

The bigger question is if this is such an open, acknowledged practice by the international community, the private sector, economists, scholars, and even former government officials, how is it tolerated by Argentines who recently re-elected the Kirchner government into a new term in power? Perhaps because, in typical Argentine thinking, “there is employment and relatively stable financial times…why concentrate on transparency and false data if things are ok?” This line of thinking is the same narrow, shortsightedness that has driven the economy into downward spirals before, due to the lack of long-term accountability and thinking by the public body.

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