From the Barrios to the Government: Challenges in Argentina

As much fun as I have been having in Buenos Aires, there are many problems evident within the education and economic framework of the country.  One of the most glaring issues has to do with the vastly underperforming educational system.  Flor and I attended a local speech given by the Minister of Education about the many probems facing the current education system in Argentina.  Some of the statistics that he shared with us were quite astounding.

  • 1:2 students finish high school
  • 1:4 students can sufficiently explain what they learned in high school
  • 1:10 students graduate from university
  • 1:100 students from poor barrios who graduate university

So where are the underlying problems that cause so few Argentines to continue their schooling?  Flor told me that a lot of it has to do with societal norms.  Parents who are uneducated, and society in general, place very little importance on education.  Kids are not encouraged like they should be to take education seriously.  Argentina is a highly subsidized country and workers oftentimes receive more subsidies from the government while being unemployed than they would earn at an entry level job.  Thus, the youth often see their parents working the system instead of actually working and follow suit.  They know that if they can’t find a job they like, they can always count on the government to pay for them.

The statistic of 1% of students from poor neighborhoods graduating is especially troubling.  Obviously it is more of a struggle for them to purchase materials or gain access to quality education as they can’t afford it, and they are often called upon to help provide for their families at a young age.  Flor and her friends, being the kind-hearted people they are, have decided to do what they can to improve this unacceptable situation.

On Thursday we picked up Flor’s friends Maria and Frederico and headed down the dilapidated street into one of the poor barrios, barrio las tunas.  Here they have set up an after school program for local kids for a few hours each day (www.potencialidades.org).  As we opened the chained link gate to the center, small niñitos rushed over, eager to play with us.  I was immediately brought a bucket to play drums on, propositioned multiple times for chocolate, and took turns spinning the kids around like an airplane.  The kids especially liked being spun around and bombarded me.  It was incredible to see the looks of joy on their faces, especially on some of the more shy kids.  The background these kids come from is evident as one little girl was blind in one eye, another little boy only had the thumb of his left hand.  And yet they were smiling like each breath was a blessing, an adventure that they didn’t want to miss out on.  The kids put on a play as we made crowns for their costumes, and we played soccer with some of the older kids.  The center also made for a perfect location to practice my castellano, as the kids speak slowly and use basic words.  I learned a lot from those kids and thoroughly enjoyed the few hours spent with them.

Another huge problem in Argentina is the always-fluctuating economic system.  Inflation has historically been a huge problem in Argentina.  It is impractical to save pesos in Argentina because there is no guarantee that they will maintain their value two weeks from now, let alone 10 years from now.  The inflation rate for the past year is well over 25%, reportedly averaging around 3.7% a month.  In comparison, inflation in the US the past year was around 1.5%.  That’s an average of prices increasing around 0.13% a month compared to 3.7% a month in Argentina!

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The National Bank, where pesos become less valuable by the day.

The high rates of inflation and instability have created a high demand for dollars and euros, more stable currencies to hold savings in.  But the government has made it illegal to buy dollars or euros within the country, forcing Argentines to open accounts of questionable legality overseas in order to hold their savings in currencies besides the peso.  The demand for dollars is so high that there are people working the ‘blue market’ in the streets.  There is the official exchange rate for the dollar vs the peso, currently around 8 pesos to 1 dollar.  But because the demand for physical dollars is so high, the current ‘blue rate’ is 10.39 pesos to 1 dollar.  This is the practical rate that is used as everyone changes money on the blue market and the exchange rate is even printed daily in the newspapers.  This creates an interesting opportunity for people traveling abroad.

  • Bring as much physical currency to Argentina as you can in dollars and/or euros.  By exchanging on the blue market you receive close to 30% more pesos than exchanging money at a bank.  Plus you don’t have to pay any commission.  If you exchange $500 at the bank or withdraw that amount from the ATM, you will receive around 4,000 pesos.  Exchanging the same $500 on the blue market will get you nearly 5,200 pesos.  That’s a 1,200 pesos difference that you lose out on if you don’t exchange physical dollars.
  • Use your credit card as infrequently as possible.  For the same reason above, you will be charged the official rate and not get your true dollar’s worth.
  • If you have an account in your home country, try the app Xoom.  Xoom transfers the dollars from your home account and you pick up pesos at one of their distribution centers.  Just take a copy of your passport and the email detailing the transaction and you receive a rate that is somewhere between the official rate and the blue rate (closer to the blue rate fortunately).  They charge a small fee depending on the size of the transaction that is more than made up for by the my favorable rate.  This service is great if you don’t have any physical dollars on you but still want to receive the much better rate (why wouldn’t you?).  I used the service for the first time in Argentina and was very glad a friend told me about it.  If you use the link provided below, you will receive a $15 gift card to Amazon after your first transfer (and I will as well, so take advantage!).  http://refer.xoom.com/a/clk/lwywp
The rapid decline in the peso's value against the dollar.  Courtesy of ww.xe.com.

The rapid decline in the peso’s value against the dollar. Courtesy of ww.xe.com.

The Argentine people are accustomed to the constant volatity in their economy and the government has done very little to help.  In fact, they may have hurt their future prospects when they nationalized YPF, the nation’s largest oil provider, which was owned by the Spanish company Repsol.  Essentially, the government forcibly took control of the company.  This caused many private firms to pull out of investing in Argentina, for fear that the government could expatriate their companies without due cause or fair compensation.  Since the expatriation in 2012, Argentina oil production has declined along with foreign investment.  The whole expatriation has proven to be a disaster as outlined by Frederik Erikson at the following website. (http://www.ecipe.org/media/publication_pdfs/ECIPE_bulletin_02.2013_FErixon.pdf)

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The Casa Rosada, the office of President Cristina Fernández de Kirchner.

Argentina faces many challenges in the upcoming years.  In order for them to escape their current status as a ‘repressed’ economy, a whole shift across the societal, economic, and political system may be necessary.  I hope that they can boost their educational system so that the society and government can make better informed decisions.  I know this is the wish of many young Argentines like Flor.  Who knows, maybe one of the future leaders to help bring Argentina out of its crisis is within one of the poor barrios, attending a program run through the compassion of others.

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