Talking About This Data Can Make You A Criminal In Argentina
There is a disconnect between the inflation rate reported by INDEC, Argentina's bureau of statistics, and the numbers reported by independant statisticians.
It's a big disconnect — 10% vs. 25% — and more importantly, those who insist upon it face criminal charges, fines of up to $250,000 and 5 years in prison (Think of what they'd do to Nate Silver!). All that is part of why Anonymous hackers took over INDEC's website earlier this month, and it's why tomorrow, the IMF will decide on how (if at all) to punish Argentina for failing to improve its statistical analysis.
In short: These are some powerful numbers.
Today in Washington, Carnegie Mellon Statistics Professor Joseph B. Kadane presented on two things. First, on why it's obvious that Argentina is not being forthright about its inflation rate. Second, on why the government's pursuit of statisticians with a differing view from INDEC's is a human rights violation.
Business Insider spoke with Kadane before his testimony, and he was kind enough to provide us with some cool charts that illustrate his first point.
This first group of charts compares government inflation numbers in four Latin American countries to prices online. As you can see, they match up fairly well.
Now here's what happens when you when you look at the same chart for Argentina.
Not quite the same experience. And that brings us to Professor Kadane's second point, that the suppression of these numbers is a violation of human rights.
In 2007 Argentina fired all of INDECs staff responsible for calculating CPI (the Consumer Price Index) and has since also filed criminal charges against former employees charging them with endangering the state.
Some of those criminal charges have been dropped while others are still pending. Meanwhile, the government has carried on with its pursuit of independant statisticians through administrative hearings during which they are slapped with fines in the hundreds of thousands of dollars. Those fines have yet to be adjudicated.
It's not just statisticians that are being intimidated either. Guillermo Moreno, the country's Secretary of Domestic Trade, has no problem threatening bankers, rolling into a debate with boxing gloves, and carried a gun.
Moreno, Argentina’s pugnacious internal trade secretary, is reported to have told a key banker on Friday : “You’ve got 72 hours to get the parallel (dollar rate) to 4.50 pesos. Tell everyone what I want.”...
His methodology is intimidation – he has been rumored in the past to carry a gun and he took boxing gloves to a meeting of shareholders of a key newsprint company in which the state has a stake in a bid to show who was boss. And he has slapped private economists with fines for estimating inflation data way above official statistics. He has been described as Argentina’s de facto economy minister and many businessmen prefer silence to crossing with him – perhaps remembering Martín Lousteau, a former economy minister, who defied him over farm export tariffs. Moreno was seen at an event running his fingers across his throat, indicating Lousteau was playing a fatal game: the minister indeed lost his job, while Moreno has gone from strength to strength.
On top of all that, observers believe that the Kirchner administration has been intimidating the press in order to keep this story in the shadows.
The one bright spot here is that politicians are immune from criminal prosecution, so the opposition party does its part to release inflation numbers through the legislature.
All this shows that the IMF has plenty of reason to be upset with Argentina. IMF head Christine Lagarde has said she may "red card" the country (kicking them out of the game, so to speak), and that could mean that Argentina could also be forced out of the G20.
We'll find out tomorrow.