Monday, 11 July 2011

An economist's life in not a happy one (updated)

From the Wall Street Journal:
BUENOS AIRES—Argentina's government has filed criminal charges against the managers of an economic consulting firm, escalating its persecution of independent economists.


The government is charging MyS Consultores with "publishing false information about inflation data" to benefit themselves and their clients. The criminal complaint alleges that MyS's data also lead to speculative behavior in Argentina's bond market.

MyS Managing Partner Rodolfo Santangelo described the charges as "ridiculous" and said the firm's inflation data do not affect financial markets.

Consumer prices rose 9.7% in May from a year ago, according to the national statistics agency, Indec. But virtually all economists say annual inflation surpasses 20%—one of the world's highest rates—angering government officials who dismiss inflation as a problem.

The criminal complaint, initiated by the Commerce Secretariat, is the harshest in a series of legal measures against economists. The credibility of Indec's data has been questioned ever since former President Nestor Kirchner replaced longtime civil servants with political appointees in early 2007.

So far this year, the Secretariat has fined at least nine economic research firms 500,000 pesos ($122,000) each. This week, the Secretariat also slapped a second fine on Orlando J Ferreres & Asociados.

"They fine us for saying how much prices have risen," Mr. Ferreres, director of his eponymous firm, said. "They could seek criminal charges against all of us. We don't know how far they're willing to go."

Mr. Ferreres said the legal actions are part of a strategy to prevent independent economists from publishing potentially negative information during an election year.
Not a good look. Economists, just like anyone else, should be free to comment on issues important to an election, whether or not the government likes what they say. And if the official inflation figures are wrong then the public needs to know this. Especially if inflation is twice what the official figures claim.

This issue also highlights why you want the national statistics agency to be independent of the the government. One thing the government should not be doing is replacing "longtime civil servants with political appointees" just to get the inflation figures to look better.

Update: Tim Worstall asks But *Why* is Argentina Charging Economists? He notes
About a quarter of Argentina’s debt is indexed to inflation.
and comes to the obvious conclusion,

The official rate is just under 10%, which is the rate that the bondholders get. The real rate….no, sorry, the rate calculated by those private sector economists which of course may or may not be correct….is over 20%.

This argument over the numbers is worth real money then: possibly worth a bit of oppression of private sector economists in the eyes of the Argentine Government.

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