In Argentina it is possible to be a millionaire and poor at the same time. Here the reason

( Spanish) – Specialists agree that inflation is a machine that creates distortions in any economic program. The lack of certainty in establishing prices results in difficulties in planning long-term investments, delays decisions and harms employees, among other effects. But in Argentina, whose accumulated inflation in the first 10 months of this year is 107% and year-on-year 193%, this has reached such an extreme that it is generating a new category of families, according to income: those that are nominally millionaires but poor. in reality.

The National Institute of Statistics and Censuses (Indec) publishes monthly valuations of the basic food basket and the total basic basket. The first establishes the threshold of indigence and the second that of poverty. That is to say, those who do not have the income to buy these baskets are poor and, if they cannot buy what they need to feed themselves, they are also destitute.

According to the latest report, corresponding to October, a family of five members, two adults and three children, can be millionaires and poor at the same time. This is so, because he needed 1,037,672 pesos (US$ 995 at the official exchange rate this Tuesday) to buy a total basic basket. That is to say that, even if its members earn more than a million pesos, they do not escape poverty. They are millionaires and poor, all at the same time.

Already in September, a family of five needed more than a million pesos to not be considered poor. And although the rate of increase in the cost of living is slowing, more families with fewer members will join the ranks of millionaires and poor people. For example, in October, a family of four, two adults and two school-age children, needed about 986,586 pesos (US$946 at the official exchange rate) to not be considered poor. And so on until reaching the families of an individual who needed 319,284 pesos (US$306) in the same month to buy a total basic basket and not fall below the poverty line.

So far this year, both baskets rose below the average accumulated inflation until October and also in year-on-year terms. While basic food increased by 80.6%, total basic increased by 99% from January to October, against an inflation of 107% in the same period. Compared to the same month last year, the basic food basket increased by 170.6% and the total basket increased by 185.7%, against an increase in the cost of living of 193% in the same period.

To understand the dimension of these measurements that establish the difference between being poor and not being poor, it is necessary to review their content. On the one hand, the basic food basket (which estimates indigence) is made up of the foods necessary to meet the essential kilocalorie and protein requirements for a man between 30 and 60 years old, of average height, always in accordance with the information provided by the Index It includes foods such as meat, fruits, milk, bread, rice, potatoes, sugar and beverages, both alcoholic and non-alcoholic, among other products.

The total basic basket considers, in addition to food, other goods and services that an average family pays for subsistence, such as health, education, communications, basic services and transportation, among others. From this analysis, an expanded sample is established with respect to the basic elements that a person or family needs to not be indigent.

Alejandro Vanoli, former president of the Central Bank of Argentina, interprets this phenomenon of millionaire and poor families as an effect of another reality that he assures has not happened in the country for many years: “It is a product of the fact that some formal workers are poor. In general, poverty and indigence were associated with marginality, the unemployed and those who had precarious jobs. But there is a downward spiral that starts in 2018 with the crisis during the Government of (Mauricio) Macri and the policy errors, both of that Government and that of Alberto Fernández, and also with the decisions that the current Government has adopted, with the devaluation, which caused an inflationary jump and a fall in real wages, especially for workers and retirees.”

Vanoli also believes that it will not be easy to reverse this trend, beyond some temporary improvement in the economy. “To end poverty, we not only need economic growth, but also a set of comprehensive policies to promote genuine work. A comprehensive approach against poverty not only has to do with providing work, but with providing the tools so that families can get out of that situation. This implies a cultural change and comprehensive social policies,” summarizes the expert.

In the meantime, a paradox that has already occurred in other periods of high inflation and that tends to deepen has re-emerged in Argentina: millionaires who live in poverty.