Friday, September 28, 2007

Let Them Eat Wii!

wii copy
We were shopping at the Paseo Alcorta shopping mall the other day and we noticed a Nintendo Wii in the window of a store. We about passed out on the spot. The price was a mere AR$3,000. That is $1,000 in US dollars. It was not some ebay scam. It was not due the some crazy inflation rate. That is the actual retail price here.

I love my Wii. We can't imagine life without it. I don't know that I would pay $1000 for one.

It is not just Wii's that are priced so crazy. All electronics here are priced through the roof due to huge import duties. Just the other day I was offered a handsome sum for my video iPod. The offer was more than double what I paid for it and it is even a couple of generations old now.

Most things in the store are made here. The government since the time of Peron has really pushed Argentine economy to be self sufficient. And that policy has helped employ a large number of people. However, this gringo feels they are getting a raw deal.

The stores are filled with inferior goods. We went shopping for baby strollers last week and were looking at paying $200 for a stroller that was not even to the standard of the $19.95 version at Toys R Us. Why? My guess is that the market isn't being allowed to work freely and efficiently and the manufactures here have been insulated from any real competition. Plus the raw goods are harder to come by and more expensive from the duties placed on them.

Another example. My daughter started school way out in the suburbs. Which means she (and we) must get up at the un-Argentine hour of 6:00 to get ready for the bus that comes by at 7:00. Time to get an alarm clock. Only there are none to be found in the stores. At first I thought this was a cultural thing. Why would a country that prides itself on never being on time for anything need alarm clocks? OK, it may be partly due to that. But in reality with limited pesos, why spend money on the overpriced item when the alarm on your cell phone will work just fine.

We were told in our expat orientation meeting at school that if you want to find good quality goods go out to the Wal-Mart. The Wal-Mart! Something is seriously wrong with this place if I have to go to Wal-Mart to find "quality".

If they opened the markets here and eliminated the tariffs, prices would come down, the economy would grow the quality of life would increase along with the quality of goods. Sure some local manufacturers would have to close due to the pressure to compete globally. But, BustBuy, CompUSA and the new Argentine equivalents would trip over themselves opening new stores employing more than the factories that did have to close ever did.

Then every boy and girl would be blessed with Wiis and life would be grand. I say let them eat Wiis! Wii tennis anyone?

12 comments:

Robert Evans said...

I'm a free market kinda guy but I understand that Argentina has its own unique history and will probably move slowly towards free markets. This, in part, is likely due to the failures they had implementing so called neoliberal policies in the 90s.

That said, the tax burden being placed on computers is a huge mistake, IMO. The young people of the country are being put at an extreme disadvantage.

Think of all the googles, facebooks and flckrs that won't get created.

David Wilbanks said...

Robert, like anything there is inherent good and bad with free open markets. Would kids be better off here addicted to cheap video games and access to cheap computers to waste time IM'ing and builing MySpace pages? Maybe not. The consumerism in the United States is way out of wack too.

On the whole though, I think things would be better here. The economy would grow, and Argentines would have access to low-cost quality goods.

One thing I do admire about this country is their outlook on life vs. stuff. In reality, Wii's, TVs and iPods are just stuff and are nowhere near as important to them as to folks in the US. Living life, hanging out in the Cafe and reading a great book seem to be more important. And of course a good football match.

So in the end maybe all this fretting over "stuff" is moot.

dbv said...

so, should i bring a suitcase full of ipods when i visit? i could use the extra cash!!

Anonymous said...

We did this opening 30 years ago with former ministry of economy Mr. Martinez de Hoz. Result: economy colapsed and industry dissapeared.
We tried again with Menem in the 90s. Result: economy colapsed, high unemployment rate, poverty.
With the current taxes, economy is growing 9% every year, unemployment is less than 10%, industry is booming.
It is old debate in Argentina, and I think you should have made a better investigation before making the move. In the future, as the growth consolidates, taxes will be reduced, but electronics will never be so cheap as in the USA, never!.

Frank.Sugar&Spice said...

Just to play the devil´s advocate. I don´t see a huge domestic electronic´s market here. They used to have a domestic TV maker but that was sold and now it´s in the hands of a multinational foreign company. The rest is mostly badly made stuff (coffee makers, etc.) and cheap stuff from China. Who exactly is the government protecting with the high tariffs for electronics? Also, they could differentiate the stuff that gets tariffed to death that has no local competitors of any kind like game consoles or iPods. You would eliminate the black market that exists for these types of products. Yeah, I know it´s small but it´s there. How could it not, it´s so tempting to load up on these little gadgets and bring them down here to sell at a nice little profit.

Pablo Flores said...

The government is doing only half its homework: the tariffs are OK as long as you aggresively push for import substitution so you can progressively get rid of the tariffs. As of now, the tariffs are just taxes — money that the government takes away for its own use. That's regarding what Frank says.

We had open "free" markets in the 1990s, and I write "free" in quotes because everybody knows markets are never free. When you do that in an underpopulated country with no consumer education and a weak economy, what you get is foreign-owned oligopolies, not free markets. We tried it and we're still paying for the consequences.

I don't think we'd be really happier with loads of electronics here. We really have other problems to solve.

Rob said...

I remember when I saw the price of the wii also, I was shocked!!! I've played it before and the free boxing game is defanitly a workout! Supposidly the ps3 is illegal here in Argentina

http://www.theinquirer.net/en/inquirer/news/2007/08/01/selling-sonys-ps3-is-illegal-in-argentina

David Wilbanks said...

rob: Thanks for the link. $2000 us dollars for a PS3! Wow that makes the Wii look cheap.

Anonymous said...

somehow the prices on mercado libre are much less than in the stores. wii, ipods etc...

actually there isn't that much of a difference compared to "normal" prices. (i was already tempted to bring some goodies into town...)

cheers!

David said...

alarm clocks and clock radios

i thought i was nuts when i couldnt find them

after talking to folks i guess modern life people wake up to cell phones and ipods or mp3s

even back in the usa alarm clocks are seriously on the wane
i did find what i want in garbarino tho'

Ricky said...

Hey,
I know this will probably sound like a dumb question but do I need a voltage converter for my Wii? I just arrived in Buenos Aires and decided to plug in my Wii; it worked for about a day but now it seems that the power isn't working correctly.

Thanks for your insight.

Longhorn Dave said...

Ricky:

You need a transformer. Not the smaller 25 or 50 watt one for your other electronics. You Need the larger one that does up to 100watts. Check the power rating on the back of the WII's power supply. I think it pulls just over 52 watts. which means you need the bigger one.