To recover, Argentina’s elites must put less faith in themselves and more trust in the free market

Argentina’s flour folly

There’s plenty of controls but not much bread

Governments everywhere always think they know what’s best for everyone. It’s true here and true in Argentina, where the government decided to address the soaring cost of bread by banning the export of flour and wheat. “Hoarders” of baked goods were threatened with jail time.

President Christine Fernandez de Kirchner found a dusty 1974 law that enables the state to compel merchants to sell their stock of wheat and flour, on pain of fine and prison. This is the government response to the mess it made with years of market manipulation.

Mrs. Kirchner’s husband, Nestor Kirchner, created an export permit system for wheat in 2006. Argentina has been one of the leading exporters of wheat, but year-by-year farmers are bringing less of the crop to market, despite the rising prices that everywhere else has stimulated production.

Producers aren’t free to adapt to the marketplace. Instead, they must obtain the government’s permission to sell their wheat overseas. That adds uncertainty to planting a crop. Over the years, as officials in Buenos Aires searched for more revenue, an export tariff was added that further discouraged growing wheat. Fields sown in wheat are down to 9 million acres, the lowest in a century.
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