SPEAKER_04: This is Planet Money from NPR.
SPEAKER_08: The Nobel Prize winning economist Simon Kuznets once analyzed the world's economies this way. He said there are four kinds of countries developed, underdeveloped, Japan and Argentina.
SPEAKER_04: Ah, Argentina. If you want to understand what happens when inflation really goes off the rails, go to Argentina. Annual inflation there, over the past year, was 124%. Even in a country that's already deeply familiar with economic chaos, this is dramatic.
SPEAKER_08: So a couple of weeks ago, we went to Argentina to see what this all looks like. And we arrived, along with thousands of other foreigners, because even as the country's economy was tanking, it's Mundial de Tango, the biggest tango competition in the world, with a very charming emcee, Mr. Carlos Lin. That show was still on.
SPEAKER_04: When we walk into the competition, there are nine couples on stage, all dressed very formally. Men in dark suits, the women in gold lame, dark red velvet, black satin.
SPEAKER_08: The couples dance in a slow, counterclockwise circle. We are, after all, south of the equator.
SPEAKER_04: The moves are dramatic, improvised, yet synchronized. The couples keep their faces close, as though at any moment, they're going to make out. But they don't. Thankfully, they don't.
SPEAKER_08: There are dancers here from Ukraine, Indonesia, Algeria, Italy, more than 35 different countries. And arguably, if you want to really see all of the strange things that are happening in
SPEAKER_04: Argentina as inflation spikes in the Argentinian vessel tanks, they are easiest to see through the eyes of an outsider. That's because this country's history of economic turmoil goes back a long time. So for anyone who lives here, they're kind of used to it. And so, we are here to meet one dancer in particular.
SPEAKER_04: Her name is Sayadate.
SPEAKER_07: Hi, nice to meet you.
SPEAKER_08: Sayadate works in tech in India, and late last year, she sold a company she founded. She decided she could afford to spend a few months on this thing that she loves, Tango. So now she's part of the first couple to ever represent India at this competition. When we meet her, she's just finished dancing. She's still giddy with stage energy.
SPEAKER_06: We have two rounds in the qualifying, so today, tomorrow, and then at the end of that, they post the results. So until then, like ignorance is bliss. It's finished. So Sayadate's been in Buenos Aires since the end of June.
SPEAKER_04: And in those few months alone, she has seen Argentina's economic crisis get much worse. And she's the one who said to us, Tango can help explain the economy here.
SPEAKER_08: Hello and welcome to Planet Money. I'm Amanda Aronchick. And I'm Erika Barris.
SPEAKER_04: Right now, the country's currency, the peso, it's collapsing. Argentina's poverty rate is above 40 percent. And people here might be on the verge of electing a far-right libertarian who is promising to replace the peso with the dollar.
SPEAKER_08: Today on the show, we are on a mission with our Tango dancer, Saya. We're going to follow her through the streets of Buenos Aires, meet everyone she meets, and try to understand what is it like to live in an economy that's on the edge.
SPEAKER_08: Okay.
SPEAKER_05: Soy Carlos Lin en el mundial de Tango. Hola y bienvenido a la planetar inero.
SPEAKER_02: Amazing. This message comes from NPR sponsor Raymond James, a financial firm as unique as the people it serves. Raymond James financial advisors consider the unique lives and goals of each client to create full picture plans that go beyond retirement savings and managing risk. They provide tailored solutions for complex needs through wealth management, banking, and capital markets services. Raymond James and Associates Inc. Member New York Stock Exchange, SIPC. This message comes from NPR sponsor IBM. People are excited about what AI will do for them. IBM is excited about what AI will do for business. Introducing Watson X, a platform designed to multiply output by tailoring AI to your needs. With Watson X your business, you can build AI to help coders code faster, customer service respond quicker, and HR handle repetitive tasks in less time. Let's create AI that transforms business. Learn more at ibm.com slash Watson X. IBM.
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SPEAKER_08: Right now, we are outside the building where the Tango competition is happening. Okay, Saya went to go get coffee. She's not here. Our Uber is here. This is going to get awkward in a second.
SPEAKER_04: The minute Saya gets back, we're going to follow her on her Tango tours to see what we learn. But her coffee is taking too long and the Uber drives off. Oh my God, there goes my Uber rating.
SPEAKER_08: So while we're killing time on this street corner, a little bit of history. Back in 1991, Argentina's government pegged the price of the peso to the US dollar. They said one peso shall equal one dollar. This was a pretty unusual move. Other countries do peg their currencies to the dollar sometimes, but they don't usually claim that they have equal value. And it was wishful thinking because the peso proved to be worth much less.
SPEAKER_04: Some years go by, the economy gets worse. And in 2001, there is a run on the banks. Now the banks were functioning mainly with dollars and they start to run out. And so the government did something pretty extreme. It told the banks any accounts with US dollars in them, convert those accounts into pesos. And poof, practically overnight, people's net worth plummeted and their savings were gone.
SPEAKER_08: So Argentinians do not trust their banks and they do not trust their peso.
SPEAKER_04: And Zaya's back with a drink in her hand.
SPEAKER_06: I actually ended up getting hot chocolate because I needed, I know, I caved last minute.
SPEAKER_04: And now we're off. The first thing we're going to do is go see a shoe seller. Tango shoes, of course.
SPEAKER_06: We're going to Neo Tango. It's I guess one of the more popular ones among my Indian friends. And my teacher back home has sent me a list of designs that she wants and asked me to go and buy it for her.
SPEAKER_08: Like everyone else in this country, Zaya has been watching the dramatic drop in value of the peso over the last few weeks. People here watch the exchange rate between the dollar and the peso as you might watch the weather forecast, checking a few times a day, treating it as a barometer of the overall economic health of the country.
SPEAKER_04: When Zaya first arrived in June, one U.S. dollar was worth about 490 pesos. Two months later, one U.S. dollar is worth more than 700 pesos. Zaya planned her shoe shopping knowing her dollars were only going to go up in value. For me, I bought like two pairs so that I can practice and compete right off the bat,
SPEAKER_06: like as soon as I got here. But I saved my shopping for the very end.
SPEAKER_08: We're going to go visit the shoe seller because we want to know how a small business deals with a currency in freefall.
SPEAKER_04: But we start to see things immediately, even before we get to Neotango. Because the minute you do anything or meet anyone in Argentina, you wind up learning about the economy.
SPEAKER_08: Like on our car ride, we get in, start chatting with the driver. His name is Juan Pablo Espino-Gomez. And I ask him the question we plan to ask pretty much everyone we meet here. When the peso starts to get devalued and is worth less and less, how does that work for you? Like what do you have to do differently?
SPEAKER_07: I have to find another job.
SPEAKER_04: It will be complicated for Juan Pablo to find another job because he's already got three. He's weak and uber driving, selling natura products, which are kind of like Avon, but from Brazil. And then there is his main job.
SPEAKER_07: I work with, you probably know these brands that I'm going to tell you Oreo, cookie, Milca. I know Milca. I love Milca bars. I work with them.
SPEAKER_04: Okay. What do you do for them?
SPEAKER_07: I work with customer service.
SPEAKER_08: So if I have a complaint about my Oreo, I call you? For sure. Or if I'm happy about my Milca bar, I can also call you. Who has complaints about Oreos? Nevermind.
SPEAKER_07: Oreo is always good.
SPEAKER_08: We all briefly celebrate the Oreo. I mean, come on, what a cookie. Also turns out not a bad job.
SPEAKER_07: Thankfully I am working in a good company. So like the inflation and stuff is like not so hard for me. There are other people that are like suffering more or having more trouble to get to the end of the month.
SPEAKER_04: Saya is listening to all this and she gets stuck on what inflation means if you have a regular job and paycheck. She jumps in with a question.
SPEAKER_06: Does Oreo also adjust your salary based on inflation? Sure, yes, because inflation is like 10 percent.
SPEAKER_08: He's talking about monthly inflation. In August it was over 12 percent.
SPEAKER_07: They increase our salaries at least three times per year.
SPEAKER_08: This is wild to me. Inflation is so ordinary here many employers promise regular raises. Otherwise their workers' standard of living would just drop and drop and drop. Getting a raise two or three times a year, it's pretty normal. Not just if you work for a big company. It works this way for a lot of government employees too. Which is unsustainable.
SPEAKER_04: The government is essentially printing money to fund those raises. And printing money, yeah, that causes more inflation.
SPEAKER_08: We pull up to the address. Does it look open? Yes.
SPEAKER_01: It's open. Yeah.
SPEAKER_08: Amazing. We say goodbye to Juan Pablo and Saya, Eric and I walk up to a very shi shi boutique.
SPEAKER_04: Shoes. This looks fancy. They're open. We get buzzed in and there are shelves and shelves of strappy high heels. Not only are they three inches high, Saya reveals a tango secret. For tango shoes, I have to buy shoes two sizes smaller than what I actually wear.
SPEAKER_06: Why? Because it's supposed to be tighter than regular shoes. Because it's supposed to be an extension of your foot. So it's actually really painful in the beginning. And then they kind of open up a little bit.
SPEAKER_08: Yeah. Wearing shoes that are too small for your feet, it's going to be painful.
SPEAKER_04: Good lord. I still can't get over that. Saya finds what she's looking for and goes up to pay. How much is it going to cost?
SPEAKER_08: $16.69. $69?
SPEAKER_05: Okay. And what would it be in pesos? 49,000 pesos. Okay.
SPEAKER_08: 49,000 pesos. In a country where the largest denomination is 2,000 pesos, people sometimes end up walking around with very, very large stacks of bills just to buy regular things like a pair of shoes.
SPEAKER_04: And businesses sometimes have stashes of different currencies on hand, like Juan Pablo Viganotti, the guy selling us the shoes.
SPEAKER_08: Would he accept dollars and pesos? Yes.
SPEAKER_05: Okay, los dos? And euros.
SPEAKER_08: Okay. And euros.
SPEAKER_04: He has dollars and euros in addition to pesos because the store caters to both a local crowd and an international one. But this business still has a lot to contend with because of the peso.
SPEAKER_08: The shoes they sell are assembled in Argentina, but some of the materials they're made with are imported. So if those imported materials stay the same price as the peso falls in value, they become more expensive.
SPEAKER_04: And that means Nío Tango has to raise their shoe prices.
SPEAKER_08: How often is the price changing?
SPEAKER_05: Ultimately, for the last month or two.
SPEAKER_04: He says lately, at least once a month.
SPEAKER_05: And two weeks, three weeks.
SPEAKER_08: You had to change the price three times in the last two weeks. Yes. And you were changing it to go up or to go down?
SPEAKER_04: Changing it so that the price will go up. No.
SPEAKER_05: Go up or down?
SPEAKER_04: Always up. Always up.
SPEAKER_08: Don't go up. No. Prices here, he says, always go up, never down. Now inflation has been a problem in Argentina for a long time. So his store is used to raising prices.
SPEAKER_04: But in August, the peso really took a hit. It happened after this far-right presidential candidate, Javier Millet, unexpectedly came out ahead in a primary election. People freaked out. There was a run on dollars. The peso got devalued and inflation spiked.
SPEAKER_08: When that happened, some store owners just stopped selling their stuff. It was too chaotic. They had no idea what price to charge. And that is what led Neotango to raise their prices three times in the last two weeks.
SPEAKER_05: Talking about how much the peso has fallen recently, Juan Pablo says that sometimes it's
SPEAKER_04: scary to have one value come out and then it changes the next week and then the next week. He goes on to say it's surprising, but...
SPEAKER_04: He makes a big gesture like, what are you going to do, man? This we've come to learn is a very Argentinian response. People are sort of like, it's Argentina. We're used to it.
SPEAKER_08: But occasionally someone would reveal that yes, they were in fact really scared. That it's not clear what's going to happen next. There could be hyperinflation. There could be protests in the streets.
SPEAKER_04: Coming up after the break, the black market for dollars and pesos.
SPEAKER_03: Museums for science, for history, for art, they're everywhere. So why not for economics? I think it's partly that the economy is actually kind of abstract and kind of complicated.
SPEAKER_03: But economist Tim Harford is up for the challenge. He knows exactly what he put in his fantasy museum of the economy, objects that would tell the story of the modern economy. And it's not a bar of gold.
SPEAKER_00: You've got something that is roughly the size of a shoebox and it looks as though it's been covered in yellow butter icing by an incredibly drunk chef.
SPEAKER_03: That's in our latest bonus episode for Planet Money Plus listeners. If that's you, thanks for your support. If it's not, it could be. Sign up at plus.npr.org.
SPEAKER_04: Argentina's currency shenanigans didn't stop 20 years ago when the dollars in everyone's bank accounts were abruptly turned into pesos. On and off for years, the country has been manipulating its exchange rate. Instead of letting the rate float around on the whims and wins of market forces, like most major economies do, the government now controls it. And they've set an official rate that claims the peso is worth far more than it really is.
SPEAKER_08: And you can tell just how far off that official rate is by coming here, to one of the country's many black markets.
SPEAKER_04: Cambio means change, or in this context, exchange. And this is how these black markets work. People stand on the street calling out, Cambio, Cambio, Cambio, to pull in tourists who want to exchange dollars for pesos at a far different rate than the one the government sends.
SPEAKER_08: I know this music is giving real Star Wars cantina vibes. Someone was randomly playing a didgeridoo. But we're actually on Florida Street, which is your basic shopping street for tourists.
SPEAKER_04: Saya needs more pesos because that's how you buy most day-to-day things. So we find a woman calling out Cambio, and she and Saya start negotiating a price. They settle on 705 pesos for one U.S. dollar.
SPEAKER_04: The government's official rate would have been about 350.
SPEAKER_08: Lots of people use these exchanges, but exchanging dollars for a rate that's different than the government's official rate is actually illegal.
SPEAKER_04: So you don't exchange money right on the street. Instead, the Cambio person takes you into what's called a cueva, which is Spanish for cake.
SPEAKER_08: We follow the woman into a small, kind of shady-looking store. The man doing the actual exchange is sitting behind a window. There's a sign for bus tickets, some t-shirts for sale. Like if they needed to, they could very quickly shape-shift into a tourist shop.
SPEAKER_04: Saya tells them how much she wants to exchange.
SPEAKER_08: If you think about the government's official exchange rate as sort of like a dam intended to shore up the peso, these exchanges are like cracks where market forces seep through.
SPEAKER_04: And these black market exchanges are such an established part of the way Argentina works that they've got their own rules. They have standards. Like when Saya tries to exchange an old $100 bill.
SPEAKER_05: Cara Chica means small face.
SPEAKER_04: It's what they call the old $100 bills with a small face Ben Franklin on them. They say they'll take Saya's old bill, but at a worse rate, 550 pesos per dollar.
SPEAKER_08: In a place where the local currency is so unstable and unloved, counterfeiting Benjamin's is its own industry. So the woman says they're taking a risk by accepting Saya's old small-faced $100 bill because it could be a fake. They'd rather have her crisp new hundreds with a blue stripe down the middle.
SPEAKER_04: We get ready to leave the cave and on the one hand the transaction that Saya has done is illegal. But on the other hand, it's kind of what everyone's doing. It's accepted, which becomes clear when we head back out. The woman from the exchange points out a police officer sitting right outside the cave.
SPEAKER_08: It's their security, she tells us. A police officer moonlighting as their guard. Still wearing his police uniform. The exchange woman goes back to her post on Florida Street.
SPEAKER_04: That transaction Saya just did shows us the pesos' true market value. Basically half as much as the government's official rate.
SPEAKER_08: Now as tourists walking out of an exchange, Buenos Aires is wildly cheap. But if you live in Argentina and you want to exchange your pesos for dollars, the rate you get at the caves is terrible. You'd much rather buy dollars at the official rate. But the government puts up a bunch of barriers to that because if they gave people unlimited access to that rate, the government would be running out of dollars in no time. So they keep adding more and more rules to keep people from buying dollars at the official rate. It's the next day and we are back at the Tango competition.
SPEAKER_04: When we find Saya, she's in an amazing dress. Teal and black and silver, sequins everywhere. Oh my goodness.
SPEAKER_08: I don't even know if I would recognize you.
SPEAKER_06: I don't think I recognize myself. This is probably what you see on Tango posters, the hairstyle, the makeup. It's like very extra.
SPEAKER_04: Today Saya's doing a choreographed dance for the competition. It's more showy with a lift and lots of spins. Keep in mind those high heels. Well very good luck. Thank you. We'll be watching. Saya heads backstage and we start talking with someone she's met since arriving in Buenos Aires. His name is Martin Ochoa. He's here at the Mundial de Tango because he loves Tango. And he's making some money by shooting and editing videos of the performers, 50 US dollars, for three minutes. He starts by telling us he grew up outside the city.
SPEAKER_05: He fell in love with Tango when he was in Patagonia.
SPEAKER_04: I first encountered Tango at the end of the world, he says. Martin says he relates to Tango for reasons that go beyond the fabulous costumes and the
SPEAKER_08: dramatic moves.
SPEAKER_08: He says Tango doesn't only talk about romance. It also talks about how hard life is and how disappointing it can be. He says it's about people bending rules and going against their morals to survive in a state of economic crisis.
SPEAKER_05: Martin says if you listen to the lyrics of some of the most iconic Tango songs, they're
SPEAKER_04: about the depression, about unemployment, about a lack of economic power.
SPEAKER_08: And he says all of the daily improvising that people have to do in Argentina reminds him of Tango. Like when people try to make money on the side or do things that are lightly illegal. The way he sees it, Argentina has two parallel economies.
SPEAKER_04: This idea of parallel systems makes so much sense to me. For years, the Argentinian government's been saying the peso is worth more than it is. At the very heart of this country's economy, there is a lie. And so people find ways around it. Like a lot of people, Martin says he is worried about the upcoming presidential election.
SPEAKER_08: The country may bring to power that libertarian outsider who said he wants Argentina to dollarize, and the peso reeling once and for all.
SPEAKER_04: The final round of the Mundial de Tango takes place at night. The city closes down one of its major streets and sets up thousands of chairs. You can see the lights from blocks away.
SPEAKER_08: Saya and I want to get closer. At least I can say I was at the finals of the Tango World Championship.
SPEAKER_06: Although just to see it.
SPEAKER_08: Saya got eliminated a few days ago. She is not competing tonight. But we work our way past a bunch of barriers so that we can see the dancers up close. Very close to the stage. I haven't actually seen the dancers. There they are.
SPEAKER_08: Oh my goodness.
SPEAKER_03: This is beautiful.
SPEAKER_04: The performances are beautiful.
SPEAKER_08: In the end, Argentinian couples win the two big prizes. This year, those are each worth 100,000 pesos. If the economy continues to falter though, the prizes will be worth less and less.
SPEAKER_04: This episode was produced by Sam Yellow Horse Kessler with help from James Sneed. It was engineered by Maggie Luthar, fact checked by Sierra Juarez and edited by Molly Messick. Alex Goldmark is our executive producer.
SPEAKER_08: Special thanks to Lucas Babic, Shashank Dugal, Edward Gilliland, Kerry Kahn, Dr. Miguel Kigel, Professor Marianna Lucci, Alejandra Marcus-Hansay, Professor Andy Neumeier, Nicholas Saldías and Ezequiel Zaydenberg. I'm Amanda Oranjic. And I'm Erica Barris.
SPEAKER_04: This is NPR. Thanks for listening.
