What are the ethics of blue?
hy are you in Buenos Aires?”
A simple question with a complex answer. The inquisitive couple waited on my response, their eyes never wavering from mine. Did they want the whole truth or the massaged truth?
“I fell in love with the city, its European architecture, and its people the last time I visited. I wanted to come back and further explore.”
I waited as they considered. Did they buy my response, or did they detect what I’d left out of the answer? Finally, the skin around their eyes softened while their lips shifted into a smile. They nodded.
“Welcome! We are glad to have you. Please enjoy your stay!”
I thanked them, and they continued on. I left out the part about how amazingly inexpensive their country was. I’d made that mistake once already. In truth, I was in the country because I had fallen in love with it a decade prior. It just so happened that the country, due to its financial situation, proved more financially affordable for anyone backed with dollars in their pockets.
Financing a Crisis
Referring to Argentina’s current economic problems as a “financial situation” is putting it mildly. Save for Venezuela, Argentina has the worst inflation rate in the Western Hemisphere and one of the worst in the world. According to the Financial Times, the country hit 71% inflation in July of 2022 (compared to the United States’ 8.3%), and the Buenos Aires Times suggests it will likely surpass 100% inflation sometime in 2023.
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Unlike the rest of the world, though, Argentina’s inflation didn’t ratchet up solely because of COVID and other government restrictions. No, Argentina had a decades-long head start.
Many of the current financial problems plaguing the country can be directly drawn to sanctions Allied nations imposed on Argentina following World War II due to the country’s willingness to accept prominent Nazi party members, which it did via the Catholic Church and Argentina’s archbishop. While on the surface, these sanctions might scream of hypocrisy, as the United States and Great Britain salivated over German scientists, Argentina allowed in nearly 1,000 former S.S. members.
The Argentine peso, as well as the economy, saw several extreme changes in the years following the Second World War. In 1970, the peso ley replaced the country’s last peso. A new peso came about in 1983, and another peso currency in 1992. Continually implementing new currencies brings with it several issues, not to mention doing so is costly. While the country itself experienced exceptional growth during the 1990s, the government’s financial handling led to a recession in 1998. This, in many ways, became the tipping point, causing the Argentina government to take on larger amounts of debt. And as the country struggled to pay off its debts, Argentina intentionally devalued the peso. With the devaluation came the creation of the “blue dollar.”
The Blue Dollar
Much like the current economic situation in Argentina, it’s possible to craft an entire Ph.D. dissertation about the blue dollar. Some refer to it as a black-market U.S. dollar, but that isn’t entirely accurate.
It’s not accurate because the blue dollar (also referred to as “dollar blue”) is entirely sanctioned by the Argentina government. But what exactly is the blue dollar? There is an official U.S.D. (U.S. dollar) to peso exchange rate, which banks issue. And then, there is the unofficial blue rate, which is issued via currency exchange service providers such as Western Union.
Due to the inflation rate in Argentina, the peso is a volatile currency. When I first visited Argentina in 2010, the exchange rate was 16 pesos to $1. When I moved to Argentina in May of 2022, the exchange rate was 115 pesos to $1. In five months, the rate has jumped further to 150 pesos to $1. With this kind of nose dive in currency value, many locals prefer, when possible, to convert their money to U.S.D. Of course, if Argentina had infinite access to U.S.D., everyone in the country would immediately convert their money, and then Argentina’s economy would crumble further. So, as a way to better control this, the Argentina government created this blue market dollar, which often doubles the cost to obtain a dollar. As of October 2022, the official exchange rate is 157 pesos to $1, while the blue market rate is 303.6 pesos to $1. This makes it difficult for locals to obtain U.S. currency, but it is easy for visitors to convert their U.S.D. to Argentina pesos and double what they would normally receive via an ATM withdrawal.
The Ethics of Blue
For visitors coming to Argentina, there might be an initial question of whether taking advantage of Western Union money transfers and currency exchange services within the city to obtain the blue market rate is ethical or not.
In truth, a visitor’s access to the blue rate rarely affects locals. It doesn’t drive up food costs or increase restaurants’ prices. It won’t alter how much bus or metro rates are. By all means, if you plan on visiting Argentina, you absolutely should take advantage of the blue dollar rate. The only person you’re hurting by using the bank rate is yourself.
You’ll be better off buying whatever you can with cash. In fact, if you can, pay for everything in person with cash. Many locations offer special discounts for cash-paying guests. You’ll likely save money at restaurants, many grocery stores have savings of 10 to 20% if you pay with cash, and it’s far easier to buy goods on the streets and at local boutiques. When local businesses have to charge via credit card, by the time the processing is run and they are paid out at the end of the month, the value of the peso has already dropped, which means they might not even receive the true value of the product they sold to you.
Everyone is happier when you pay cash, including when you pay with blue dollar cash.
Although there is one exception to this rule.
Where You Stay
While the products you buy and the food you eat aren’t going to affect locals, where you stay will.
Rent represents by far the largest expense of locals, especially in Buenos Aires. To combat landlords from dramatically increasing the rent on tenants, the Argentina government has enacted several new renter-friendly laws, including locking in long-term rental prices for several years without the ability to increase monthly rents.
However, rental protection doesn’t include short-term or vacation rentals like Airbnb. This makes renting apartments to visitors instead of locals far more attractive. It is possible for an Airbnb host to rent out an apartment to a visitor, who is unaware of the financial situation or what locals pay for the property, and make what a local would normally pay in only a few days.
Because of the income potential, more and more property owners are turning to vacation rental services like Airbnb instead of offering their properties to locals. This has a two-prong effect on residents of the city. First, it reduces the number of apartments they have access to. Now, in a city of over 16 million people, there isn’t exactly a shortage of apartments, but the numbers are dwindling, and competition is fierce. When I first moved to Argentina and told locals of my quest to find an apartment, I was told, “good luck” on more than one occasion. It’s because properties accurately priced for the market do go quickly.
The second problem, and just as harmful for residents, is the influx of Airbnb and temporary rental increases the overall price apartments are going for. According to the Global Press Journal, the average Buenos Aires resident pays 41% of their income to rent. With rent increasing due to inflation and fewer available properties, it is pushing locals further and further out of the city. In fact, according to Infobae (2022), real estate property values increased more than 60% over the previous year, and much of this increase is reflected in the rising cost of rental units.
Airbnb rentals in Buenos Aires are not limited to individual units either. There are now entire mid-rise buildings dedicated specifically to vacation rentals. For every former apartment turned into a short-term vacation rental, another local family is forced to move further away from work, relocate children to different schools, and lose connection with a neighborhood they might have spent most of their life in.
If you plan on visiting Buenos Aires in the near future, look instead toward a traditional hotel. Hotels are plentiful throughout the city and are already dedicated to service visitors without taking properties away from locals or increasing the cost of rent. In fact, by staying in a hotel, you’re doing what you can to assist city residents. From the customer service staff to housekeeping, bartenders, and live musicians, these individuals rely on visitors staying in a hotel. Your money, instead of pushing people out, will help keep them employed, not to mention these are excellent locations to obtain information on what to do and where to go for food and entertainment. They can also assist with purchasing show tickets and making reservations if you struggle with Spanish (or struggle with the local dialect).
It Isn’t Difficult to Visit Buenos Aires Ethically
Buenos Aires and the rest of Argentina offer so much to visitors and ask for so little in return. From the breathtaking north and the Iguazu Falls to the wine region of Mendoza, the bustling cultural center of Buenos Aires, and the nature lovers’ paradise of Patagonia, there’s truly something for everyone in this gem of a South American nation. The country has seen its share of financial hardships, which is why, more than ever, residents welcome visitors, as it means more mouths to feed for restaurants, more alfajors to sell for candy vendors, and more tango shows to produce for live audiences. Your money goes a long way to help many of these locals. Just make sure you’re not taking homes away from them at the same time.