Uruguayans make use of knowledge in society
Many of us emphasize that basic lesson from Hayek’s The Use of Knowledge in Society about the role of the price system transmitting information and guiding actions. If someone needs an empirical proof of that and is thinking on an experiment, well, just wait a second because we have experiments around us.
One such comes from the diverging parity of currencies, for example between the Argentine and the Uruguayan Peso. There is exchange control in the first and, therefore, at least two different prices, the governmental and the market ones. The gap is about 100% and for anyone going to Argentina and exchanging dollars in the black (or blue as it is called) market the price signal Argentina sends is that it is cheap…. Well, mostly cheap, not in everything.
Uruguayans have noticed this and acted accordingly. El Observador reports that 661,581 Uruguayans travelled to Argentina in 3Q almost 240 thousand more (+56%) than in the April-July period. Compare this with the 85,466 who did it in January. 80% or outbound tourism went to Argentina on a shopping tour and spent there 247 million US.
Uruguayans spend an average of U$S 374 per capital and $ 69 per day. Uruguay usually has a positive tourist balance, particularly from those Argentinians visiting their beaches but now it has turned negative, from +$270 million in 2Q to -$99 in Q3.
The number of Argentinians visiting Uruguay has remained steady around 250 thousand each quarter and the number will certainly increase in the summer, despite the high cost it will mean for them.
Anyway, a good example of how people makes use of knowledge available in society.