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Sun Mar 1, 2015, 05:56 PM

Argentine Gov't moves to nationalize railways

Source: Buenos Aires Herald

President Cristina Fernández de Kirchner announced that the Executive Power will sponsor a bill to nationalize the country’s railways during her speech at the opening of the 133th congressional period.

“I would like to tell all lawmakers that I will deliver a bill for the State to recover the management of Argentina’s railways,” Ms. Kirchner said. “I am not moved by a nationalization zeal. It is simply about improving efficiency.” “We will save additional 415 million pesos ($48 million),” she vowed.

Read more: http://www.buenosairesherald.com/article/183239/govt-moves-to-nationalize-railways

Argentina's railways - at 21,000 mi the most extensive in Latin America - were privatized by way of operating concessions 20 years ago. While most freight lines were kept running, all but 6,000 mi or so of commuter rail services were discontinued.

They were privatized gratis because the rationale at the time (heartily endorsed by the IMF and AEI types) was that privatizations would free the state from the rail system's $1-2 million in daily losses - but by 2011 "privatized" rail required $4 million in daily subsidies, with no improvement in quality and 100,000 laid off employees to boot. Numerous lines were already renationalized (i.e. the concessions rescinded) in 2013, and services in these lines have improved dramatically. This announcement just finishes a job long overdue.

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Response to forest444 (Original post)

Sun Mar 1, 2015, 06:42 PM

1. How is it the IMF is portrayed as credible when has destroyed the infrastructure of

so many nations. When they get involved, services shut down and people lose their jobs. The opposite of what civilization tries to accomplish.

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Response to bloomington-lib (Reply #1)

Sun Mar 1, 2015, 07:03 PM

3. Because both sides are interested in portrayals.

Were political science anything with claims to a science, it would be a cargo-cult science (to use Feynman's terms):

"Details that could throw doubt on your interpretation must be given, if you know them. You must do the best you can — if you know anything at all wrong, or possibly wrong — to explain it. If you make a theory, for example, and advertise it, or put it out, then you must also put down all the facts that disagree with it, as well as those that agree with it. There is also a more subtle problem. When you have put a lot of ideas together to make an elaborate theory, you want to make sure, when explaining what it fits, that those things it fits are not just the things that gave you the idea for the theory; but that the finished theory makes something else come out right, in addition.

"In summary, the idea is to try to give all of the information to help others to judge the value of your contribution; not just the information that leads to judgement in one particular direction or another."

In other words, we're to engage in and facilitate critical thinking.

So the question isn't, "If the IMF has done all these bad things, how can be portrayed as credible?" (When clearly it can't be--that's the inference you're to draw. And if you don't draw the right inference, you're a cretin.)

Instead, the question is, "What is the evidence that doesn't fit this narrative that leads apparently reasonable people to claim that the IMF is credible?"

For that we'd need a completely different mindset. Not gonna happen. No evidence it's gotten better since I was a teen, some evidence that it's gotten worse. For most people, it's just as bad. For educated people, it's gotten worse as society at that level and in more arenas has been politicized.

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Response to Igel (Reply #3)

Sun Mar 1, 2015, 07:41 PM

5. Yes, but this isn't really about the IMF.

We can quibble over the motives all you like, but a decade later or so the results were plain to see: dilapidated service with a limited reach (6k miles, compared to 21k before); heavier reliance on subsidies than ever (see above); and contrary to Wall Street (and IMF) promises, zero benefit to national coffers (au contraire).

Naturally the IMF did a lot of cheerleading at the time it was happening, but to be fair the decision wasn't theirs: it was an obsequious (and corrupt) Carlos Menem administration that privatized these and other state firms for a fraction of their real value, and by way of sweetheart deals that entitled privatized firms to receive hefty subsidies ad infinitum as in the case of the railways (that's "free market reform" for you).

To put in broader context, around $24 billion were earned by privatizations in Argentina during the 1990s. But around $15 billion of that was in the form of Brady Bonds that were worth 60 cents or less on the dollar, meaning that the Argentine state earned at most $18 billion (most of which went to debt repayment, at 10% interest, anyway).

A Bank of England audit requested by Menem himself, found that Argentina's 300 state-owned enterprises had $1 trillion in assets at the time the privatization drive began in 1990 (!).

That's not privatization - that's profitization.

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Response to bloomington-lib (Reply #1)

Mon Mar 2, 2015, 06:05 AM

8. Because so many sensible people say so

The media doesn't seem to ever report of failures by the IMF, so it must be good...
or something

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Response to forest444 (Original post)

Sun Mar 1, 2015, 06:51 PM

2. privatization is good for us . bah humbug now here have i heard that line b4 ?

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Response to allan01 (Reply #2)

Sun Mar 1, 2015, 08:26 PM

7. Oh, yeah. Let the business press wailing-and-gnashing-of-teeth marathon begin!

I might be wrong this time. I think even they are starting to realize that the private sector -and foreign investors- can make a lot more money as trusted subcontractors to a healthy high-volume public enterprise, than they can picking at the carcass of a derelict privatized one.

Plus, it's good for the soul.

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Response to forest444 (Original post)

Sun Mar 1, 2015, 07:07 PM

4. Great news! Carlos Menem, friend of George H. W. Bush, and his sons, was the one who privatized them

before he was arrested for smuggling, illegal weapons trafficking, and moved to Chile to avoid extradition for embezzlement charges.

Found this in Wikipendia regarding the privatization:

Between 1992 and 1995, the government decided to privatise into segments the state-owned company Ferrocarriles Argentinos (FA), which comprised the six relatively independent divisions, Sarmiento, Mitre, Urquiza, San Martin, Belgrano and Roca, and granted concessions to private companies for their operation through competitive bidding. The decision was taken by the former President Carlos Menem and formed part of his neoliberal reforms.

At the start of the concessions, service quality greatly improved, and traffic began to grow again. However, as more locomotives and rolling stock were needed the private companies became increasingly reluctant to make the investment required to increase capacity and service quality began to decline again.

In addition, automobile industry interests seeking the demise of the railway, purchased lines for far less than their real value. As with other privatization schemes under Menem, members of Congress in both the Peronista and Radical Parties, as well as railway union officials, received monetary favors for allowing the dismantling of Ferrocariles Argentinos. The closing of most of the rail system led to the emptying of many towns of the interior, and therefore to a dismantling of the development that had taken place there since the arrival of trains. Argentine agriculture found itself in the difficult position of shipping its goods more expensively and inefficiently by individual trucks.

The economic crisis in 2001 was the final blow and neither the private companies nor the government could provide the service required. In 2003, the new administration of President Néstor Kirchner set it as a key policy objective to revive the national rail network. Although the economic upturn saw traffic grow again, the suburban rail operators are now little more than managers of government contracts rather than true entrepreneurs.[4]

In June 2012, the government announced that it was renationalising some freight railways.[5]


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What a shame the railroads were bumbled away for privatization, what a victory it will be when they can be used by the people again.

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Response to Judi Lynn (Reply #4)

Sun Mar 1, 2015, 08:02 PM

6. You know what they say:

It takes two to Tango.

That interview was filmed in 1994 in Buenos Aires. It's easy to see that Poppy Bush knows he's the boss in the room.

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Response to forest444 (Reply #6)

Mon Mar 2, 2015, 11:51 PM

11. You got that right! The room was filled with his self-importance. Jeez. How robust he is!

We had almost completely forgotten how much he used to love to use "robust" sprinkled among his Presidential words.

It was amusing hearing him blaming the "opposition" and the "journalists" for his problems.

Thank you!

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Response to forest444 (Original post)

Mon Mar 2, 2015, 10:25 PM

10. Sounds great to me! Good luck, Argentina!

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Response to freshwest (Reply #10)

Thu Mar 5, 2015, 05:27 PM

12. +1!

Beautiful country, if you've never been - and they're good people as people go. Nice but not obsequious, you know?

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