Power fees going up in Buenos Aires

The national government is giving the power companies a raise, through an increase in the power fees, that will fall on those who consume more than 650 kWh every two months. The increase will range from 10% to about 30% and, while Minister Julio De Vido says it'll only affect 24% of the population, others claim the middle class will be hit hard. And it seems a further raise is due next February.

The above is the news as reported everywhere in Argentina, and many people are genuinely concerned or outraged for the wrong reasons. Why? Well, despite the big headlines and the alarming newsflashes broadcast by the media, the raise is only for Buenos Aires, its metropolitan area and the city of La Plata only. Granted, that's 40% of the consumer base and Buenos Aires is the center of the universe for the porteño and for the "national" media, but you'd think they should at least qualify their statements.

I didn't say we hinterlanders* shouldn't be concerned or outraged. We have reason to be concerned since the same inflation and the companies' lack of investments that prompted the national government to grant the raise for the Buenos Aires area utility companies is having serious effects on those that supply the provinces; many had adjusted their fees up or were considering raises before this, and now it's only a matter of time before they align themselves with the capital's companies. Our own EPE (the Santa Fe Provincial Power Company) is checking its numbers right now.

* "El interior del país" ("the interior of the country") is what they call everything but Buenos Aires. That's how Argentina was structured to begin with: a colony with a big port to interface with the world, plus a broad expanse of land ripe for primary exploitation. It's customary and it doesn't sound alright. In fact, it reminds me of the ridiculous conception of Bender's robot apartment in Futurama — Bender sleeps standing up in a 1×1-metre room with no furniture, and the place where he lets Fry live is a huge room in itself... which Bender calls "the closet".

The reason for the outrage is, partly, the outrage of the porteños at this raise, because they've been enjoying ridiculously low prices for power, natural gas and public transportation at our expense since... well, ever. Time and time again I've written about the subsidized fuel for buses. As Rosario's city council is about to take the bus ticket to AR$1.60, a bus or subway ticket in Buenos Aires still costs about AR$1.

Well, as it turns out, the average residential power fee in Buenos Aires is vastly lower than the average in the rest of the country. No wonder the system has problems — you can't expect that the power grid won't collapse when you charge the lowest fee in the place with the largest and densest population, the highest per-capita income, and the highest concentration of installed top-notch air conditioners and refrigerators. According to the article in Crítica Digital, in the capital area a home that consumes 1,700 kWh will get a bill for about 88 pesos. Checking EPE's website and doing a quick calculation, we learn that the same amount of power, in Santa Fe, will punish the wasteful ways of the unfortunate consumer with a bill for 194 pesos. (The guy who writes the Crítica article obviously has math issues. He reports that fees in Buenos Aires are "194% cheaper" than in Santa Fe. Things can't be more than 100% less anything, unless you allow for negative values. Back in 2002 journalists noted that the dollar-peso parity had gone from 1 to a rate of almost 4 pesos per dollar, and reported that the peso had therefore "devalued by 400%". I recall only one news source giving the correct figure of 75%.)

Why did the porteños get this lucky all this time? Well, first of all, no-one likes being charged more, and when you have a metropolitan area with 12 million people surrounding the government seat, you don't want to make them angry. Especially when outside the capital proper you have several huge concentric rings of increasingly impoverished areas. If you control the money, you can use it to favour those near you, while the rest of the country gets indebted. Second, if you measure inflation only in the metropolitan area, it's in your best interest (image-wise and in the short term, i.e. the Argentine way) to concentrate your anti-inflation tactics there and leave "the interior" to its own devices. When the system starts to buckle under pressure (because you subsidize the demand but do not force the companies to invest and increase the offer), you deny it for as long as you can. And then you do something. You can imagine how close to the brink we've come if you consider the government is taking this step now, after the president's image has plunged and with a cooling economy on the horizon.

So, porteños and platenses, welcome to the rest of the country. Don't complain; you're still getting lucky.

Fly me to the moon (by bus)

The above are prepaid cards of the kind used by urban buses in Rosario, worth 6 trips each. The one on the left shows the price of the bus ticket until yesterday (AR$1.20, discounted to 1.15 in 6-trip cards); the one on the right has the current price today, December 26 (AR$1.40, discounted to AR$1.35).

The reasons for the increase are (again) easily summarized: 1) inflation, affecting fuel, other supplies and general maintenance of the buses, as well as administrative expenses, etc.; 2) the mob that passes for a bus driver union got them a salary that rivals that of a well-established doctor, lawyer or architect; 3) the national government sends most fuel oil subsidies (keeping fuel oil cheap for public transportation) to Buenos Aires and its metropolitan area. Reason #1 finds the government simply in denial; reason #2 is fait accompli time and time again; reason #3 is a result of a federal republic that is such only on paper.

Just after Maurice the Menace was elected Chief of Government of BA, Néstor Kirchner ordered AR$600 million in subsidies to public transportation taken away from the capital district, but not in order to redistribute them among the provinces. Buenos Aires City, holding the highest standard of living in Argentina, and amid a shortage of fuel and energy everywhere, somehow continues to enjoy ridiculous cheap bus, train and subway fees.

Be careful what you ask for

Some of the items that are not, repeat, not becoming more and more expensive every day.

(picture by johannrela)

Rounding up the economics news... Cristina K says she'll do the same as her husband, though undoubtedly she says it with many and much more sophisticated words... (That's more or less the official party line, if we're to trust those ads of the Rafael Bielsa campaign where the people didn't complain but only, happily, cried "More! More!".)

In the meantime, inflation in Kirchnerland was 0.7% in June. It was only 0.4% in No-Thinking-Men's-Land (Filmus dixit), double that in Santa Fe, and 6 times as much in Mendoza. I have to check the rest of the data, but I believe there's a definite correlation between the inflation rate of a given place and its distance to Economy Minister Miguel Peirano, quite possibly with fluctuations here and there due to the presence of Evil Neoliberals, unexpected polar airmasses, and political transvestites.

Now seriously, La Nación complains that the national government is trying to make things complicated for Macri. You know Buenos Aires has always lived off the national state. Telerman, since before his lame duck stage, and now Macri as well, have repeatedly demanded that the national state transfer the control of the part of the Federal Police that patrols Buenos Aires City to the City, something that was included in the conversion of Buenos Aires from a Federal District to an Autonomous City. Macri, in particular, wants the police to follow his orders, something quite understandable when you based your campaign on the issue of security (or rather, how to protect the middle and upper class from the lower class). The national government ignored the demand, until now. Now they want to talk about it, but it seems they only intend to give the police to Macri — not the money needed to pay for it. That's 900 million pesos, almost US$300 million, 10% of the city's budget. As Petinato would say, chan!

And that's not all. K's folks are also perfectly willing to let Macri control the subte (i.e. the underground, tube, métro), which is the preferred method of transportation for millions of porteños every day — safe, fast, environmentally clean, and extremely cheap. But don't hang on to that last adjective. The subte companies receive 250 million pesos a year in subsidies. National subsidies for a system supervised by the national government. Guess what will happen when the system is transferred to the city. Chan!

You're probably thinking I strayed off my usual territory, since this doesn't have anything to do with Rosario. Wrong! Do you know how much a passenger pays for a trip on the Buenos Aires subte? 70 cents! That's less than one-fourth the price of a cup of black coffee in any café in BA. Do you know how much a passenger pays for a (much slower, much dirtier, and usually shorter) trip on a bus in Rosario? 1.20 pesos. That's half the price of a cup of a coffee in most cafés here. And that's because the subsidies granted by the state to make gas oil cheaper for public transportation throughout the country, which were already very biased in favour of the capital and its metropolitan area, were decreased even more some months ago.

Now I don't have the tiniest bit of hope that the Kirchner administration will take funds from BA just to give them to us. But the funds should never have been granted to BA in the first place. The unsubsidized subte ticket will probably cost about AR$1.60, more than twice what it does now, but certainly not unpayable. I don't see the problem — that should be nice to Macri's associates and ideological supporters, who surely don't like such populist, leftist devices as subsidies, especially if they make it easier for the poor to move about cheaply in the city. And it should also be nice to the national government — with higher fees, the subte will be used less, thus saving energy (not that's there's in any way an energy crisis!) that the country needs to produce the value-added industrial goods that are fueling our economy, such as soybeans and sunflower seeds.

Alas, what Macri asked for, he will get. Is there not a lesson to learn from this?


PS: I've just added a link to an article in today's La Capital. The Santa Fe Province and the national Ombudsman offices are considering an accusation of discrimination against the national government due to the unequal distribution of the subsidies to public transport. The metropolitan area of Buenos Aires gets 86% of the country's total subsidies; Santa Fe gets 2.42%. Each bus that runs in BA gets between 9,000 and 12,000 pesos/month, while in Santa Fe they get about 3,000.

Gimme, gimme!

This is what happens when the economy goes well in a country with people accustomed to ask for more all the time without regard for common sense.

It's not that Argentina is swimming in fresh money. There's just more currency in the streets. The money-making machines are rolling at full speed, as the Central Bank desperately attempts to buy more and more dollars to keep the exchange rate high and encourage exports. Argentinians don't like to save, and they love spending. The national state is collecting a lot in taxes and this is an electoral year — remember, also, that this is a truly, old-fashioned populist Peronist government, so it's throwing money around in projects, subsidies and plain advertising throughout the country.

As a result, we the people have money in our pockets, usually, and we don't restrain ourselves as much as we did in former times, when we had to think twice before choosing the comfort and speed of a taxi over the crowded inside of a public bus. Back then we preferred receiving guests at home, with food and drink bought at the supermarket; now we don't feel guilty going out to dinner in a fancy restaurant every now and then. And so on. We're now spending money, big time, and those who want our money have noticed it.

First it was the taxi drivers, then the bus drivers. Our urban bus fee was AR$0.75 cents, now it's AR$1.20, all because the bus drivers wanted to earn a minimum of AR$2,300 a month. Most semi-qualified full-time workers in Rosario get around AR$1,000, maybe a bit more, and there are many, many people working eight or nine solid hours per day, Monday thru Saturday, for less than that. In general, a person earning more than AR$2,000 per month in Rosario, unless they're a established professional (a doctor, a lawyer, an architect), is doing very well. The bus drivers in Rosario drive badly, and their manners are terrible; the service is erratic, unsafe, and almost inexistent at night; and it hasn't improved. But wait! Just after the last fee raise, which was entirely their fault, the drivers are now asking for a salary raise again. I guess soon medicine and law students will start leaving the universities to become bus drivers; they'll earn more without having to gain experience or look for clients.

But wait (again)! Since the bus is getting a bit expensive, people are choosing to get taxis (three people pay AR$3.60 for a bus trip; for AR$6 they can get a 15-minute taxi trip, give or take). Taxi drivers are enraged by the fact that they're having so much work, and complain that their service should be expensive not only in absolute terms (which it is) but also in comparison to the bus, so they want the taxi fees to raise, too. The fee is made up of two parts: the basic starting fee, called bajada de bandera (i.e. what they charge you just for stopping and turning off their "FREE" red light sign), and the ficha, or time/distance-based fee (i.e. what they charge for every block, plus the waiting times before traffic lights, etc.). The bajada de bandera is now AR$1.80, while the ficha is AR$0.90. The taxi owners want those figures to raise to AR$2.60 and AR$1.30 respectively. That would make the taxi what they want, a more exclusive service, in the literal sense: a service whose cost excludes most of the public from using it.

Not to be left behind, the public employee union of Santa Fe is also asking for a raise. The provincial government has been making a big deal of the fact that we (they) have a fiscal surplus, so why don't they pay us more? The leader of UPCN, the main union, is also a deputy (member of the Lower House). Incompatibility, anyone? He's also a well-known embezzler (nobody has been able to prove anything, but that's not difficult when the judges are all friends of the party). UPCN wants a minimum wage of AR$1,800. For most employees that would mean a 90% salary raise. Naturally, the provincial government is not happy about this ridiculously high request, but can't refuse it outright because it's an electoral year and UPCN is always quick to resort to strikes in sensitive places, such as public hospitals.

The teachers employed by the provincial state are asking for a raise too. They want a minimum of AR$2,200. Bear in mind these are people who work 5 hours a day, 9 months a year. For sure they've studied to get there and they work in a hostile environment (public schools, overcrowded with mostly poor children, often in bad neighbourhoods). But I can have no sympathy for them. They've always used schoolchildren as symbolic human shields in their fight for a higher pay. They always, always go on strike, causing the children to lose class days they'll never recover, and they never try to negotiate and set things straight with the government during the summer vacations. Since I was a child myself, teachers have never, ever, gone to class every day in the year. As March approaches, teachers threaten they won't start classes, thus delaying the educational schedule from the very beginning.

Most labour unions are asking for raises as well. They argue that both private companies and the state are doing financially well and that inflation was 10% last year (most believe it was actually much more). What can we say to that?

Orthodox economics says that higher salaries for everyone will increase costs and will fuel consumer spending, and in turn this will trigger more inflation. Orthodox economists, though, are notorious for favouring companies over consumers. Looking at companies' production costs, it's apparent that the private sector is in fact taking advantage of the public sensation of economic exhuberance to raise prices and reap more profits, since the workers' pay is only a small percentage of the total cost of the product in most cases. This may vary a lot, of course; harvesting corn is not the same as manufacturing cars and definitely not the same as selling vacations in a spa. The service sector in particular is collecting truckloads of money; long-distance bus fares have increased out of all reason, restaurants charge ridiculous prices for drinks (8 pesos for a beer you can get for 2 pesos in the supermarket!), and the cheesiest gyms in town fake a Pilates class and charge old ladies 80 pesos for it.

The argument that salaries cause inflation is the favourite of private companies. If modern economy were based in real life, it would be easy to dismiss it, but since the whole world economy is based in arbitrary factors (such as Ben Bernanke's mood when he wakes up, or the amount of people blown up in Iraq during a given week), it's often enough that the market or the public "feel" something to make it real. Well done!

Mayor Lifschitz goes to San Francisco

Rosario's mayor Miguel Lifschitz travelled to San Francisco, California, United States. Besides the exchange of ideas and vague promises of cooperation, San Francisco's mayor promised he'll work on making Rosario and San Francisco sister cities... whatever that means... as long as both he and Lifschitz are reelected this year (we have elections in September; San Francisco has them in November).

It turns out, also, that San Francisco's Secretary of Transport is a rosarino! Lifschitz had mentioned that he wanted to bring back the trolleybus to Rosario; there's one (the K line), operated by the municipal state-owned transport company, going east–west all across town, but that's just the last remains of a grid of electric trams that used to cover the city. The municipality wants the trolleybus to have a place in it, by restoring the M line, going north–south.

It's been years since Rosario's bus system has had increasing problems coping with a larger urban area and a larger population. Long ago the municipality planned a new system which would replace the many unconnected bus lines with a hierarchy of district-based lines, transfer lines between nearby areas of the city, and main lines that would cross the whole city. The system was discussed, debated, studied, reformed, and presented to the private companies; it failed to gather investments, then there came an economic crisis, then another, then it failed again... The last attempt succeeded, so we're waiting, sometime during 2007, for the buses to be reorganized. The trams would be an interesting addition to the mix.

The opportunity is unique. The city of Vancouver, Canada, is liquidating its fleet of old trams, which are nevertheless working fine, and it's vowed to donate them to Córdoba, Mendoza and Rosario — we're going to get 70 of them, provided we can pay for the shipping, which is minor compared to the cost of the units. We'll then need 15 million pesos to mount the infrastructure. The K line serves a lot of people and is remarkably quiet, so I hope the M line will be OK as well. What I'd like to see is a picture of Vancouver's trams (Wikimedia Commons has a picture of a TransLink trolley bus, but I doubt that's it).

Besides the tram, it seems Lifschitz liked San Francisco's touristic cable car. There was a project, once, to set up a railway along the coast of the Paraná so that passengers could watch the view. Again, it was one of those things easier said than done. With the city now decidedly going touristic and economically improving, the mayor is pondering the idea of a cable car in Rosario. That would be a major attraction. The municipality has worked hard to make the shoreline accessible and available; from the center northward you can stroll (or jog) along pedestrian paths by parks and beaches for some 7 km with almost no interruption, admiring the river and the islands in the east, and the skyline of the city in the west. A way to do the same for those not keen on walking, or to enjoy the view comfortably in the hottest times of day in the summer, or during rainy days, would be extremely welcome, and if not touristically expensive, also quite useful in itself.
Pathetic attempts at criticizing Lifschitz's administration routinely pop up in the walls of certain parts of the city. Lifschitz is a Socialist and a former official of the Binner administration, and though he's kept his low profile and a cautious distance from the campaign for the governorship, Binner and Lifschitz are linked in the popular sentiment, and the Peronist operators of Rafael Bielsa's campaign are taking advantage of that. "Lifschitz, enough with the travels, Rosario needs solutions", I read today in a wall — this, as governor Obeid is in Cuba presenting a book of his, admiring a replica of Che Guevara's home and sucking up to the Castros. Not that that's wrong in any sense; mayors and governors often travel abroad to showcase their lands and promote trade and cultural exchange. "Lifschitz = Bus fee raise", on a poster, too, with a picture of Binner on one side, explaining that the Socialists don't have a solution for the city's problems. (The Peronist leader in the city council made a public display of disapproval when the mayor was forced to raise the fee after the bus drivers got an outrageous salary raise. They also complained when the municipality rose the real estate tax to make upper-middle-class homes pay more than a few pesos. This is all useless since they can't block anything in the council — it's just for show.)

The Peronists have been unable to win in Rosario since 1983; since 1989 we've had Socialist mayors, and Lifschitz is practically sure to win this time again. The Peronist candidates over the years have all been ridiculous... low-level party cronies with a history of living off political favours, opportunists with no idea how to run a city, a foul-mouthed mediocre yellow journalist, the leader of a pharmacy chain suspected of supplying his business with stolen medicine... anyone, absolutely anyone who could bring even a single vote to the cause, under the legal fraud of the Ley de Lemas, tailor-made for the benefit of the pragmatic Justicialist Party. All of them put together, on three consecutive elections, could not come close to Binner or Lifschitz running alone. The city has terrible problems, but people aren't that stupid. So maybe next year, if mayor Newsom of San Francisco is still there, Rosario will have a new sister.

Rosario bus fee raised

I guess that's enough with Mendoza already... There are news over here too!

This is not exactly news, though it was unexpected. The municipality just raised the urban bus fee from 0.95 to 1.20 pesos; the 6-trip prepaid card rose from 5.40 (each trip for AR$0.90) to 6.90 (AR$1.15/trip); all in all it's over 25%, quite a brutal hack to one's pockets. The political cost is going to be high. The executive branch (mayor Miguel Lifschitz) asked the Socialist-dominated legislature of Rosario to grant it the power to raise the fee. The Deliberative Council complied at once, eager to shift the political cost to the mayor, who has kept a low profile and a high approval rate. Lifschitz conditioned the fee increase to the results of a study of the costs of public transportation, but it was obvious that the fee was going to go up regardless. The opposition was quick to point out that the delegation of legislative powers was done too fast, during the holiday season (everybody knows nobody pays attention to the news during the summer holidays!), and denounced a previous secret agreement between the mayor and the companies that own the bus line concessions (and that will participate in the re-designed public transportation scheme to be implemented a few months from now). Basic knowledge of realpolitik tells me this is probably true; the companies will not invest in a system that doesn't give them enough profit.

The root of the problem, however, is the combination of last year's huge salary raise for bus drivers (that was presented to the media as the resolution of a conflict between the drivers' union and the companies, but was rather clearly, except for the most naïve, a mis-en-scene to appease the drivers and to get the companies an argument to push for a fee increase) and the national parliament's preference for Buenos Aires City in the issue of subsidies to fuel for public transport — which is why bus tickets in Buenos Aires remain at around 80 cents while the big cities in the rest of the country (Córdoba, Mendoza, and now Rosario) have had to raise them to over AR$1.10, from previous values around 90 cents.

Buses in BA carry a lot of passengers from the impoverished metropolitan area, to be sure, but the cost of living in that area is considerably higher than that of the rest of the country (I'm told a cup of coffee can be around 4 pesos in BA — you can get a medium cup of coffee with milk plus two medialunas for less than 3 pesos in Rosario). Why is the bus fee kept artificially low in BA? BA has trains and a subway, and of course people there have many more cars and many more taxis available in proportion (BA has a taxi per 80 people — Rosario has about 1 per 350 people). Moreover, with a national government that constantly pressures private companies and interferes with the market to keep the prices of basic products depressed, what sense does it make to let public transportation become so expensive? An average worker in Rosario may now spend between 6 and 8% of his or her monthly salary just to get to and back from work.

I use the bus a lot (maybe 90 bus trips a month when I'm going to Japanese class); despite my willingness to exercise, I just can't go to work on foot or by bicycle; it's too far away and I can't possibly wake up even earlier than I do now. I can pay for the difference, but I shouldn't. My bike got out of repairs just yesterday and I think I'm going to start putting it to use...

Meanwhile, the transport officials of the municipality say the bus system is working fine and will be even better, the everyday bus users are complaining about the quality and frequency of the service, the taxi drivers want their own fee to be increased even more to compensate, and at least one person is attempting to block the fee increase by a judicial interdiction. The taxi owners are also complaining that they will have lots of work because the bus won't be advantageously cheap enough (what do you call a businessman who complains because his product has a large demand?).