31 August 2008

Musketeers of redistribution: Ricardo Jaime

Continuing with the translation of the Crítica Digital article titled Los mosqueteros de la redistribución ("The Musketeers of Redistribution"), about the subsidies granted by the Kirchner administration.

The second musketeer of redistribution is the Secretary of Transport, Ricardo Jaime. During the first semester of the year, subsidies to transportation (urban buses, trains and subways) reached AR$2.66bn, up by 71% compared to the same period last year.
Néstor and Cristina Kirchner (for all practical purposes, it's all one open-ended presidential term) have channeled billions into subsidies for public and private companies, with almost complete freedom to alter the budget and without oversight, so these figures are important. They usually say they need freedom to redistribute the income collected by the state so that it reaches the poor, but in fact all that money and all that freedom gives a few people a huge amount of power. Unsurprisingly, they've been using it to benefit the companies.
Subsidizing public passenger transportation is not an Argentine invention. And there's a consensus that such subsidious mostly benefit the lower-income rung of society. However, here we have doubtful criteria for assignment of subsidies, [which are granted,] in the case of bus companies, on the basis of sworn statements without control over cost structures, and in the case of trains and subways, over cost structures that are inflated by companies linked [to the main ones] as suppliers.
If you've travelled by train in Buenos Aires, it should be obvious to you that the companies that provide the service aren't pouring money into it. I mean, people have set fire to train stations out of anger, due to how bad the services are. By giving money to private companies and not overseeing their investments or forcing them to give a reasonably good service, the government is an accomplice of fraud. If the Secretary of Transportation can't make sure that people aren't treated like cattle in buses and trains that he (using our money) is paying for, then he should resign.
Aerolíneas Argentinas is a completely different matter. The poor do not generally travel by plane. The decission of re-nationalizing is debatable, but valid if weight is conceded to arguments such as regional integration or economic development. What is not trivial from the point of view of redistribution is who will take on the cost. Jaime said that, if it were up to him, he would pay nothing to the Spaniards of [the Marsans group]. And he says they gutted the company, while he looked the other way for five years…
This is especially relevant now that Aerolíneas is being really nationalized. It certainly looks as if we'll be buying back a company laden with debt and with a dismal record of service, and we'll be taking care of fixing it.
There is not a successful precedent of redistribution, either, in the case of LAFSA, the state company that in 2003 took care of the employees of former companies LAPA and DINAR. LAFSA never flied and today it is in the process of dissolving itself. But in the budget there are still funds set aside to pay the salaries of 99 employees, about 10 of them with wages above AR$10,000 per month.
Empty shells masquerading as actual companies for accounting purposes are so common in Argentine history that this surprises no-one. "Enterprise ethics" is an oxymoron in Argentina. This case is also interesting because the state invokes the welfare of the workers to justify the intervention in the finances of failed companies. We're hearing this kind of thing in the debate about Aerolíneas Argentinas as well. At the risk of being accused of insensitivity, I think the state should decide whether it wants a serious company that works and can sustain itself as a flagship airline, or a mockery of an airline whose main purpose is to produce money for its workers, some of who have never done any actual work besides showing up at union meetings.

I'll be posting the last installment of this series in a few days.

29 August 2008


I'm going on vacation! Tonight I'm boarding a bus with my girlfriend Marisa and heading for the province of La Rioja, in the northwest of Argentina. We're staying for a week in Chilecito, a town of about 30,000 in an artificial oasis near the center of the province, between two mountain ranges. Although it certainly looks like a lovely place and we'll tour the surroundings, checking out its vineyards and its abandoned mines high up in the sierras, our main goal is to see the marvelous geological formations of Talampaya and Ischigualasto, located south of Chilecito.

Talampaya is a national park; Ischigualasto, better known as Valle de la Luna (Moon Valley), is a provincial park and lies in the territory of the neighbouring San Juan Province. Both places are part of a UNESCO World Heritage Site. They feature some weird geological patterns caused by erosion; Ischigualasto is also renowned for the presence of many, well-preserved ancient dinosaur fossils.

I may have time to leave a few scheduled posts ready for publication, but other than that, I don't think I'll be able to check this blog. I'm leaving comments open without moderation for registered users, in case you absolutely need to express yourself while I'm away. I'll be back, hopefully with good stories and many pictures, on Sunday, September 7.

24 August 2008

Musketeers of redistribution: Julio De Vido

Long time no write, sorry. I resume the translation of the Crítica Digital article titled Los mosqueteros de la redistribución ("The Musketeers of Redistribution"), which shows how the Kirchner administration isn't Robin Hood taking from the rich to give to the poor, as they arrogantly assert all the time.

… [T]he residential natural gas fee in Buenos Aires amounts to 30 cents per cubic metre. However, four million low-income households which have no access to the natural gas supply network are forced to buy [pressurized natural gas] containers at a cost of AR$1.70/m³, that is, almost six times more. Since the devaluation [of the peso, in early 2002] the residential gas fees have been frozen; but the price of the 10-kg gas container has climbed 275%, to an average of AR$30…. [Minister of Federal Planning Julio] De Vido authorized the deregulation of the gas container market, in which [the private company] Repsol YPF is dominant, and in exchange offered the so-called "social container", which is impossible to find at the price of AR$18 suggested by the State. Even if you could get that, the price (AR$1.20/m³) would be four times that of the network gas….
That is, the government forces the natural gas companies to sell their product at ridiculously low prices to a mostly middle-class public (and gives those companies a good excuse not to invest on surveying and expanding their network to less privileged areas) and allows Repsol YPF to charge six times more to the poor who aren't reached by the network, or who can't pay for a connection to it. (Until a few years ago my neighbourhood itself wasn't connected to the NG network — when it was our turn, we had to pay something in the order of AR$700 to get the pipes into our home; the equivalent price today must be three or four times as much.)
With more concern for fiscal health… in the last weeks Cristina's government started giving signs that it will unfreeze the utility fees. The astronomical growth of subsidies would threaten the fiscal balance if tax revenue were to falter in the future. … During the first semester [of 2008] the energy subsidies alone amounted to AR$8.2 billion, 295% than the same period [in 2007]. The announcement of hikes in the power fees will be followed by the slow thawing of residential natural gas fees.

The interesting thing is that the increases follow a segmented criterion: more [percent] increase for those who consume more. According to data provided by the power distribution companies, 7% of the high-income households account for 25% of the consumption. In the case of natural gas the concentration is similar.

If progressive [as in gradual?] adjustments had been applied two or three years ago, the State would have avoided a huge transference of wealth to the pockets of the less needy. Why wasn't it done before? De Vido used to explain it was not easy to identify the bills of the higher-income households, something acknowledged as possible only now.
More about this coming soon...

11 August 2008

Income redistribution?

An example of why I don't consider Cristina Kirchner's to be a progressive government, and why the Kirchnerist mantra about their income redistribution goal is a big lie, and why I think it's OK if the middle- and upper-class heavier consumers are charged more for utilities: an article on Crítica Digital, titled Los mosqueteros de la redistribución ("The Musketeers of Redistribution" — Minister of Federal Planning and Infrastucture Julio De Vido, Secretary of Transportation Ricardo Jaime, and Secretary of Domestic Commerce Guillermo Moreno). I translate freely:

"This year, one million families with incomes in excess of AR$6,000 per month will receive a state subsidy of AR$750/month in the form of cheap power, domestic natural gas and fuel. This is the equivalent of five social plans [welfare payments] of AR$150/month, which are still received by little less than one million household heads under the extreme poverty line."
The minimum wage has been recently raised to AR$1,200, from an earlier figure of AR$980 established in July 2007.
"We have already written about the sales boom of natural gas-powered heaters for swimming pools, of the rage in 1,000-watt searchlights for the gardens of the most exclusive closed neighbourhoods, or the growth of the market of high-end diesel cars. Since nothing is free in economics, these subsidized prices are paid by the state, which this year will give away nearly AR$20 billion to compensate energy companies."
For comparison, the federal state collected taxes for about 17 billion in March and 24 billion in July, so this is like giving away a whole month of taxpayers' money. You could argue the subsidies go to the taxpayers, only they're not the same taxpayers. Most of those billions come from the IVA (our VAT), which is 21% over most goods and services (including food), so the poor pay a disproportionate amount of it, because everybody needs food, and most of what the poor buy is food. A smaller amount comes from a profit tax that leaves ample room for evasion, and that the government doesn't even try to collect. In fact, the government is about to exempt individuals with monthly wages over AR$3,300 (single) or AR$4,500 (married with children) from the profit tax, detracting from the total collection.

The government actually benefits from the "inflation tax". Every month it proudly exhibits huge and increasing tax collection figures, which is easy when your main source of revenue is tied to the prices of consumer goods. Coupled with INDEC's low inflation rates pulled from Guillermo Moreno's ass, it lets them believe or pretend that the country is growing fast, although that plainly happens only in nominal terms.
"From the total subsidies to the energy sector, the generous Argentine State will provide this year AR$9bn to subsidize the consumption of that higher-income social group. Incredibly, there are still well-off middle-class people who complain that the State "gives away" Jefes de Hogar welfare plans, which today are received by extremely poor households mostly headed by women. The 2008 budget for the Unemployed Heads of Household programme is only AR$1.8 billion."
Yes, many in the middle class are really angry that the poor "don't work, don't pay taxes and get money from the government", while "decent hard-working citizens" have to struggle to go on vacations or change the car every few years. I've heard borderline middle-class citizens demand that the government "sends those lazy bums to work", disregarding the fact that most of them are single women with small children, or young men who have no qualifications at all. This is the state's fault, but taking away their welfare payments is not a viable remedy.
"So as to dispell all doubt regarding the magnitude of the redistribution exercised by [Julio De Vido's] Ministry of Federal Planning: the nine billion pesos devoted to subsidize the consumption of well-off citizens are well above this year's budget for the Ministry of Social Development (AR$7.6bn); they're on par with the annual budget of the Ministry of Education (AR$9.3bn); and they represent 2.5 times the budget of the Ministry of Health (AR$3.5bn)."
This was just the first part of the article devoted to the "Musketeers of Redistribution", who (as you see) wield huge power over the lives and fortunes of Argentinians, and who are accountable only to the office of the President. If and when I have the time, I'll translate another part.

08 August 2008

Rosario sues over the smoke

A nuestra derecha, el incendio The municipality of Rosario is taking the case of the smoke coming from the islands to the Supreme Court. As I've reported on several occasions, people who own fields on the islands on the Paraná river's floodplain have been setting the scrub on fire, a traditional and cheap way to clear the land that has gotten out of control. The reason why the fires are so widespread is that farmers are moving all their cattle to the islands and keeping their good fields elsewhere for much more profittable soybean, wheat and sunflower.

Not only is the environmental damage considerable, but the smoke raising from the burning islands decreases the visibility on major road corridors (the Buenos Aires–Rosario Highway and the Rosario–Victoria Bridge), and the falling ashes create health problems.

The islands opposite Rosario are under the jurisdiction of the municipality of Victoria, Entre Ríos. Further south, the delta comes under the jurisdiction of Buenos Aires Province.

After years of putting up with the smoke and seeing how nobody does anything to stop it (except the feverish but insufficient joint operation mounted by the national government through the Environment Secretariat a few months ago when the smoke reached the Center of the Universe, i. e. the City of Buenos Aires), mayor Miguel Lifschitz decided to sue the provinces of Entre Ríos and Buenos Aires, not asking for monetary reparation but to get the authorities to stop the burning, monitor the area, and control its development.

I think this is good idea, seeing how all the friendly talks and meetings have failed.

07 August 2008

Shadows of the dictatorship

Argentina's last dictatorship ended in 1983, but for several reasons the criminals that took part in it were not punished appropriately. Now that the trials have been resumed, some cases have been re-opened, and new horrible deeds are unearthed every time. It's no wonder that the criminals resist.

Yesterday the guilty sentence was passed for four of five military defendants on a trial for crimes against humanity held in Corrientes. Cecilia Pando, an activist that defends the tactics of state terrorism employed by the dictatorship, was there with a group of supporters; as the sentence was read, she snapped and started yelling insults and threats all around, accusing Human Rights Secretary Luis Eduardo Duhalde of being a "terrorist", sliding her index finger across her neck (the throat-slitting gesture) and shouting "I'm going to kill you with my own hands".

Pando is the wife of a retired major, Rafael Mercado, and her group calls itself the "Association of Friends and Relatives of Political Prisoners of Argentina". They believe the military defended the country against terrorism and the prospect of a leftist dictatorship, and now they're treated as dirt because the current government is made up of former terrorists and their allies. This claim was echoed by the professional torturer and murderer Luciano Benjamín Menéndez — "the terrorists of the '70s are in power" — after his sentence (a life term) was dictated, last July.

There's a small but well-connected group of people who are convinced of the justice of the military cause — who believe the desaparecidos were only a few, that most of them actually fled to Europe and let their families play the victim, that everyone who has testified about the kidnappings, the gruesome torture sessions, the summary executions is lying or deluded or paid by the government that "persecutes" the country's "heroes".

They don't state this out loud all the time, of course. More often, they admit that crimes ("excesses") were committed fighting the terrorists, but justify it by saying "it was a war". They always speak of national reconciliation, unification and peace, which for them means forgetting the past and forgiving the criminals even as they unrepentantly walk down our streets — not incidentally, the usual line of the Catholic Church.

Another usual complaint is that of unfairness — placing themselves on one side of the "theory of the two demons" and claiming that, if the military must be punished, then so must the "subversives". In reality, of course, many who were tortured or killed by the dictatorship were just activists, and the actual terrorist organizations were never even close to subvert (i.e. overthrow) the government. They were used as a convenient argument for the military to seize power and "restore the order", and then as a scapegoat for the dictatorship's own failed policies.

Why am I giving so many details? Well, part of the public opinion has become more receptive of some of these claims because they don't like the Kirchners' idea of human rights. You know I don't like the Kirchners at all, and I don't believe they have the marvelous "human rights policy" they often congratulate themselves of. What they have is a desire for revenge. They were leftist militants in the 1970s; Néstor Kirchner has a background of closeness to the leftist-Catholic-Peronist terrorists of Montoneros, though he wasn't in the organization himself; there's plenty of evidence he views the world as a battleground, with him on the "good" side; his words when he speaks of the past show his deep (and broad, and therefore often misguided) resentment and intolerance against those who are not of his own ideological flavour. One can understand and sympathize with that up to a certain point, but a president or the leader of an influential majority should be above that, for the good of the people.

Kirchner's desire for revenge turned out to be a catalyzer for better things: by fighting the conservative Supreme Court he was stuck with at the beginning of his term, he allowed for an independent Court to be assembled; by fighting the laws and pardons that kept the dictatorship's criminals from being investigated, he let justice work as it should. That removal of obstacles was about the extent of Néstor Kirchner's policy on human rights, and if he had stepped down as soon as his work was done (about three years into his term), he would've been remembered as a great president by most Argentinians, including myself. But because he showed his true colours, he gave the dictatorship's sympathizers a measure of credibility. Ah, I suppose it's too much to ask for a human being in such a high place to be OK on all accounts.