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.

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.

Powerless

Remember when there was not an energy crisis? Remember when the constant blackouts were not signs of an impending energy collapse but just the growth pains of a flourishing, rapidly expanding economy? Well, we might be heading for another no-crisis again!

Just as they deny that inflation is high and growing, the government is now forcefully denying that the meeting of Argentina, Brazil and Bolivia's heads of state to solve the energy problem was a failure. It was a failure, of course. Bolivia told us they've got contracts signed with Brazil to send 30 million cubic meters per day of natural gas their way, and they intend to fulfill them, unless Brazil agreed to loosen up the terms. Upon Argentina's request, Brazil (that is, Petrobras) kindly replied they're not going to let us have a single molecule of their Bolivian natural gas, because they need it to power the massive (and politically influential) São Paulo's industrial complex. Faced with Argentina's teary-eyed despair, it's quite likely Brazil and Bolivia tried to console her, "You still have Venezuela."

We need fossil fuel for our power plants, industries and vehicles. You can't cut fuel to the power plants, or you'll have blackouts. Angry citizens in the dark aren't good for presidential popularity. You can't cut natural gas for cars, because there are over a million cars in Argentina running on it. You also can't cut NG for homes, because we cook and heat our bathwater with it. You can't cut fuel oil, either, because most heavy vehicles run on it, from the trucks that transport consumer products all across our vast territory to the machines that harvest our crops.

Last year, industries were forced to agree with the government on programmed cuts of the supply of natural gas, and on new working hours. They moved their working shifts around, and to cover the rest of their demand they imported fuel oil from Venezuela at four times the price of natural gas, with some help from government subsidies. This was a problem and will be a problem again this winter, when everybody in the cities starts turning on the NG-powered heaters at full blast. There are some industries and power plants that need natural gas no matter what.

Brazil finally agreed to send a few million megawatts of their spare electricity our way as a compensation for depriving us of our Bolivian natural gas. The offer is neither enough nor well-meaning. It seems Brazil is still angry because last year we re-negotiated the price of natural gas with Bolivia, and Brazil ended up paying a lot more because the new Bolivian government realized they'd been giving it away.

Oh, and Bolivia just realized that they don't have the infrastructure they need to deliver the 20 million m³ of natural gas they'd promised..., the gas for which we're building a huge, expensive gasoduct. We were expecting it for 2010, but Bolivia says the private companies that must invest in exploration and transport of the gas are withholding their money — because they don't like a Socialist/populist government that takes 50% of their massive profits from them. So the gasoduct will be just an empty, useless pipe for a couple of years at least.

Chile also needs natural gas to heat homes. They imported a lot from us, but starting in 2004 we broke our contractual obligations (with some legal protection — national needs are above contracts with foreign companies) and nowadays our gas exports are a trickle (or maybe a whiff?). So not only we're screwed, we're also screwing Chile. Argentina met Chile too, on a separate account, and they agreed that Chilean companies will get natural gas and they'll give our companies fuel oil. This is good for Chile because otherwise they'd have to use diesel, which is pricier. The equation doesn't work for Argentina, however, because fuel oil is so much more expensive than natural gas. Something will have to be done to fix that.

And, of course, this mess is not such, but only the reflection of a flourishing economy. There is and there won't be an energy crisis, and if you say so, you're a conspirator against the government, bent on destroying the country, and probably a neoliberal serial baby killer as well.

Blacking out from happiness!

It's so good to live in these times of economic growth, with the shopping malls full of light, and people buying around tirelessly, and the factories bustling, producing goods for the anxious consumers and for the whole world! Now, every time the power goes out, you know it's a good sign — it's just growth pains!

Or would you like to live in a country that always has energy to spare? As they say, only the mediocre are always at their best. The fact that we're having problems (which we are not) is a sign that we're doing better each day!

Now if you think otherwise, you most surely must be a neoliberal right-wing nut bent on the destruction of everything that's good about Argentina, from Sunday asados to good ol' friends' capitalism, or a poor unthinking sod deceived by the diabolic cunning of the neoliberal right-wing nuts. You're still welcome to build the country that the sensible people truly want, with us, the good guys — in fact, you're welcome to become one of us, if you have some voters that we could use.

In any case, there's something you can do to help you through the dark hours..., which means a lot of time, since you'll be often living one of those painfully glorious growth spurts when the power goes out because the power plants cannot produce, or the grid cannot handle, the tremendous amount of electricity needed to run Argentina ever-increasing productive beatitude. Just use this mantra:

There's no energy crisis... There's no energy crisis... There's no energy crisis...


Repeat ad infinitum, and you'll see the light. Eventually.

(BEST IF USED BEFORE OCTOBER 2007)

Out of gas

One of the days we hoped would never come has arrived. This country may be full of problems, but it's always been prodigal, and we've always been accustomed to waste. Oh, not waste of money, necessarily, especially when half the population is still officially poor or very close to it, but our abundant natural resources have always been enough to throw around. We've never had (that I remember) a long drought or a widespread animal plague threatening our supply of food; we haven't been involved in any war that demanded us to carefully mind what we consume; we've always had plenty of fuel to heat ourselves, power our cars, and propel our industries.

Well, if this isn't the first toll of the bell signaling the Day of Reckoning for Argentina's Age of Waste, I don't know what it is.


Industries have been suffering scheduled cuts of their natural gas supply for several years in the months of peak consumption. These are industries working "interruptible contracts", which means they're supplied gas but have agreed with the supplier that the flow can be stopped at certain times. A few weeks ago, natural gas was cut to some other industries as well. Days ago, fuel stations in Buenos Aires received the order to stop selling Compressed Natural Gas. Almost the same order came to Rosario's fuel stations this weekend: do not sell CNG except in cases of emergency, or sell only through one pipe.

This is not so dramatic, you might say. It's been very cold, we don't have reserves, we don't have appropriate infrastructure, we're accustomed not to care about fuel. But it's not been so cold — just over or just below zero degrees in the main urban centers; we have some reserves, and we could build the infrastructure in no time; we only need to be more aware of what we spend. Yet, the cold cannot be remedied, our reserves are not high, and nobody seems to be building infrastructure for gas extraction and delivery. Some say we have natural gas reserves to last until 2012 or 2016, but it's a well-known fact that the last remains of reserves are not as easy or cheap to extract. With an industrial energy matrix designed to use more natural gas than anything else, with more than 1.4 million vehicles running on cheap CNG (more than any other country in the world both in relative and in absolute numbers), and a culture of irresponsible waste that cannot be changed by merely pointing at alarming figures, what are we going to do?

I was going to go out yesterday night. I didn't, in part because it was very cold and I was tired and the gang had no firm plans ("Let's go somewhere and get some booze"), but then also I knew I would have trouble getting back home. Catching a bus after 1 AM is like hitting the jackpot, and taxis, which never abound, were fewer than usual. Why? Because most taxis run on CNG, and at night they can't just park in a busy stop and wait for passengers to come by; they need to get out and drive around the city and load CNG every now and then, and if possible, keep the heat running. Most would rather stay at home. I've endured the experience of fruitlessly waiting for either a taxi or a bus to come, at night, in less-than-safe corners, with sub-zero temperatures, for an hour or more. I'm too old for that; these days it's either a quick and comfortable ride home, or nothing.

Fortunately nobody's speaking of rationing gas supply to homes, except in the negative. We all know what rationing would mean, mere months before the elections. That's reason to be truly frightened — if this is now, what will they do after our vote is safely again in the far future?

Fueling the crisis

The producers and distributors blame it on the weather being so cold; the government says it's lack of investment and speculation and repeat that, again, there's no energy crisis. But this is not enough. People are having power cuts, sometimes lasting days, because there's not enough natural gas and diesel to power the generators and because the generators are overwhelmed by the demand. Natural gas is being denied to drivers, or sold by small quotas, and now even the compressed natural gas (CNG) cylinders that many people use to heat their homes and cook are difficult to get, and fuel oil in the south of Santa Fe is rationed.

I don't have a car, I don't have to put fuel into any machine to harvest anything, and luckily I haven't had blackouts at home. I have natural gas delivered normally through the pipes, and I've used it almost continuously since last week to get some warmth. Yet I'm hearing complaints on the radio, from several parts of the city, and I'm wondering how much this luck (because this is plainly luck and nothing more) will last.

Everybody passes the blame on to someone else, yet everybody's right in a sense: each of the accused is guilty of part of the problem...

So cold

Did I tell you already I'm freakin' cold these days, all day?

This is not normal. Sure, those cold waves from freezing airmasses coming from Antarctica are not uncommon at all. Just not like this, in mid-autumn, and lasting a week, and featuring those lovely sub-zero temperatures every day. It's almost 10:00 PM and we're still under freezing point, and it's terribly humid, and yet this weather is so ill-behaved that it's not snowing as predicted. It hasn't happened in Rosario since 1973, but it may this winter, though. It's already snowed in places of Córdoba Province and in Mendoza — both on the same latitude as Rosario. So, no adorable pictures of snow-white parks for you.

People are dying as a result of the cold, and there are serious problems with the power generation and distribution, and the supply of natural gas. Those who don't live in Argentina may not fully appreciate what that means for us. Electricity, except for lighting, is comparatively expensive, and so are most fossil fuels. Natural gas (as a real gas, or compressed and liquefied) is employed for home heating, to heat our bathwater, to cook, and to power cars (Argentina has the greatest absolute number of LNG-powered vehicles). Industries use loads of natural gas for all sorts of processes, and power stations burn it to generate energy. When there's not enough, they have to use fuel oil, which is four times the price (and that, only thanks to Mad Hugo up there).

Now, we produce a lot of gas and export a lot of it to Chile, but when demand is high the flow is stopped so as to supply internal consumption first. Since this is the case now, the Chileans are mad at us. Chile made the mistake of planning its energy future based on Argentina's abundante supply of cheap gas (we all know you can't pin your future to Argentina's anything!). Interestingly, Bolivia, which sits atop a veritable ocean of liquid and gasseous hydrocarbons, provides us with a lot of extra gas, and has more than enough for Chile too, but due to a territorial dispute they refuse to sell it to them (and only sell to us on the condition that we don't re-route it to Chile!). The dispute could be solved if only Chile gave back to Bolivia a strip of land that reaches up to the Pacific Ocean, which it stole ages ago; but that won't happen soon.

Back to Argentina and to Rosario and to me: I'm cold (did I tell you already?) and I also officially have a nasty cold as of today, which is a pity since these days are so sunny they motivate you to go outside, but I can't risk catching something worse. On the other hand, better get some antibodies now than during my winter vacations.

Chronicle of a Death Foretold

Since there is no energy crisis, today's blackout must have been caused by other factors... Maybe a rat chewed on a powerline or something. That has happened. Whatever the reason, 43,000 people were left without power today when part of a power plant in the downtown exploded around 10 PM. Destiny had such a fine aim at me that this came more or less around the time when I was just about to conduct some business on floor #15 of a certain building. News: sedentary work is bad for your physical fitness. If you haven't been jogging or otherwise exercising your legs and your aerobic capacity, climb the stairs slowly or you might die amid painful panting.

Again, this is not part of any hypothetical "energy crisis". It's just a coincidence that blackouts are becoming more and more frequent lately, and even worse as summer approaches and people start turning on their air conditioning. Really.

Seriously: At most, we must concede that the power company guys' denial is not groundless. Part of this is not caused by a higher demand of electric power, but by sheer neglect and incompetence.

There is no crisis... There is no crisis...

... the denial keeps being broadcast, on and on, like a mantra, but the fact is that our never-too-good electrical power supply is in danger. So much, that the sales of portable electrical generators have skyrocketed.

Not long ago, the article in La Capital says, only large factories, clinics and icecream parlour chains bought these generators, but as the heat starts to rise (in preparation for a summer that is bound to be hellish), power cuts are becoming common, so small businesses, office buildings and private homes are getting them as well. Manufacturers in Rosario claim they're installing 2 or 3 every day, and that they're overwhelmed by requests. Moreover, the cost of hiring a portable generator is now customarily included in the expenses of wedding parties. The other day, a downtown section of our own Icecream St. (Pellegrini Avenue) suffered a blackout that forced business to throw away hundreds of kilos of melted sweetness. The horror!

The smallest power-gen apparatuses in the market cost 2,000 pesos (US$660, €500), which is maybe twice a non-professional monthly salary. This lets you keep your lights on, plus air conditioning, a fridge, and a computer (as long as you put fuel into it, which is also expensive and in shortage).

In Santa Fe, the partly-state company EPE, which generates our low-voltage, irregular supply of over-expensive electricity, has stated that the grid will not have a crisis, but they wouldn't guarantee that there won't be blackouts this summer (unlike in 2005, 2004, 2003, and every other summer since I learned how to spell electricidad). The national government simply denies there is a crisis, and somewhat perversely, it refuses to take over-visible measures to prevent a crisis. The perverse part is that they're doing it like that because next year is election season, and the president lives by popular opinion surveys, so he doesn't want to show any weakness (including the acknowledgement that a crisis is looming), but at the same time he wouldn't tolerate public protests because of blackouts. Who understands politicians?