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Thread: Socialism = Paralysis in Argentina

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    Banned Eric Stoner's Avatar
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    Default Socialism = Paralysis in Argentina

    From the Associated Press :

    President Cristina Fernandez and her late hubby, Nestor Kirchner spent years subsidizing much of Argentina's economy while the country was struggling to overcome its economic crisis a decade ago. Those subsidies are unsustainable with inflation soaring past 25% per year and foreign investment plummeting. The Buenos Aires subway system is in major trouble. The subsidies it received from the national government went for pay increases for a workforce that nearly doubled to 4,500 while under national government control.

    The subway system in Buenos Aires is now in its second week of a strike leaving over a million daily commuters to walk, drive, take a bus or just stay home. It started on August 3 with workers demanding a 28% pay raise to match inflation. The national government tried to transfer control of the system to the city of Buenos Aires in January but the mayor, Mauricio Macri said "no thanks" claiming that President Fernandez reneged on her promise to fund operating costs for a year. Fernandez responded by refusing to resume control of the system so now nobody is in charge. Macri and Fernandez are so busy blaming each other that the city has literally ground to a halt. I can't make this stuff up.

    The city's six subway lines were "privatized" in 1991 and the workers are supposedly employed by a private concessionaire, Metrovias. Like almost every other subway system around the world , there is no way the system can generate enough profit to defray operating costs. Both fares and salaries are set by the government which also own the lines and subway cars. The system was kept running with huge subsidies but in January Fernandez said it was Macri's responsibility to come up with most of the money. The catch is that Buenos Aires has no way to do so. Not with national control over fares.

    This is an object lesson for the U.S. on so many levels. First, it is what is guaranteed to happen with many of Obama's highly touted HSR projects. When the Federal funds run out, the states and cities will be left holding the bag. Likewise with systems that became dependent on Federal operating subsidies. When they were limited to only capital projects and purchases, or cut off altogether, states and cities were stuck. Second it is one of many examples where socialism fails. Too many workers making too much money coupled with inflation. Third, the "privatization" was a joke. What was privatized ? The lines and rolling stock are owned by the government and Metrovias can't cut salaries or raise fares. Similarly to Governor Christie in N.J. and some other U.S. governors , Mayor Macri wisely refused to take responsibility for a system without the power and means to make it work.

    As Margaret Thatcher said : "The problem with socialism is that sooner or later you run out of other people's money."

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    Banned Melonie's Avatar
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    Default Re: Socialism = Paralysis in Argentina

    ^^^ I'm surprised that president Christina didn't follow the US example more closely ... instead of trying to foist the subsidy cost of continuing to operate subway trains on the city gov't where those subway trains are actually available for citizens to use, she should have invented an Amtrak 'national' subsidy system. That way some of the subsidy money could be extracted from suburban and rural citizens of other 'states' who don't even have access to the train service ! Then, to avoid pitchforks, president Christina should have 'buried' the subsidy costs via a slight increase in federal income tax. Better yet, president Christina should have extracted subsidy money from something that the suburban and rural residents need to use but the city residents do not ... like a higher gasoline tax !

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    Default Re: Socialism = Paralysis in Argentina

    ^^^ Let's not go overboard and let the "perfect" be the enemy of the "good". There are sound reasons that justify reasonable subsidization of mass transit : less imported fuel , less carbon output and less traffic just to name three. Likewise, when residents of a region make use of a service like mass transit, it is not unreasonable to expect them to bear a portion of the cost. To broaden this a bit, is it fair to ask New York residents to subsidize BART ? Or San Fran residents to subsidize the NYCTA ? I would argue that it is not. It's even worse to ask people in Norfolk , Va. or Denver to support either or both.

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    Banned Melonie's Avatar
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    Default Re: Socialism = Paralysis in Argentina

    ^^^ it's already happening that way, to a degree at least. Every big city allocates federal 'block grant' money to subsidize their mass transit system ... thus Norfolk and Denver residents are indeed already subsidizing NYC and SF mass transit even though they're not specifically aware they are doing so. Additionally, every state redistributes their own statewide tax revenues to subsidize their big cities' mass transit systems ... with a popular redistribution being big city mass transit receiving a portion of road / bridge tolls and fuel tax revenues ( predominantly paid by suburban and rural state residents ). I won't disagree with your assessment of 'fairness'.

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    Default Re: Socialism = Paralysis in Argentina

    Quote Originally Posted by Melonie View Post
    ^^^ it's already happening that way, to a degree at least. Every big city allocates federal 'block grant' money to subsidize their mass transit system ... thus Norfolk and Denver residents are indeed already subsidizing NYC and SF mass transit even though they're not specifically aware they are doing so. Additionally, every state redistributes their own statewide tax revenues to subsidize their big cities' mass transit systems ... with a popular redistribution being big city mass transit receiving a portion of road / bridge tolls and fuel tax revenues ( predominantly paid by suburban and rural state residents ). I won't disagree with your assessment of 'fairness'.
    This is one reason why I continually argue for cutting out the Washington "middle man" and letting the revenue stay in the states in the first place. It is not just a question of folks in Iowa and Texas contributing to mass transit systems that they will never see or use. The reverse is just as perverse. Why should residents of N.Y.C. , Boston, Chicago, L.A. etc. help pay for roads in North Dakota, Alaska and Texas ? Those states are swimming in oil and gas revenues and can for such things themselves.

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