Argentina’s Ruined Railways Will Force Milei to Confront Poverty

[mikic007]

Privatization doesn't have to mean no subsidies, and subsidies doesn't have to mean actual tax revenue being sent to the private company. It can be in the form of tax incentives and exceptions on certain regulations. Politicians who didn't understand that forced Amazon to drop its plan to build one of its headquarters in Long Island City, Queens. One of the politicians even suggested using some of the "subsidies" (tax incentives) to pay teachers more. These people failed to understand that the tax revenue related to the new headquarters would not actually exist if they don't build the headquarters and tax incentives are not tax revenues that can be used to pay government employees.

If a government owned company is losing $1 billion a year to provide a certain service for the people and struggles to improve that service due to funding constraints, what is wrong with handing it to private sector owners and giving them some tax incentives, and maybe even some financing that is much less than the amount that the government is losing each year for a period of time? Yes, you have to give people an opportunity to make large profits before they are willing to risk their capital. And when they actually succeed and make large profits, you can fight with them about how much of that profit should be shared with the people later, in the form of new taxes. Don't be like the financial illiterate politicians and activists who forced Amazon to drop its plan to build the Long Island City headquarter.

I'm sorry, but that's fairy tale level of naivety. It is quite stupid to reject one of most successful businesses on the world to place hq in your community, and this example isn't in any way similar to privatisation of train system in whole country. The same as you painted beautiful picture of nonexistent world, I can paint you beautiful state, where is no corruption and everything works like a charm. Reality in both cases is the same far.

At that point no company with honest intentions would enter into trains or planes in Argentina. Cannot, will not. Maybe some strategic partner can be found, but no owner. And if buyer of this companies will not be willing to risk their capital, before getting big gains, what good would that do?

And let's not forget at least for trains it wasn't Cristina ruining them...

 

[sergio]

I'm sorry, but that's fairy tale level of naivety. It is quite stupid to reject one of most successful businesses on the world to place hq in your community, and this example isn't in any way similar to privatisation of train system in whole country. The same as you painted beautiful picture of nonexistent world, I can paint you beautiful state, where is no corruption and everything works like a charm. Reality in both cases is the same far.

At that point no company with honest intentions would enter into trains or planes in Argentina. Cannot, will not. Maybe some strategic partner can be found, but no owner. And if buyer of this companies will not be willing to risk their capital, before getting big gains, what good would that do?

And let's not forget at least for trains it wasn't Cristina ruining them...

I don't understand what you said. I am not advocating terminating passenger trains. Passenger trains almost never make a profit which is why, for example, they are subsidised in Europe. In Argentina the private railways were not held accountable for the subsidies they received. There has to be greater transparency. Now that intercity trains are run by the government there are far too many employees as there were under Ferrocarriles Argentinos. A private company would have to reduce the number of employees and would need a state subsidy. The subsidy would need to be audited. I'm not sure, however, that Milei will be willing to make such an arrangement. My suspicion is that he will try to close down intercity trains completely without finding a buyer willing to continue passenger service.

 

[TonyTigre]

Things are accomplished when people learn from their mistakes and try again, knowing they will make more mistakes, but hopefully not the same ones. It takes optimists and those with courage to try again. Yes, people do change, and when I say people, it doesn't have to mean the same persons. It could mean new leaders and new voters. Without optimistic visions and the will to try then nothing will change.

Milei is certainly about accountability, so any deal he makes, he will certainly take that into account.

There is a buyer for everything when the price is right. Sometimes that price could be just $1.

Many successful companies lose billions of dollars before the become profitable. All the investors knew that from the beginning. People will invest if they see the potential and the risk vs. reward ratio is appealing enough. No risk, no reward. Bigger the risk, bigger the reward.

 

[Bajo_cero2]

What peoples does not understand is that this privatization policy is know as "Colony".
Only a sovereign State invest in transportation subsidies to develope the country.
What Milei should do is to open the frontiers abolishing immigration law because this trains loose money because we need 20 cities of 2 million people to make this country sustainable.

 

[mikic007]

I don't understand what you said. I am not advocating terminating passenger trains. Passenger trains almost never make a profit which is why, for example, they are subsidised in Europe. In Argentina the private railways were not held accountable for the subsidies they received. There has to be greater transparency. Now that intercity trains are run by the government there are far too many employees as there were under Ferrocarriles Argentinos. A private company would have to reduce the number of employees and would need a state subsidy. The subsidy would need to be audited. I'm not sure, however, that Milei will be willing to make such an arrangement. My suspicion is that he will try to close down intercity trains completely without finding a buyer willing to continue passenger service.

I was replying to @tonitigre, he gave very optimistic view on privatisation, while most cases similar to trains in Argentina turn out as disaster. I would like to share his optimism, but that would go against my experiences. I can't call myself an expert on the field, but was working in different fields of logistics for some time. What you said makes sense, however the same government that can achieve what you wrote, can also run train services efficiently and sell them in better condition. In my opinion that would be the safer way, since it is not so much about the profit of the company, as it is a support role trains should present to the economy. Running a train system is not a rocket science, but it takes time and huge (state) funding. No one will be willing to provide this funding, I can assure you that. Unlike planes, buses and trucks, ports and rails you cannot move somewhere else, if investment goes sour, making it exclusively state business (unless you are a stable economy).