The Corner

Nationalization in Argentina . . .

. . . works about as well as it does in most places. Or maybe even worse.

The Economist reports:

Among the first moves Néstor Kirchner, Ms Fernández’s late husband, made on becoming president in 2003 was the renationalisation of Correo Argentino, the country’s postal service. At the time this was seen as a swipe at Grupo Macri, the concession holder, because the son of its boss had become an opposition politician. It turned out to be the start of a trend: Kirchner later took over the railways, a radio-spectrum operator, a shipyard and a water company. Since succeeding him in 2007, Ms Fernández has netted bigger fish: before grabbing YPF last month, she had expropriated Argentina’s private pension funds and its flagship airline.

 Under public control, the financial results of these firms range from mediocre to dismal. In the past year the government has spent nearly $3 billion to prop them up, and the official budget suggests that figure will double in 2012. AySA, the water company, and Aerolíneas Argentinas, the airline, have been particularly needy: they cost the state $972m and $840m last year. Though the firms lost money in private hands as well, their former owners say they struggled only because regulators subjected them to strict price controls.

The government has tried to downplay the importance of the losses by arguing that nationalisations were intended to provide public services, not to make money. But the companies have served their customers no better than they have the treasury. Buenos Aires and its suburbs have only three waste-water treatment plants for 10m residents, and often suffer flash floods that drench entire avenues. Just 47% of households in the region have sewerage, half the share in greater Santiago, Chile’s capital.

Meanwhile, only 56% of Aerolíneas Argentinas’ flights run on time, and the company sits near the bottom of most industry rankings. On its website Mariano Recalde, its boss—a former labour lawyer whose father is a pro-government congressman—vaunts its change of livery, which now features the national flag’s sky blue. “The Argentine colours rise with every take-off of an Aerolíneas flight,” he writes.

Needless to say, there’s more. It’s worth reading the whole thing.

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