Contributed by Bianca Fernet, stilettos-on-the-ground American economist in Buenos Aires. Her blog Not Paris dives into financial and economic topics in Argentina.
I was on the bus on my way home last night when I passed this sign at the rail station:
Roughly translated, this means fight for the return of the Argentine Railway System and is an argument for the re-nationalization of the Argentine rail system, which was privatized about 20 years ago. To this day it remains highly subsidized and fraught with quite dangerous problems.
I couldn’t help but be drawn in, as I happen to be currently re-reading Ayn Rand’s sexy ode to free markets and railroads, Atlas Shrugged. I got to thinking about a conversation that I have had with multiple Argentines about the difference in cultures between the United States and Argentina – namely the Protestant work ethic vs. the Catholic ideal of suffering and salvation.
The protestant work ethic emphasizes hard work and frugality as the way to achieve heaven, and is indeed considered synonymous with capitalism, as the term was coined by Max Weber in his 1904 work, The Protestant Ethic and the Spirit of Capitalism. This ideal is personified by Dagny Taggart, heroine of Ayn Rand’s Atlas Shrugged. In contrast, Catholic salvation ideology is defined by gaining heaven through suffering and enduring – the tools for salvation come from within. To stay within the theme of flat female heroines, I think that Twilight’s Bella Swan provides an interesting example of achieving success through endurance of suffering and waiting.
As a preface, I was raised Catholic, I don’t think idealism is very productive, and I fully acknowledge that the majority of railway systems in the world are either highly subsidized by or entirely run by the government. That being said, the Protestant vs. Catholic culture is an interesting concept to roll around especially when comparing Latin America to the United States. And I couldn’t resist taking a stab at the railroad nationalization movement in light of my current reading.
The above infographic (click to enlarge) describes the premises and goals of the Federación Ferroviaria Argentina, an umbrella organization of railway unions and associations. Their major complaints are the following deteriorations that have occurred since the 1991 privatization:
▪ Number of employees has fallen from 92 thousand to 15 thousand
▪ Working track has fallen from 35 to 10 thousand kilometers
▪ Annual subsidies have risen from US $305 million annually to US $1520 million annually
They report that rail service is irregular, inefficient, and dangerous, and that the owners of the routes have used subsidies to get rich at the expense of necessary development. Sounds a lot like the world faced by Dagny Taggart, Atlas Shrugged’s heroine of capitalism, hell bent on saving her family’s railroad empire in the face of dirty words such as progressivism, socialism, and equalization – a world where subsidization would be equally distasteful.
Here’s where it gets fun. The FFA states the following goals for nationalizing the railway:
▪ 792 new kilometers of metropolitan rail
▪ 500 new electric, two story trains that are designed and produced in Argentina
They further blame privatization for Argentina’s lost ability to produce rails and trains domestically. The final successful outcome of this campaign consists of: employment, economic independence, political sovereignty, and social justice.
Notice anything missing? Perhaps goals of increased transportation, benefits to commerce and trade, increased economic output? Even if you consider transportation as a public good, the goal of a railroad is not economic independence, social justice, or even employment.
Which swings back to the larger theme. Culturally, Argentina has an ideology that promotes fighting, suffering, and endurance to eventually be rewarded, quite a bit like Twilight’s Miss Bella Swan, who is repeatedly rescued and rewarded for her natural talents and attributes after enduring difficulties.
In all actions, both government-led and in private enterprise, it is crucial to define what is success and strive for it. In Atlas Shrugged, profit and making money become dirty words in a Dickens-worthy comically overemphasized manner. Yet even under the “transportation as a public good” premise, the goal of a railroad system should be increased movement of people and goods and the benefits that occur as a result.
State intervention and indeed nationalization are arguable in many cases, but fighting and suffering for a nationalized railroad system seem to considerably miss the mark.
I am in complete agreement that the current private but subsidized model in Argentina is not cutting the mustard, but fighting for subsidization of projects to boost employment and diminish importation seems about as well thought through as one of Bella Swan’s suicide attempts. Cross-posted from Not Paris.
Also by Bianca Fernet: The dust has settled—for the time being—from the November/December drama surrounding the US Court rulings regarding Argentina’s payment on defaulted bonds. But it remains a confounding snaggle. And an appeal is coming. It will certainly be a titillating February. Read.... Argentina's Bonds, Defaults, and Vultures