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Re: Argentine's elections



On Mon, 15 May 1995, Jorge Raygoza wrote:

> Ken:
> 
> I just want to add a comment to your posting. In the disccussion about "free
> markets" I have seen there is an important (in my opinion) point nobody has
> made so far: the difference between "a good investment" an d "a good
> bussiness". A good investment- as I define it- does not only make profits but
> it is able to create well paid jobs (because people increase their
> productivity and so on) and allows the enterprise to "stay in the market"
> despite the competence. That is, they look for "efficiency" in order to make
> profits.
> 
> The privatization process seen in Mexico has only been "a good bussiness",
> meaning a good way to get lots of profits in a short period of time.
> Investors get monopolies and they are assured a "grace period" (before some
> other companies enter the market). That's why they can't wait to recover
> their "money invested" there and instead of building their own business they
> look for partners to share the profits in order to avoid that "competence".
> If competence finally shows up, they already have recovered their investment
> and made a good amount of profits. Efficiency? They don't care! Customer
> satisfaction? They don't care either!  See the case of TELMEX. What do
> ordinary people have gained by the privatization of TELMEX? Nothing! Service
> is expensive (and with fees authorized by the government) and bad. His owner
> is then suddenly among the five richest in the world! How come? Many say it
> is because he is the "prestanombres" of C. Salinas.

I am in total agreement, and that is exactly my point. Thje buyers of 
TelMex thought they were buying a monopoly business, with no competition 
and little or no control of rates charged. Problem (for them) is that 
technology is moving so fast that by the time they took control, 
competition in Long Distance, the major generator of income for a 
telephone company, was easy and quick, and TelMex continued to build up a 
base of very annoyed customers. I still think TelMex will eventually go 
broke or be sold off.

>   
> Yes, so many locations are now receiving the service but this is because
> customers pay now higher prices than before (less than one year after been
> privatized fees went up more than 90%, when inflation had been less than 25%,
> so the money is coming from our pockets anyway!). The MASECA monopoly has
> sent a lot of "molineros" to bankrupcy and now most of the "tortillas" have
> to be made with "harina de maiz" instead. And lots more examples can be
> found. The worst one will be PEMEX, if things continue on the same path.
> 
Pemex still has a fairly good image with the Mexican public, probably 
because of the 1938 takeover, and the nationalist feelings that resulted. 
If other companies come into the market, or if more private (or new) gas 
stations open up, as is happening, Pemex may find itself in the same sort 
of trouble as TelMex.

>  You and many other people like me- I guess- were waiting for that time in
> which "competition finally makes its appearance to the market" and we all can
> benefit from better service and fair prices. But I'm beginning to think this
> is not going to be soon. And even worse, it might never take place!
> 
>                                               Jorge Raygoza 
> 
Ken Price
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