Re: Argentine's elections
What we have (in many sectors of the Mexican economy) is NOT capitalism as
it is generally understood, but a transfer of ownerwship from state control
to state-controlled individuals and groups. In this case, the "control" is
due to the relationships that allowed Helu (and others) to "buy" such
industries as TelMex. The results have been rather predictable. In the
majority of cases, there has been an substantial increase of the cost of
services, and a reduction of services delivered as the new "owners" attempt
to get back their investments as rapidly as possible.
Fortunately, the NAFTA agreement, for all its flaws, contained requirements
that oblige Mexico to open the majority of such industries to foreign (and
domestic) competition within several years, if not immediately. I truly
believe that there is a very good possibility that TelMex will either go
broke, or be taken over at"bargain basement" prices once consumers in Mexico
have a choice in telephone service. If that happens, how good an investment
did Sr. Slim Helu make?
The same thing is happening in banking and financial services. The
privatization of the banking system simply transfered ownership from the
Banco de Mexico to an exclusive club of "connected" individuals. Service to
the public certainly got no better, and no cheaper. Some of those connected
individuals (such as Carlos Cabal) turned out to be little more than crooks,
just like the politicians that sold them the banks in the first place; no
wonder they got along so well!
Perhaps the current situation is/was a necessary intermediate step between
state socialism and something approaching relatively free-market capitalism.
It was the crooks and the connected that had the sources of money needed to
buy the companies the state wanted to dispose of, and that had the
"connections" needed to make the purchases attractive. Once the markets
started to open up, the incompetence of the new owners became all too
apparent, and the companies acquired have, or are, going broke. Just what
did a group of meat packers (the Brenner family, owners of "Fud") and their
"Grupo Xabre" know about running an airline (Mexicana)? Absolutely nothing!
They bought the wrong airplanes, and spent millions repainting the fleet
while service went to hell and the passengers went to other carriers. Like
TelMex, was Mexicana a good investment? I don't think so. Eventually, market
forces will correct these problems and the "free market" will prevail, if
given the opportunity.
-+-+- Kenneth M. Price
PanAmerican Consulting Associates, Inc.
<>Greenville, SC, USA <> Irapuato, Gto. Mexico <>
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