A corrupt and innefficient government agency gets replaced

[D'kian]

Progress, of sorts.

Yesterday, Sunday Oct. 11 2009, President Calderon declared the closing of the Central Light and Power company (LFC for its initials in Spanish), a government agency that provided electricity to the central region of the country, including Mexico City.

The LFC's union is squaling like a cat whose tail has been stepped on, of course, even though they're being offered very generous golden parachutes (I mean of course sensible severance packages including at least triple what the law demands). This alleged company was a jobs program that, incidentally, provided electricity. Its expenses were nearly twice its income, I'd like to see selfish, greedy private company operate like that for 15 years. Its workers were known for setting up illegal, unregistered hokk-ups to the grid, for which they collected "rent" every other month. Every other day you heard, mostly on radio news shows, another horror story of someone over-charged by the LFC; things like a single family house suddenly owing the LFC thousands of dolalrs in electric consumption.

There will be a hue and cry, the opposition parties will wail and rip their vestment, the union will block streets and stage protest and amke threats.

And a month or two from now the Federal Electricity Commission (CFE) will provide electricity in this part of the country, employing the same workers (minus a few retirees), with a diferent but similar union, and we'll ahve a less corrupt, somewhat less innefficient government company.

You think the bailouts in the US were bad? So do I. Now imagine the yearly bailouts the Mexican government gives to entities like the LFC, CFE, and other government enterprises (like the LICONSA milk company, the oil company, sugar mills, highway nets, etc etc). That's truly worse.

[Castle]

Of course, the Mexican gov't was quick to state that privatization is simply not an option. That might actually have a snowball's chance of working. They should outsource it to the cartels down there. They're really good at moving and distributing commodities with minimal loss.

[D'kian]

Of course, the Mexican gov't was quick to state that privatization is simply not an option. That might actually have a snowball's chance of working.

A snowball has a better chance in hell, actually.

Calderon's party, the National Action party, opposed privatization when it was an opposition party at the time of president Ernesto Zedillo for political reasons. When they speak of privatization now, they get shouted down and called hypocrites (the truth does hurt).

[D'kian]

Things are about to get really ugly. The workers of the closed agency aren't taking their severance pay, and the union broke off talks with the government (talks on what, I've no idea). Now they'll begin closing off streets and making more of a mess than they've already done. I'm expecting rolling blackouts through minor sabotage, too.

On other fronts, faced with an income shortfall, the government propposed raising taxes, introducing new taxes, and raising other taxes. The opposition cried foul, but now they've reached a deal. here's what we can expect:

Sales tax to rise from 15% to 16%

Income tax to rise from 28% to 30%

Cigarette tax to rise from about 160% to some even mroe ridiculous number. Likewise the gasoline tax (imagine taxing a commodity made by a government monopoly, then claiming we don't depend on oil).

A new tax on telecommunications of 3% No one is sure what this emans, but it will probably be aplpied to cell phone services, ISPs and regualr phone landline (then we'll hear how so many mexicans don't have internet access or even a phone line and how the governemnt should do something about it, <sigh>)

When you find yourself in the bottom of a deep hole, and you're the mexican government, the obvious solution is to dig deeper. Why? Who knows.