Why the neoliberal model just doesn’t work in Argentina.
Thursday, May 31st, 2007Yesterday Argentina’s government required the energy companies serving the greater Buenos Aires area to restrict the supply of natural gas that flowed to businesses and homes all over the city, but primarily in the poor parts on the city outskirts. This means that on the coldest day of the year so far, people were shivering in their homes, and many schools had to close because they had no heat. Forty thousand taxi drivers parked their cars at home because they can’t afford the high gas prices. At the same time the subway workers are striking, so traveling anywhere in the city is a mess right now.
Why would this happen in Argentina, a country with one of the largest supplies of natural gas in the world? Let’s look at how fuel functions in a South American economy. Chile is a neighboring country with very little natural gas but a stronger economy. Bolivia also has natural gas, but no access to the coast, and a destitute economy, so they are unable to export abroad for a profit. So Bolivia sells gas to Argentina, and then Argentina sells its gas to Chile for a profit. When there is a shortage, the government is obliged to uphold business contracts it has with countries it exports gas to, like Chile (although they did have to cut off their shipments for a day or so). Meanwhile, the country’s own people go cold and can’t afford the gas prices.
Does this make any sense? Look at how capitalism works. It forces countries to serve other countries’ interests better than their own. I’m not saying that complete socialism is the right answer, either. But Argentina is a perfect example of how unsustainable the neoliberal economic model is.