Sunday, December 29, 2013

Who Turned Off The Lights In Buenos Aires?

My dear friends those of us in civilized countries tend to take our electricity for granted. We can only experience power outages when there are unusual storms or other natural disasters. I spent many years of my life in Third World countries like Mocambique, Angola, the Congo, Zimbabwe, Brasil, etc where electric power failures were and are common.

I feel sad for Elena's friends and relatives in Buenos Aires who are suffering major power failures when the temperatures are in the 90's and the humidity is 100%. (Imagine all of the food spoiling in ice boxes and freezers in homes and restaurants. Then we also have to consider all of the ill people in hospitals there. Also imagine numerous elderly people dying of heat-related problems)

Argentina is not a Third World country. It has educational institutions that are world class. It's road system is good. It's medical care in excellent. (For example Elena graduated from the University of Buenos Aires Medical School. Her training there prepared her so well that she scored in the top 5% of US doctors on tests for her US medical license.) It's people are sophisticated and cultured. Some 100 years ago Argentina was one of the five wealthiest countries on planet Earth.

What's going on here? The president is a beautiful woman with a brilliant mind. Sadly she has little common sense when it comes to economics. To keep her political supporters happy, she keeps electricity prices ridiculously low. This is great for the bill payer but not good for the electric companies. They do not have the money to do maintenance on their grid or to build new capacity to handle the always-growing population of Buenos Aires. Despite shale oil deposits that would make Argentina another Saudi Arabia of energy production, fuel must be imported to run the worn out electric generators that provide power.

Imagine what would happen in winter with major power failures. You would have a possibility of a substantial number of people freezing to death.

The object lesson here is that political ideology cannot be used to make practical economic decisions.