Tuesday, October 13, 2009

Odd Situation

Labor Secretary Javier Lozano says that more liquidations are possible, not as a privatization policy, but merely as a method of government savings. I remain somewhat baffled by their insistence on selling liquidations as a mere savings instrument; it just comes across as a really draconian means to a pretty abstract end (smaller budget deficits).

As far as the likelihood of furthers episodes like the one presently unfolding, it should also be noted that this was a pretty unique situation. You have two state companies (LyFC and the CFE) operating in the same industry, with one extraordinarily inefficient while the other is pretty solidly run. The two companies do not share unions, and the latter was ready and willing to pick right up where the former left off before its disappearance. Strikes weren't really a viable option here, because it would be like the USFL striking with the NFL stars waiting in the wings to sign on as replacements. I don't think there is another significant industry/union conflict where simply disappearing one of the parties is a viable option. It's not like Calderón can ask Petrobras to jump in for Pemex, although I'm sure he has at times wanted to wave the Mexican oil company out of existence. Nor, for that matter, can he make the public school system vanish as a remedy for their inefficiency.

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