Everyone Wants Infrastructure But - Road to the Middle Class

In the old days before the welfare state a lot of infrastructure, schools and hospitals, was built with benevolence. People gave money to build a school. And then there were the turn-pikes: regulated, profit-making enterprises. People hated the gates, and they hated the toll collectors, and they hated to pay the tolls.

Trouble is, when you don’t have the infrastructure, you can’t have prosperity. And in a continent like South America, governments don’t build infrastructure, and people rebel from paying for private infrastructure, as the London Economist reports.

Although the region's economies are growing faster, thanks to an export boom, they are hobbled by poor roads and railways, clogged ports and a precarious electricity supply. In the 1990s governments slashed public investment to balance their budgets. They invited private investors to make up the shortfall... But the flow of private money for electricity, water and transport has dried up in many countries, partly because citizens or politicians turned against privatisation.

That’s because people didn’t want to pay for the infrastructure. Except for Chile.

But that is because the evil Gen. Pinochet got privatized infrastructure built anyway. Fortunately Chileans are still building. “In Santiago treatment of sewage has increased from 3% in 1999 to 70% today, says Alfredo Noman, chairman of Aguas Andinas, the capital's Spanish-controlled water company.”

Not that Chileans are happy.

Success has not made privatisation popular. Chileans grumble that they see only new cars on the new roads, because drivers of jalopies cannot afford them. (The same is true of Mexico's privately built toll roads.) Running water is convenient, but backyard wells were free.

It’s amazing. People will put up with staggeringly inefficient, but subsidized, government services like schools and public transportation but complain bitterly about efficient producers like oil companies and water companies that make products for which they have to pay.

But nobody said that humans were grateful.

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Christopher Chantrill blogs at www.roadtothemiddleclass.com. His Road to the Middle Class is forthcoming.