Carolina De la Rosa Mr. Aparicio
While the government has been able to provide various goods and services have been beneficial to the economy like roads and public schools, the government has also been able to damage the economy severely especially when it runs as a monopoly taking complete ownership of goods and services like when government monopolizes goods, this results in there being little to no incentive for organizations to work efficiently, or there to be any work at all.[1] This can be seen by the Mexican government when its far leftist president Andrés Manuel López Obrador (AMLO) decided to cancel the construction of a new international airport in Mexico City even though it was a little less than halfway done and largely invested in. Despite the Mexican government needing to oversee certain airport regulations, airports should be privatized and not under complete government control.
In 2000, when the airport surpassed its official capacity, that the Mexican government reached the conclusion another airport needed to be build. So, by 2001, it was announced by the government that it a new airport would be built outside of Mexico City in the Texcoco lakebed. The project ended up being cancelled because of various people inhabiting the land who not wanting to move for an airport to be build. Years later, the idea was then brought up again by the Enrique Peña Nieto administration in 2014. The project was also going to be built on federally owned land that no one already live on so all seemed perfect for this project to start and finish. But then AMLO came.[2]
Even though construction was 1/3rd done, the financing was 70 percent complete, and the government had already spent $3 billion on the project, in 2018, the newly elected Mexican president AMLO decided to cancel the airport completely. The construction was left abandoned which cost the government $9 billion even though it would have been cheaper to just finish the airport, which would have been around $8.3 billion.[3] Even though AMLO states that his reasons for cancelling the airport was because of it being expensive to control the flooding near the area when it rained, most critics speculate that it was so that he could be given full credit with the new commercial airlines that he was going to build Santa Lucia air force base near Texcoco.[4]
This caused an outcry among many. Investors were highly disturbed at how compulsive he was to make this decision without considering the consequences. Even the International Air Transport Association (IATA) commented stating that Mexico’s economy could lose $20 billion and up to 20,000 jobs if a new facility is not constructed. [4]
While the new airport in Mexico City got cancelled, it probably would have not if it was privatized. The privatization of airports is not a new concept as it has been occurring since 1987, as more than 100 major airports around the world are privately run. In fact, 66 percent of all passenger traffic in Latin America and the Caribbean passed through privately run airports, according to Airports Council International. [5]
According to a report by the American Society of Civil Engineers in 2013, there are several benefits to privatizing airports. Such as a higher rate of efficiency since airports gives the shareholders the incentives to study the automation, there is no spending nor loss of taxpayer money since airports source of revenue is based on passenger flights, airlines, and advertisements, and there can be a greater competition between nearby airport.[6] Bust most importantly, the biggest benefit of the privatization of airports is that government does not have complete control of doing what it wants and cancelling an almost 20 year project like AMLO did.
[1] Wheelan, Charles. Essay. In Naked Economics: Undressing the Dismal Science, 83–91. New York: W.W. Norton & amp; Company, 2019.
[2] Foster, Kendrick. “Building (and Canceling) an Airport for Mexico City.” Harvard Political Review, April 11, 2021. https://harvardpolitics.com/mexico-city-airports/.
[3] ] Taylor, Mia. “Mexican Government Will Spend $9 Billion to Cancel Airport Project.” Travel Pulse, November 11, 2019. https://www.travelpulse.com/news/airlines/mexican-government-will-spend-9-billion-to-cancel-airport-project.html.
[4] Redacción. “El Capricho De AMLO Por Cancelar El Aeropuerto De Texcoco Le Costará a Los Mexicanos Tres Veces Más De Lo Presupuestado.” La Gaceta de la Iberosfera, February 21, 2021. https://gaceta.es/actualidad/el-capricho-de-amlo-por-cancelar-el-aeropuerto-de-texcoco-le-costara-a-los-mexicanos-tres-veces-mas-de-lo-presupuestado-20210221-1949/.
[5] Guinto, Joseph. “Privatizing Airports Is a No-Brainer.” The Atlantic. Atlantic Media Company, August 18, 2020. https://www.theatlantic.com/ideas/archive/2020/08/sell-airports/615331/.
[6] Edwards, Chris, and Robert W Poole. “Privatizing U.S. Airports.” cato.org, November 21, 2016. https://www.cato.org/tax-budget-bulletin/privatizing-us-airports.
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