Argentina Embraces Unpleasant Old Ideas for Controlling the Oil Industry

Argentina, where President Cristina Fernández de Kirchner pals around with the likes of Hugo Chavez and wows progressive fans, has discovered an old truth: There's no reason for government officials to take on the scary responsibilities of running actual businesses when they can boss around private companies and let the cowed "owners" take the fall for any resulting failures. That sort of separation of actual control and nominal ownership has been an understandable favorite of political leaders for along time. And the Argentine government has embraced it in spades.

NASDAQ summarizes the situation very pithily:

The Argentina oil industry has been more or less reduced to a utility under a presidential decree announced last Friday. But the new rules don't provide the kind of monopoly risk profile usually associated with lower margins.

Under the decree announced by President Cristina Fernández de Kirchner, the government will establish a commission to review the annual investment plans of all companies operating in the Argentina oil sector. The commission will reject any proposals it believes are inconsistent with national goals. Companies must submit their annual plans by September 30.

It's good to be boss without taking any of the risks, isn't it? The Financial Times adds:

For many investors, that won't be the worst of it. The commission will oversee companies' investment plans, sanction them if they fall short and, in the most  controversial aspect of the decree, periodically publish "reference prices for the sale of hydrocarbons and fuels, which will allow [oil companies] to cover the production costs attributable to the activity as well as obtain a reasonable profit margin."

So, to summarize: You can still "own" an oil company and take all of the risks associated with that status, but how you manage the company and price your products are controlled by the Argentine state. You might say, "It places some importance on the fact that private property is not nationalized, but the control through regulation is just as real." Oh, wait … That's an excerpt from a definition for corporatism.

Yes, everything old really is new again, including the corporatist economic theories of fascism.