14 July 2010

Trem Bala Perdida

The news about the 2014 World Cup and 2016 Olympics continues to confuse, amaze, anger, and depress. 

Today's OGlobo ran the headline: Lula tells FIFA 'we're not a bunch of idiots'. Unfortunately, this observation was not confirmed by reading about the launching of the R$33.1 billion high speed train project that is intended to link Rio de Janeiro, São Paulo, and Campinas. As I have mentioned before, there is NO PASSENGER TRAIN SERVICE between these cities, so an entirely new rail system will have to be created. Lula wants this to be completed before the Olympics, though he has delayed the public bidding on the project until 10 days before he leaves office. His solution: "It's really sunny here, if you wanted you could have three shifts working seven days a week." Yes, Senhor Presidente, you could. R$ R$ R$ R$ R$ R$. Ca-ching! The minister of the Casa Civil (responsible for federal construction projects) was asked why the government wanted to build the train: "Because we can. Because we're bold. It's a sign of Brazil's maturation, as a country that is in a period of growth." Spending tens of billions on a high speed train linking the wealthiest cities in the country because you can, is not only a sign of immaturity and insecurity, but is idiotic and irresponsible. 

Yesterday, p.21 of the Economy section: "Real Estate prices in Rio rise 76% and experts see new heights coming." There is a difference in the rise in prices around the city, with Ipanema registering the most growth. But the pattern is clear, from now until after the Olympics there is only going to be an increase in housing prices in what is already one of the most expensive cities in the Americas. OGlobo attributes the astronomical boom in the real estate sector to easy credit, higher wages, the installation of the Police Pacification Units (UPPs) in the Zona Sul, and the coming mega-events. The segment that is seeing the most hyper-valorization is the middle and lower middle class sectors. If you were thinking of buying a place in Rio, you're about a year late. 

In summary: all of the stadiums are behind schedule (and are going to be very expensive white elephants), the airports are not equipped to handle any increase in demand, there is no efficient inter-urban transport so the government wants to build a high speed train, the Brazilian Football Federation (CBF) is a closed and corrupt institution and will direct the production of the World Cup, the Brazilian Olympic Committee (COB) is a closed and corrupt institution and will direct the R$30 billion Olympics through a complex shell game (which involves vague and temporary institutions like the Public Olympic Authority and the Olympic Legacy Company), the same people and companies that went ten times over budget and left no legacy for the 2007 Pan American Games are poised to repeat their sleight of hand, real estate prices are going through the roof, the state government is occupying favelas with shock troops which has increased real estate values by 400% and increased crime in other parts of the city, there are plans to totally reform the Zona Portuaria into something resembling Puerto Madero in Buenos Aires or South Street Seaport in Manhattan despite the fact that 40,000 people live there, there are massive government subsidies to build hotels, museums, and absurd environmental and cultural attractions, new transportation lines will link the international airport with the Olympic Zones and leave the rest of the city to find a way to get to work, the national government just passed a law REDUCING the need for transparent spending on the World Cup and Olympics, no government official wants to begin work until after the elections in November, and the contracts signed by three levels of government with FIFA and the IOC have become more inviolable than the social contract of a democracy. 

These projects will change the urban and social fabrics of Rio de Janeiro and Brazil for generations to come. Much more public participation and coordinated planning should be undertaken in their implementation. Closing one's eyes and hoping for the best is not a solution, unless you happen to own real-estate in a part of town that is already well-served by public transportation and environmental amenities. Money has never flowed more freely from Brasilia to Rio de Janeiro and those with vested interests are far from idiotic but work tirelessly to capture as much wealth as possible. The next post will be positive, but it may take some digging. 


RG Michener said...

Interesting stuff, Chris, though I don't see why creating a train line between three of the most important cities in Brazil is idiotic. At least they'll be doing something with all the tax they're collecting (tax is 34% of GDP--higher than Canada!). Perhaps it will also lower the atrocious death rate from auto accidents, by absorbing excess manual labor--increase the minimum wage and create a new micro-economy based on the rail industry.

Dr. Christopher Gaffney said...

the problem isn't that they are building a train line between those cities, it's that with the same amount of investment, they could build a national rail system. there is no evident demand for a high speed train as it will be more expensive than flying and it won't even be ready for the mega-events that they are supposedly building the train for...

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