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Friday, February 5, 2010

why do we pay 1,20 EUR for a metro ticket in Budapest?

Anybody who would try to answer the question given in a title above, but has not visited Budapest recently may have a train of thoughts like this: Budapest as the first city in continental Europe with an underground transport would develop its public transport on such a level that simply it offers some really high quality service. Well we have to disappoint those thinkers and simply explain the post-social reality: BKV (Budapest Public Transport Co.) is a perfect model of today`s Hungary, "the country of hypocrite parasites" as it is described by Mr. József Papp an economist from Corvinus University. A public organization with sufficient work force and without any constructive approach in the lines of decision makers, but with a strong nepotism, corruption and the primitive instincts, so much characteristic for immature democracies: to grab as much as it possible during a mandate because nobody knows who will take over your position tomorrow. Here is the democracy in which on free elections simply the governing horde of politicians can be changed with another hungry chinovniks, with the same attitude. Now we even did n`t mention that those manager`s competency and qualification are generally measured by their loyalty to the appointing structures. OK. I see I went a little too general so let`s turn back to the original question, why do we travel on a 20 years old Ikarus for the price of a cup of coffee?! The BKV`s tariff income (sold tickets) is 60 billion HUF, normative subsidies financed by the state is 32 billion HUF and capital`s municipality also contributes in recent years with an amount of 10 billion. All this money however is not enough to cover the costs and in each year there is a shortcoming of 30 billion. In this year the state government agreed to pay additional 28 billion as a special aid. All these numbers give a result of 60 billion earned money to 70 billion state subsidy!! By this mathematics a single ticket which you buy for 320HUF indeed costs 660HUF ~ 2,50EUR !! It is incredibly high amount. Now we can talk about costs that create these crazy numbers. Overgrown administration staff, over-payed management and recently the skeletons also started to fall out from the wardrobes: audits discovered lots of contracts for different consulting and law advise services provided by different offshore companies and law offices. Additionally just these days the police confiscated hundreds of bills for severance payments to former and still working management staff. Parasitism inside the system while external costs are burdened by extra high taxes and fees on salaries toward the state, and of course expensive debts, because banks are not willing to finance the company in such a chaotic condition. This lack of will means higher costs of credits even by 40% than it could be in a case of a transparent organization. Returning back to the state`s role: it becomes obvious that all the state subsidies smoothly flow back to the state because of the mentioned high salary fees. The net cost of salaries is on a level of 30 billion while the common charges give a sum of 32 billion, which is exactly equal with state subsidies. Why are the costs net salaries so high? Just read this post once again and instead of the word "BKV" use "state administration"!

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