Tuesday, September 2, 2008

STATES AND CITIES TURNING OVER PUBLIC WORKS TO PRIVATE CORPORATIONS

Wired - States and cities, struggling with gargantuan budget deficits, are increasingly selling or leasing vital transportation infrastructure to private companies. . .

One of the biggest proposed deals is a plan to lease the 537-mile Pennsylvania Turnpike, the nation's oldest major toll road, to a private investment group that includes Citigroup and the Spanish firm Abertis. The legislature votes on the deal next month; if it goes through, Abertis will pay $12.8 billion to run the turnpike for 75 years. That's a big chunk of change.

If last year's bridge collapse in Minneapolis made one thing clear, it's our infrastructure is a mess. The American Society of Civil Engineers says it will cost $1.6 trillion to get things shipshape again. With many states grappling with growing budget deficits, no one expects to see the problem tackled anytime soon. Turning over our infrastructure to the free markets may be the best way to save it, and the Department of Transportation under President Bush has made no secret of its interest in doing just that. . .

But plenty of people don't see it that way. Labor unions worry private ownership of public infrastructure puts their contracts at risk, and a large percentage of people think anything built with their tax dollars should stay in public hands. It doesn't help that a lot of the companies striking these lucrative deals are foreign. The Dubai Ports fiasco showed how well that goes over with the public.

The Penn Turnpike deal has garnered a lo t of headlines, but it's one of many such deals. In 2005, a consortium of companies including Australia's Macquarie Infrastructure Group and Spain's Cintra paid $1.8 billion to operate the Chicago Skyway bridge, and Abertis took over the Orlando airport a year later. Like it or not, these deals have delivered results. The Skyway has fewer potholes, high-speed electronic toll collection and reversible lanes to improve traffic flow. Abertis has invested $70 million in the Orlando airport.

6 Comments:

At September 3, 2008 5:36 AM, Anonymous Anonymous said...

don't cherry pick your evidence. Dubai Ports was buying LEASES from another FOREIGN company. wake up....you're just as bad as the reactionaries...

 
At September 3, 2008 8:10 AM, Blogger Lars said...

In the story it notes bridges with less potholes and other modern upgrades. I don't doubt that this is the first phase of any private interest that takes hold of any piece of public interest. Show face, make good on investment, win over skeptics. Step two I suspect is massively raise prices in the form of increased tolls. Step three is to let your assessts crumble in order to increase profits. Step four is to expect the public to bail you out when/if your venture fails and you can no longer maintain what you bought/leased. Much like Sallie Mae, no government is going to allow major infrastructure to just completely collapse.

The story of Dennis Kucinich and the Cleveland Electric company provides the perfect illustration of why turning over public infrastructure to private concerns isn't such a good idea.

 
At September 3, 2008 8:48 AM, Anonymous Anonymous said...

word, Lars

 
At September 3, 2008 10:06 AM, Anonymous Anonymous said...

After these corporations maximize profits, hide profits in offshore accounts, pay pals multi-million dollar golden parachutes, pay politicians, pay lawyers... they will stoically turn on their heels and state that they have no moral responsibility, either expressed or implied, to the public.

But, the Big problem is:

If, as some people desire, All profitable governmental operations were turned over to private corporations, and politicians became legitimate independent contractors for corporations... who would bail these new corporations out should they fail.

The Chinese? The Arabs?

Fact is, profit driven corporations shouldn't be involved in public utilities. The government can be cajoled, even if it is kicking and scratching all the way, to do the Responsible Thing. Private corporations have no such contract with the public, and business is Not transparent for people to see what is happening.

There is nothing quite as hypocritical as a Libertarian banker.

 
At September 3, 2008 10:30 AM, Anonymous Anonymous said...

Like it or not, it is a matter of skewed priorities.
Somehow our leaders never seem to have a problem spending billions, no trillions, in places like Iraq. It has been announced this week that over a billion dollars will be sent to the Republic of Georgia. Our fiascos in Southwest Asia suck up billions of dollars every week---dollars that if spent at home could more than take care of all of our domestic infrastructure problems.

What continues is the ongoing divestiture of the former United States of America. The greedheads are handling the nation the same way they handle their other acquisitions. When a company is purchased, M&A artists proceed to sell off the parts, liquidating assets, and eventually divesting everything of value until nothing remains. Discarding the ruins, they then move on to something else.
Have you heard, Goldman Sachs is planning to move their headquarters to London?

 
At September 3, 2008 7:56 PM, Anonymous Anonymous said...

Lars has nailed it.

 

Post a Comment

<< Home