USA Today notes in an article today that “States and local governments across the USA are preparing to cash in valuable public assets for one-time windfalls that could reap tens of billions of dollars.” Though there is talk in the article of “operations that private enterprise might operate better” one wonders if this is any sort of victory for free markets. This suggests not:
Investment banker Carol Rein of UBS Securities says foreign investors like government assets in this country because similar investment opportunities in Europe and Australia have been successful. Assets such as toll roads and water systems are attractive to investors because they have little competition and generate steady revenue.
This puts me in mind of an old practice that kings had for raising money. They would sell the rights to a monopoly in a certain trade or even sell an official position. As Rodney Stark writes in The Victory of Reason:
…all of the colonial administrative positions [in the Spanish Americas] were sold by the King of Spain!… The number of official positions sold in the colonies greatly proliferated under Philip II as he attempted, unsuccessfully, to avert repeated bankrupties… most positions were purchased as investments to be made back from the many opportunities to sell influence and services.
Now, the article does not explicitly state that these “privatizations” include the sale of legal monopolies to private parties. But I’ll bet you the right to charge tolls on the Golden Gate Bridge that they do.
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It comes down to a conflict of interests. Make a huge profit now by selling a monopoly and deal with the problems that will generate someday in the future with even more regulation OR undo the damage done by state control in commerce and allow the market to create an open, diverse and free market?
Given that no-one trust the complexity of market and everyone has a firm believe in orderly centralized control this choice is never even proposed.
Political power is power over violence. Political power is measured in its ability to destroy or coerce: How many WMD does it have? How many criminals are punished? And the one with the biggest demolition crew is called a superpower.
Real power is something else. Real power is the power to create and sustain. When a hurricane hit the one remaining superpower it demonstrated that a political superpower could not protect its own people against bad weather.
Right now, the only creative power in this world is a free and open market. It has real power and will to create and sustain. The market will become whatever is needed, for as long it is needed, whenever it is allowed to be.
I’m suspicious of privatizations like these. By all rights the drivers on the bridge (Golden Gate) are its rightful owners, and I wonder what kind of voice they had in handing over “ownership” (when perhaps only management is legit) to a private party. I think the best thing to do would be to have a vote, with the ability to recall the managers/operators as often as possible, so as to avoid undue price gouging and inferior service. I think in this case of monopoly, price gouging is a real concern, and not just a political bogeyman.
Shouldn’t that be “power to collect tolls” rather than “right”?
Steal from people. Build something. Let them use it for free for a while. Then hand it over to a political connection and treat it as justly-owned property.
What a fabulous scam.
- Josh
“I’m suspicious of privatizations like these.”
I take it that your suspicions would be increased if the slogan “We Sell It To Ourselves!” was broached.
“By all rights the drivers on the bridge (Golden Gate) are its rightful owners”
NO. The drivers are the customers, not the owners. The owners are the taxpayers. The proper way to privatize is to give them shares. Of course it’s hard to figure out the right amount of shares. One can either spread it over equally or by proportion of taxes paid over a period of time. The latter is fairest.
” I think in this case of monopoly, price gouging is a real concern, and not just a political bogeyman.”
NO. All one has to do is not restrict the construction of another bridge, tunnel, or ferry service.
Weren’t many of these “Toll”-based projects built with the, then, understanding that the “Tolls” would be collected for the maintenance of both, the road/bridge, etc. and a “sinking fund” that would pay off the borrowings that funded the project?
With the upshot being the “Tolls” would go away(?)
That those projects and their attendant “Tolls” morphed into long-lived Political plums for many “connected” interests is bad enough, but that the same projects are now being “sold” to “private” interests, really is quite something to behold.
Well, at the current state of things, real privatization and competition are problematic, to say the least. My favorite monopoly / paramilitary organization, The New Jersey Turnpike, was built using stolen property (eminent domain), and, I suspect (based upon my obvservation of massive traffic jams on Friday evenings at Exit 8A and Exit 1), relies on tolls that are below market price .To build a competing route would require unbelievable expenditures of money, and it is doubtful a competitor could ever recoup their investment.
Ironically, a favorite saw of opposition politicians for years in NJ has been a campaign promise to ABOLISH the tolls on the NJTPK and the Garden State Parkway. So now there will be one less empty campaign promise for the politicians to make!
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