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August 28, 2008

The only viable solution to the nation's public infrastructure crisis is privatization. - Inspired by rising deficits and costs of public works

As deficits impede the government from improving and repairing roads, bridges and airports, they are becoming increasingly amenable to the idea of a partnership with the private sector. Of late, big banks like Morgan Stanley, Merrill Lynch and Credit Suisse are starting to take an interest in financing massive infrastructure projects.

Jenny Anderson of The New York Times reports: "this fall, Midway Airport of Chicago could become the first to pass into the hands of private investors. Just outside the nation’s capital, a $1.9 billion public-private partnership will finance new high-occupancy toll lanes around Washington. This week, Florida gave the green light to six groups that included JPMorgan, Lehman Brothers and the Carlyle Group to bid for a 50- to 75 -year lease on Alligator Alley, a toll road known for sightings of sleeping alligators that stretches 78 miles down I-75 in South Florida."

Those against this idea of privatization cite the dangers of being owned by foreign corporations. They're also against the higher fees and tolls that inevitably follow private ownership: "Private investors recoup their money by maximizing revenue — either making the infrastructure better to allow for more cars, for example, or by raising tolls. (Concession agreements dictate everything from toll increases to the amount of time dead animals can remain on the road before being cleared.)," writes Anderson.

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Comments | 13 Total

August 28, 2008 at 9:59am by Rachel King

If a project is public, then its the government's responsibility to take care of it. That is not to say that public-private partnerships are a bad thing, but it should not be the default solution. When you start bringing in private or even foreign investors, the community loses control or input into the public project. It's the government's responsibility to build bridges, fix roads, etc. and it should be done in accord with the people who live around the area and are familiar with what needs to get done.

August 28, 2008 at 10:25am by Dale Thompson

Disagree due to the word 'only'. The infrastructure crisis is real and pervasive. It also cannot be solved in ways that have been used in the past. Given the volume of projects and needs that have gone unattended to over the past 30-40 years, combinations of public and private efforts will be needed. Moreover, these efforts must be carefully structured to prevent or at least mitigate the risks cited by the author above. From a public policy standpoint, we must take care not to exclude people in society who do not have the wherewithall to pay tolls, fees, and other charges to use roads, bridges, and airports if they must use these facilties to make a living or get their children to/from school.

August 28, 2008 at 10:36am by Oishik Bagchi

There is nothing called "only". This might be a solution but not only. I feel, a joint-venture with Government can work excellent. On one hand Government can regulate the expenses and revenue and on the other hand the private players can ensure maintenance. A part of finance can be sourced from advertisements also.

August 28, 2008 at 11:10am by JP Biondi

I partially agree with this. In my opinion, large corporations could add value to the infrastructure of the U.S. However, will the taxpayers subsidize these corporations through paying for the police and emergency services in these areas? Or, could this be an opportunity to have these 'owners' pay for the services rendered on their property and relieve the taxpayers? On the other hand, this could become extremely dangerous, we are experiencing what happens when private companies take hold of public property and responsibility with regards to the outsourcing of our military services. In the long run this prospect makes me very uneasy.

August 28, 2008 at 1:11pm by Megan DaGata

To a layman, the only thing that can be done to help the current strain of financial crisis is to help eachother. If that is the government or a private organization, the ultimate goal is to continue with good quality of life. I don't care if that is from the government or my next door neighbor. A project like building a dam to retain flood waters, that should be governed by the US governement but completed by a private company. The government has too much red tape to be able to do a proper job. Projects like the welfare system, that should be privatized. Privatizing something as huge as that would make people accountable for their actions. Their would be more people to police it to look for loop holes and scam artists. Then, we wouldn't have so many lobbyists looking out for themselves and adding riders to bills that would involve the social programs we have in place. There are so many riders to bills that we no longer have a bill, we have a preamble at the top, followed by all kinds of legislation at the bottom.

August 28, 2008 at 2:47pm by EDWARD INTSISFUL

There are too many selfish entrepreneurs around to make this a wishful thinking. Profits mostly end up in their pockets and not necessarily ploughed back into the wider economy.

August 28, 2008 at 2:58pm by Rohit Channazhi

though its not the only viable solution, channeled in the right manner..it could become one great solution to solve the infrastructure issue. Privatisation automatically promotes the "aim for wealth creation" culture..Competition makes things better..Consumers pay more, but they get what they deserve atleast...

August 28, 2008 at 3:36pm by Bailey King

For most cities, public-private investment partnerships in infrastructures is the next wave of economic development, e.g. science city (business parks and the like), silicon valley or alley v.?, new town u.s.a.,... Everyone wants a to be part of a new generation of global wealth, and so privatization seems inevitable. But the only viable way to finance public works? I think perhaps the government might designate "public ways", for which there are regulatory caps on tolls and fees to protect public interests, and package infrastructures for capital gains in the private sector, for which taxes, tolls and fees conform to a regulated "market" rate.

August 28, 2008 at 4:28pm by Vance Dubberly

Oh come on, has anybody been paying attention to what's been happening in this country for the last 12 or so years? The gov would have the funds to maintain this stuff if they'd stop partnering with private industry. Republicans across the country have been doing these partnerships left an right California, Florida, Texas all already have such public/private ventures in place and they all cost the Tax payer more than straight publicly funded ventures. Almost always amounts to, we the tax payers pay the bill, private industry if there is any money get to collect it that. Look at the California toll Roads for an example what a freakin disaster. If private industry wants to do these things fine but there are 2 caveats, 1) They don't get government subsidies to do them, 2) they don't get access to immanent domain. Now lets see how much of this private industry wants to take on.

August 28, 2008 at 6:16pm by B M

I disagree. I think we just need to get some competent people in the governemtn to run the project, and they can utilize private consultants for assistance. Some of the infastructure should be private, but it's a case by case scenario. If you make everyhting private then the only ones who'll get to use the systems will be those with money. Think about the education system.....do you think children will have equal opportunity to educations if it's all privatized? I doubt it. Or think about your healthcare......will a child be left to die because his parents were not able to pay for the quality of healthcare needed to treat them? The Government is here to work for the people, and private companies are here to make a profit at almost any expense.

Big business is focused on profits and not on the well being of the people. If everything is outsouced to private business then the gap between rich and poor will continue to widen creating a more dramatic effect of the current day slave and slave owner relationship which is managed through currency.

August 28, 2008 at 6:19pm by B M

I disagree. I think we just need to get some competent people in the governemtn to run the project, and they can utilize private consultants for assistance. Some of the infastructure should be private, but it's a case by case scenario. If you make everyhting private then the only ones who'll get to use the systems will be those with money. Think about the education system.....do you think children will have equal opportunity to educations if it's all privatized? I doubt it. Or think about your healthcare......will a child be left to die because his parents were not able to pay for the quality of healthcare needed to treat them? The Government is here to work for the people, and private companies are here to make a profit at almost any expense.

Big business is focused on profits and not on the well being of the people. If everything is outsouced to private business then the gap between rich and poor will continue to widen creating a more dramatic effect of the current day slave and slave owner relationship which is managed through currency.

August 29, 2008 at 9:27am by Gregg Lebovitz

If public funding and privatization are the two extremes of the possible alternatives, then the answer must fall somewhere in between. The problems we face in Massachusetts are driven by the laws that govern authorities for funding projects. Tolls, and fees are not folded back into the infrastructure, but are funneled into a general pot that gets distributed to other programs. Those of us who drive the turnpike pay for public works projects not related to the "pike." Running government authorities as self funding organizations with non government private over site is an alternative that merits some investigation. The authorities could issue bonds that brings in private money with a reasonable rate of return.

There are other alternatives that also provide similar balance between public and private money. The problems with pure privatization is they ignore the needs of the general population in favor of the few who can afford higher rates. I can foresee a private road infrastructure mirroring the airline industry where a few business travels get preferential treatment while the rest of us are herded to the back like cattle.

August 30, 2008 at 12:36am by john weller

Rohit hit the nail on the head. B M is dead wrong. Living in the US by the grace of God and the blood of our ancestors has afforded us all the same opportunities and possibilities. Have you noticed who is running on both tickets for the white house? Socialism would not only end the american dream but would more or less hand the keys to our country to all that want to destroy us.