The Worst Thing About Privatization Is…

…that it kills a great punchline. You see, companies are actually trying to buy the Brooklyn Bridge. That’s what <Business Week says, anyway.


Ian Welsh, at the Agonist, comments:

I don’t understand why this is even considered. You don’t put basic infrastructure like this in private hands, because it allows monopoly pricing. They will squeeze the most money out of it they can, and that will be the majority of the surplus value produced by the roads. Since they will set the cost to maximize profits, it will be above what a proportion of the population and a proportion of businesses can afford (check a supply/demand curve to see what I mean – you get a lot more use at price = 0, and you get a lot more money if you price a lot of people out of the market). What this will mean is that a lot of businesses will go under (or never be created), a lot of people won’t travel even short distances (which will strangle businesses that need those travellers, price certain people out of certain jobs) and will in general reduce economic activity. However much money any government gets in the short term, it will lose more from reduced taxes due to reduced economic activity and reduced economic growth in the long term. (ie. it isn’t just people who use the roads/airports/bridges who lose)
And odds are, you’ll eventually have to either regulate these things to keep prices reasonable (at which point the companies will start shorting on maintainance) or you’ll have to buy them back at a huge markup.
Infrastructure is one of the two very basic jobs of government, and any government that is getting out of it is refusing to do its job.

He also realizes that in the era of Little Lord Pontchartrain, there might be other motives:

Finally, I’ll add that these deals often smack, to me, of inside dealing – of selling patrimony for cents on the dollar….The prime rule of privatizing is that you never, ever, give away a monopoly.
These deals are all bad deals for the public and for governemnt, though they may be good deals for those buying the infrastructure in question, or for the politicians who will find some nice donations in their accounts; and good jobs when they decide to cash in and leave public service.

Our children and grandchildren are going to hate us for what we laissez-faire Republicans have done to our country.

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2 Responses to The Worst Thing About Privatization Is…

  1. SteveG says:

    On the bright side, the same group of investors is looking at purchasing some swampland in Florida…

  2. Estetik says:

    What is the obsession with Homo erectus? There couldn’t be something between H. habilis and H. erectus? H. erectus has to be the first of the genus to migrate out of Africa? I don’t think so.

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