Privatization a bad deal for taxpayers.

Business Week investigates the practice of privatizing roads, bridges, etc. and finds it’s trouble. Investors love it, but taxpayers (or, rather, toll-payers) get the shaft. Corporations need to increase profits each year, which either means a) skyrocketing tolls or b) ever-worsening infrastructure.

Published by Waldo Jaquith

Waldo Jaquith (JAKE-with) is an open government technologist who lives near Char­lottes­­ville, VA, USA. more »

3 replies on “Privatization a bad deal for taxpayers.”

  1. If privatization of that kind of infrastructure worked economically than it would never have been made wholly public as it historically has. Privatized roads and bridges have historically meant both poor infrastructure and a damaging effect on regional economies.

    The Romans built a lot of public roads with public money. These were of high quality and many are still in use, thousands of years later. The Roman economy soared. ‘All roads led to Rome’ and this good, accessible public infrastructure that Rome built helped to make her the economic capital of what was then the western world. Tolls were often collected at city gates but these were set and limited by government so as not to become so onerous as to stifle trade. Wheras most of the roads in fuedal Europe were privately owned. Those were poorly engineered and cheaply maintained and their use entailed such frequent and high tolls that regional commerce was choked. Really mature economies had difficulty evolving when it was frequently not worth the trouble and expense of trying to move large quantities of a commodity from one area to another.

    Anyone who thinks that we should abandon our highly successful Roman model for the dark ages of the old European model is a fool. Even Barry Goldwater often cited roads and bridges as economic ingredients best left to government to maintain.

  2. One of the reasons people established cities on the ocean and large bodies of water is that waterways provided the inexpensive right-of-way necessary to trade. Nonetheless, not everyone can live on the coast; roads are needed. So right-of-ways must be established, and road construction and maintenance must be paid for.

    Traditionally, the people who use the roads have paid for the roads. Until recently, that included Americans. With the Interstate Highway System, we broke from that model. As a result, our politicians have turned transportation funding into pork barrel projects.

    We all know people can only be trusted so much, and politicians can be trusted least of all. Yet just to avoid paying tolls we give them our money and trust them to build roads where they are needed. In hindsight, that has turned out to be very stupid.

    Consider the innate wisdom of toll roads. We don’t buy a pig in a poke. Instead, we do not pay for the road or the mass transit system until we how it works for us.

    Nonetheless, we do not have to entrust our public transportation systems to private investors. Instead, we should require our leaders to borrow the money to pay for transportation projects (i.e., expressways and mass transit systems) construction and maintenance in the private market. Then we should pay off the bonds with tolls and user fees. If we do that, I think we can count on the purchasers of the bonds to make certain transportation projects make economic sense.

  3. I’m not opposed to public tolls for roads. Though I find them odd and unsettling, I recognize that it’s because I have the wrong idea in my head that roads should be free. Of course they shouldn’t be, and user fees are quite probably the best way to handle those costs. But I see no reason why roads should be turned over to private investors to do that, as you explain, Tom.

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