The Ignorant Investor
Ignorance Can't Stand in the Way of My OpinionFriday, February 03, 2006
It begins: Spendthrift States Start Selling Off Assets
INDIANAPOLIS - Sweeping past Indiana's steel mills and corn and soybean fields, the 157-mile Indiana Toll Road is often called the "Main Street of the Midwest" for its strategic role in linking the East Coast to Chicago and points west.
Now the highway across the heartland could fall into private hands.
Indiana officials hope to sign a lease this spring with a Spanish-Australian partnership that would operate the toll road for a profit for the next 75 years.
The company would keep all toll revenue. In return, it would be responsible for maintenance, improvements and other operating costs, and would pay the state $3.85 billion up front — money that would go toward other road and bridge projects.
I don't know why folks in Indiana want to pay a private vendor for a critical service like maintaining a road instead of just paying the necessary taxes. We tried private toll roads in this country before, and apparently people didn't end up liking them because they mostly disappeared long ago. Now we're heading back in that direction, selling out parts of our road network for cash up front.
It wouldn't bother me if this deal was for modest term of a year or two, or could be cancelled at any time. But a 75 year lease is about as permanent as you get, and it will be only the first step in what will be the eventual turnover of basic governmental functions into private -and most likely foreign- hands (people from overseas have more savings to invest than we Americans do, focused as we are on consumption). As we drain our savings to maintain our lavish lifestyles, what else is there to do but mortgage our state properties like the losing players in giant game of monopoly?
"At last, we can stop dreaming and start digging," Gov. Mitch Daniels said last week. The Republican has hailed the transaction as "the Louisiana Purchase of our time for Indiana."
Somebody should tell Gov. Daniels that playing the role of the French in the Louisiana Purchase is not something to be excited about.
posted by Worker 17 # 1:06 PM 
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Not sure why roads should keep their status as valid publicly funded projects, when electricity generation, schools and hospitals dont.
Or maybe the US love afair with the car means that roads deserve to be funded by the state. In effect, a massive public subsidy for the car makers.
Or maybe the US love afair with the car means that roads deserve to be funded by the state. In effect, a massive public subsidy for the car makers.
# posted by 
: 1:09 PM
: 1:09 PM
You'd need good public roads whether you loved the car or not. Electricity is heavily regulated in my area, my kid goes to public school, and we have a couple of public hospitals around, too. I wouldn't want to have to rely on a purely private regime for any of these services, simply because the private sector is focused on profit maximization rather than public service (and rightly so).
One of the most striking characteristics of public infrastructure through the ages is that although building individual components is often a money-losing proposition, the collective result of infrastructure improvements often raises overall economic activity. The likelihood is that when you start peeling off the profitable parts of this structure, you're going to end up with fewer resources to allocate to the necessary but less profitable parts. I see that as risking the net benefit of public infrastructure.
If you're a libertarian, this isn't going to be a convincing argument because libertarians don't believe in the idea of collective public utility, or at least, they believe that the highest public utility is the aggregate only of individual private utility. That's sure not a disagreement that any discussion on this blog will resolve.
In any case, I thought it was interesting to see this midwestern road being essentially purchased by a foreign consortium. As I always say, I could be wrong.
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One of the most striking characteristics of public infrastructure through the ages is that although building individual components is often a money-losing proposition, the collective result of infrastructure improvements often raises overall economic activity. The likelihood is that when you start peeling off the profitable parts of this structure, you're going to end up with fewer resources to allocate to the necessary but less profitable parts. I see that as risking the net benefit of public infrastructure.
If you're a libertarian, this isn't going to be a convincing argument because libertarians don't believe in the idea of collective public utility, or at least, they believe that the highest public utility is the aggregate only of individual private utility. That's sure not a disagreement that any discussion on this blog will resolve.
In any case, I thought it was interesting to see this midwestern road being essentially purchased by a foreign consortium. As I always say, I could be wrong.
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