March 4, 2015


The Tragedy of Privatizing the Commons. . . Absentee owners rarely have the same sense of stewardship and restraint as local owners. A group of local owner-operators (say, fishermen) have a strong incentive to stick it out through a difficult negotiation to agree on self-imposed restrictions that preserve their fishery. After all, they have most of their life savings tied up in their trade, they don’t have skills that they can readily apply to other businesses, and they may want their children to be able to follow in their footsteps. They’re in it for the long term. From an economists’ standpoint, the investment horizon for local owner-operators is measured in decades or more. But a corporate owner that seeks only a financial return will have a much shorter time horizon when making decisions. It may simply not be worth it to preserve the future productivity of a natural resources if that means forgoing a much greater profit today. All of this says that privatizing the commons may not work in a lot of cases. The incentive to chase a quick buck may outweigh the financial and social rewards of long-term stewardship. Ownership is not necessarily stewardship. U.S. News & World Report

The Perils of Privatization. . . Blackwater went into the annals of government contracting as one of the great disgraces of privatization. A staff report prepared for the Oversight Committee found that Blackwater billed the government $1,222 per day per guard, “equivalent to $445,000 per year; over six times more than the cost of an equivalent U.S. soldier.”. . . As Blackwater showed, many of the efficiencies are spurious, because contractors cut corners. The notion of market discipline can be short-circuited by political influence that steers contracts to favored companies despite their poor performance. Often, apparent savings are bogus because of costs that are passed along to the government. In some cases, privatizing something as necessarily public as national defense is convenient because the contractor, not the government, takes the fall when something goes wrong. This is precisely the opposite of accountability. The American Prospect

My libertarian vacation nightmare: How Ayn Rand, Ron Paul & their groupies were all debunked. . .In America, libertarian ideas are attractive to mostly young, white men with high ideals and no life experience that live off of the previous generation’s investments and sacrifice. I know this because as a young, white idiot, I subscribed to this system of discredited ideas: Selfishness is good, government is bad. Take what you want, when you want and however you can. Poor people deserve what they get, and the smartest, hardworking people always win. So get yours before someone else does. I read the books by Charles Murray and have an autographed copy of Ron Paul’s “The Revolution.” The thread that links all the disparate books and ideas is that they fail in practice. Eliminate all taxes, privatize everything, load a country up with guns and oppose all public expenditures, you end up with Honduras. Salon

FL: Florida’s Privatized Prison System Is Chronically Underfunded. . . Prisons weren’t discussed as a priority for either Scott or legislativeleaders on the campaign trail, but budget records reviewed by the Herald/Times show the private prison industry was given special attention. Over the past four years, lawmakers and the governor increased spending on prison vendors by creating new programs and steering millions to them in state contracts, even as the public prisons crumbled and became more dangerous for inmates and staff. Governing

PA: Does privatization work? Ask Harrisburg. . . . [A]s part of the city’s deal to get out from under its incinerator debt, the city parking authority’s “assets” were leased in a complex transaction. . . . First, parking rates doubled. Well, OK, they needed to as part of the deal to bail out the city; the private partner was only going to be interested if it was worth their while. But beyond that, according to PennLive reports, the new system has been one snafu after another: Its zero-tolerance enforcement is so zealous, its agents sometimes try to ticket drivers as they are walking to the payment kiosk. Technical glitches and operator errors have led to mass ticketing of drivers who have properly paid. Making sure a ticket is paid on time to avoid a penalty (the grace period is all of four days) involves either paying on line, which carries an extra credit card surcharge, or a trip downtown to pay in person. . . . Private enterprise doesn’t exist to serve you, it exists to make money. If it can make money by serving you well – it’ll do that. If it can make more money by serving you poorly – why wouldn’t it do that? That’s the difference between a system owned by the public, which has an express duty to the public, and a private operator whose chief duty, always, is to the private operator.. LancasterOnline

PA: Liquor privatization faces uncertain future in Pennsylvania. . . Just like the previous time the House voted for privatization, the proposal faces an uncertain future in the state Senate. Lawmakers there are interested in improving consumer convenience and selection, but aren’t as adamant about privatization as the House.

IN: Rutter: Toll Road fever grips gullible investors. . . The chance that no one listens also does not dissuade you from shouting at government officials in Lake and LaPorte counties. Do not borrow $4 billion to take the white elephant Indiana Toll Road off the hands of international investors and operate the 157-mile road the state of Indiana still owns. If the two counties actually do possess the creditworthiness to borrow billions, is the Toll Road what anyone would want to rent for 67 years? Yep, say the involved public officials who insist the auction is too good to pass up. They might even get a sweet deal because it’s an auction. All that is required is entering a seven-figure deal with the bankruptcy court to bail out an international money operator whose dealings have been called “like wrestling in the dark with a ghost.” What possibly could go wrong? Chicago Tribune

WI: Kathleen Vinehout: Another awful Scott Walker idea: privatizing Family Care. . . “You have got to be kidding!” a Chippewa Valley advocate responded when I told her about a plan to potentially turn Family Care over to a for-profit insurance company. Family Care and its fee-for-service sister, IRIS, provide thousands of Medicaid-eligible frail elderly and disabled people the help they need to remain in their homes . . . If the current version of the governor’s budget becomes law, it will mean big changes to care for frail elderly and disabled people of modest means. For the rest of us, it could mean many more of our neighbors and family members end up in expensive institutions. Worse yet, folks could be stranded at home without the services they need to independently live and work.

OH: Ohio highway projects get boost from bonds, logo sales. Partnering with private businesses, offering sponsorships along highways and selling $1 billion in Ohio Turnpike bonds are among ways Gov. John Kasich’s administration has worked to boost transportation revenue amid lagging federal outlays. Akron Legal News

TX: Israeli firm wins first big US job: $800m Texas toll highway. Three years after setting up an office in the US, an Israeli firm has won its first major road-building job there – making toll lanes on a 10-mile stretch of state highway near Houston, Texas. Infrastructure firm Shikun & Binui is a 50% partner in a consortium called Blueridge Transportation Group, which was selected by the Texas Department of Transportation (TxDOT) to design, build, finance, operate the new toll lanes on SH-288 in Harris County. Under the public-private partnership agreement, once they build it, Blueridge will collect tolls on the road for 52 years. Spain’s ACS Servicios y Concesiones, and InfraRed Capital Partners are the other two consortium members. Global Construction Review

NC: Widen I-77: Toll roads benefit the wealthy. . . The Widen I-77 group has filed suit against NCDOT and contractor I-77 Mobility Partners. The group is seeking a court order to stop the project. I-77 Mobility Partners has filed its own motion asking the judge to dismiss the lawsuit because “it has no basis in law.” . . . Kurt Nass of the Widen I-77 group was the plaintiff’s only witness. Nass presented elaborate and detailed cost analysis that he says proves the toll road would be much more expensive in the long run that hiring a private contractor to build general purpose lanes. Nass says the widening is really only needed in the Cornelius area, not for the 26 miles north of Charlotte. He says toll roads only benefit the wealthy. “If you are wealthy enough to use the road then you have solved the congestion problem.” Nass estimates the cost of the toll will be around $20 round trip. Between 30 and 40 members of the group were in the courtroom Tuesday. WBTV