America for Sale: Is Goldman Sachs Buying Your City?
July 7th, 2011In general, big is bad. Centralized is bad. Whether it’s public or private doesn’t matter.
Now, when it comes to something like a municipal sewer system, or other infrastructure assets where competition isn’t possible, handing those assets over to private corporations should be considered treason, and the politicians responsible should be arrested. (Don’t hold your breath.)
There’s a big difference between using private contractors for something like janitorial services at a city hall, for example, and handing over a city’s critical infrastructure to some corporation. With janitorial services, there’s going to be a lot of competition to do that work. With something like a municipal sewer system, on the other hand, how many competing sets of underground pipes, pumping stations, water filtration systems, effluent tanks, etc. are there going to be? If there’s only one option, and that thing was built with pubic money, it has to be run in the interest of the people who paid for it, the taxpayers.
It’s worth keeping in mind that markets can fail to operate efficiently even when multiple corporations are allegedly competing.
There are many examples of astonishing collusion amongst several corporations to fix prices. Here are a few recent examples:
Nine Chipmakers Fined by EU for Price-Fixing
Airline Price Fixing Fines: Prosecutors Target 21 Companies Over Passenger, Cargo Fees
I keep coming back to Kiwibank in New Zealand. Before Kiwibank, several Australian banks were colluding to screw New Zealanders raw. It took a government owned bank to give New Zealanders a non-rape option for banking. That’s right! The best deal for banking services in New Zealand is offered by a government entity. If you want to pay more, feel free to use one of the Aussie banks.
Does this mean that governments should be in the business of manufacturing vitamins or remote control cars or hunting knives? Of course not. Where there are dozens or hundreds of options, there’s no way that the government would win. But when an outlaw cartel has formed in an area as critical as banking, when there is no option available to people outside the cartel, this is one of the few areas where a government can actually improve the situation.
So, in my opinion, ensuring that markets are running efficiently is one of the handful of legitimate roles of government. And in areas where a market solution is not possible—as with large municipal infrastructure assets—the role of government should be to stop private interests from turning a place into a company town.
Via: Dylan Ratigan:
In Chicago, it’s the sale of parking meters to the sovereign wealth fund of Abu Dhabi. In Indiana, it’s the sale of the northern toll road to a Spanish and Australian joint venture. In Wisconsin it’s public health and food programs, in California it’s libraries. It’s water treatment plants, schools, toll roads, airports, and power plants. It’s Amtrak. There are revolving doors of corrupt politicians, big banks, and rating agencies. There are conflicts of interest. It’s bipartisan.
And it’s coming to a city near you — it may already be there. We’re talking about the sale of public assets to private investors. You may have heard of one-off deals, but what we’ll be exploring with the Huffington Post is the scale and scope of what is a national and organized campaign to shift the way we govern ourselves. In an era of increasingly stretched local and state budgets, privatization of public assets may be so tempting to local politicians that the trend seems unstoppable. Yet, public outrage has stopped and slowed a number of initiatives.
While there are no televised debates around this issue, there is no polling, and there are no elections, who wins it will determine the literal shape of modern America. The Dylan Ratigan show is teaming up with the Huffington Post to do a three part series called “America for Sale”, showing the pros and cons, and the politics and economics, of a new and far more privatized government.
Research Credit: Matt
WHAT?
My brain just actually registered the bit about California libraries and I clicked through, then searched until I found more info.
For-profit, public libraries, managed by an investment firm.
The sale of toll roads, parking meters, airports etc. are incredibly stupid. But if we’re to the point where government is packing local libraries off to the salt mines, we are completely and utterly f*****. Let’s face it – I love libraries, but as an investment, they’re barrel-scrapings compared to the other pieces of public infrastructure for sale.
What exactly does it mean when a nation no longer collectively holds title to its infrastructure and natural resources but still pays taxes to the government once tasked with preserving and developing it?
I can’t help but feel that we’re busy chopping up our own house for firewood, and that we’ll all be colder than we can imagine next winter.
Zeke
Kevin,
thanks for your commentary. unfortunately, it seems that a majority of NZers think it’s a good idea to be under the rule of an unrepentant ex-ML-forex trader who smiles a lot while he shafts them. oh well.