While conservatives wail about federal financial bailouts being a return to socialism, the budget problems at the states signal new momentum for the opposite: privatization.
States have been looking for ways to raise cash for some time, and leasing or selling toll roads (as in Illinois and Indiana) has been one route. Others have looked to public-private partnerships and private investment to raise capital for infrastructure projects, something that was floated here (and rejected) with the new Tacoma Narrows Bridge and was proposed for the Deep Bore tunnel under Seattle, an Alaskan Way Viaduct alternative.
But an Associated Press story suggests that cash-strapped states, there are 44 facing major budget deficits, are turning with renewed interest and vigor to public asset sales to raise cash and off-load white elephants:
Like families pawning the silver to get through a tight spot, states such as Minnesota, New York, Massachusetts and Illinois are thinking of selling or leasing toll roads, parks, lotteries and other assets to raise desperately needed cash.
Such proposals include privatizing the Minneapolis-St. Paul International Airport and the Minnesota state lottery, which together could raise nearly $3 billion for the state. Massachusetts is considering privatizing the Massachusetts Turnpike. In New York, AP reports, a commission is studying "leasing state assets, including the Tappan Zee Bridge north of New York City, the lottery, golf courses, toll roads, parks and beaches." Some kind of socialism.
Privatization does a couple of things. It raises cash, it eliminates cost, it creates long-term revenues streams (like road tolls) that are market- rather than taxpayer-driven. In other words, private operators can get away with charging more than a public authority can, or a legislature facing tax-resistant voters. The private sector assumes risk but can also reap relative safe, steady returns by taking over necessary infrastructure. Safe havens for capital look pretty good right now:
Such projects could be attractive to private investors and public pension funds looking for safe places to put their money in this scary economy, said Leonard Gilroy, a privatization expert with the market-oriented Reason Foundation in Los Angeles.
"Infrastructure is more attractive today than ever," Gilroy said. "It's tangible. It's a road. It's water. It's an airport. It's something that is 'ê you know, you hear the term recession-proof."
Privatization is an old idea that is shovel-ready for the Great Recession.