Public Versus Private: the Privatizer-in-Chief

Public versus private - Despite mounting evidence, conservatives continue pushing for the privatization of America

Between tweets, Donald Trump is a big proponent of privatization, and those he has named to cabinet positions share his passion for turning government over to the private (for-profit) sector.

A couple of examples: Betsy DeVos wants to privatize public schools; Jeff Sessions is a fan of private prisons. (Neither of these ideologues is likely to let mounting evidence of their favorites’ poor performance persuade them otherwise; evidence is so last century!) So it shouldn’t surprise us that of the (many) really bad ideas being championed by our erratic new President—a man who has never worked in government and quite obviously never considered the meaning of “public service”—is using private companies to repair America’s decaying infrastructure.

This proposal raises all sorts of practical questions, of course, but when you peel back all of the reasons to suspect that our genuine need to repair our roads, bridges and electrical grid is being used to leverage another giveaway to the rich and connected, there is a more profound issue that generally gets ignored: who should own and benefit from the country’s infrastructure?

I was prompted to focus on that question by an article in Engineering News-Record, (not, I confess, a periodical I regularly read. My husband, a retired architect, is a subscriber.) The article described a legal challenge to the Gordie Howe International Bridge being built by  the United States and Canada. The challenge to the authority of Michigan’s Governor to acquire land for the approach to the bridge was brought by the Moroun family, private owners of an existing bridge, the Ambassador, also connecting Detroit with Windsor.

The Morouns claim that their own bridge could lose 75% of its traffic, and they have threatened to close it.

What is really being lost here is the public interest. Infrastructure should serve public needs; instead, the current bridge is a profit-generating enterprise owned and controlled by a family whose interests are the bottom line, not the common good. That’s not to say that private interests can never build roads or bridges to augment those constructed with our tax dollars, but those efforts should be undertaken with a clear understanding of the primary purpose of the network they join and the risks they assume.

This is not an isolated case.

America’s prolonged anti-tax hysteria has meant that local governments—desperate for revenues to provide public services—have increasingly sold off public assets. In my home city of Indianapolis, the city entered into a fifty-year “lease” of its parking meters in 2011, trading control of its curb sides and parking rates for up-front cash. The results—which haven’t been pretty—are an object lesson in why such infrastructure should be civically owned and operated.

After Indianapolis leased its parking meter operations to a private company, rates skyrocketed, hours expanded and the number of metered spaces increased. But when I last looked, the city was receiving only about a quarter of the revenues the private vendor projected when it paid $20 million to the city for the right to operate the meters until 2061.

Aside from everything else, the length of the contract was unconscionable. Decisions about where to place meters, how to price them, what lengths of time to allow and so on have an enormous impact on local businesses and residential neighborhoods. They are decisions requiring flexibility in the face of changing circumstances; they are most definitely not decisions that should be held hostage for decades to contracting provisions aimed at protecting a vendor’s profits.

The contract profited the vendor at the expense of citizens. More often than not, new  construction interrupts adjacent parking. If the city is managing its own meters, it can choose to ignore that loss of parking revenue, or decide to charge the developer, based upon the City’s best interests. Street festivals and other civic celebrations also require  that meters be bagged, and usually there are good reasons not to charge the not-for-profit or civic organization running the event. The Indianapolis contract requires the City to pay the vendor whenever such interruptions disrupt its projected revenue from those meters.

There was never a satisfactory response to the obvious question “why can’t we do this ourselves, make parking decisions based upon the public interest, and keep all the revenues to provide badly-needed public services?” Why couldn’t Indianapolis retain control of its infrastructure, and issue revenue bonds to cover the costs of the necessary improvements? (Interest rates were at a historic low at the time, making it even more advantageous to do so.) If the administration at the time was too inept to manage parking, it could have created a Municipal Parking Authority and hired that competence. There really was no compelling reason to enrich private contractors and reduce future (desperately needed) City revenues. (That “up-front” payment was very enticing, of course. Let subsequent administrations worry about the long term.)

There are times when so-called “public-private partnerships” are useful and appropriate. There are other times when they amount to theft from the public till. It behooves us to distinguish between those situations, and to remember that constructing and maintaining an infrastructure owned by and operated for the use of all our citizens, rich and poor, is one of the most basic obligations of government.

[Originally published at SheilaKennedy.net on February 11, 2017]

Sheila Kennedy is a former high school English teacher, former lawyer, former Republican, former Executive Director of Indiana’s ACLU, former columnist for the Indianapolis Star, and former young person. She is currently an (increasingly cranky) old person, a Professor of Law and Public Policy at Indiana University Purdue University in Indianapolis, and Director of IUPUI’s Center for Civic Literacy. She writes for the Indianapolis Business Journal, PA Times, and the Indiana Word, and blogs at www.sheilakennedy.net. For those who are interested in more detail, links to an abbreviated CV and academic publications can be found on her blog, along with links to her books..

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