Wednesday, March 26, 2008

How Foolish to Keep Private Sector out of Government

Thursday, March 27th, 2008

Baton Rouge, Louisiana



A number of Jefferson and St. Tammany Parish officials were aghast last week over supposedly “secret negotiations" to sell the Causeway Bridge that goes to the North Shore across Lake Pontchartrain. When the state's largest paper, the Times Picayune, mixed the idea editorially, one elected official after the other fell all over themselves running away from even any talk of such an atrocity.

"That is the most ridiculous thing ever heard in my life," said one Jefferson councilman. "I'm just flabbergasted that is even being considered," said another. The gang at the TP took the final blow by editorializing that "this bad idea can’t die fast enough." So why on earth would any public official even consider such an idea?

Well, perhaps because the sale of roads, buildings, sewer systems and a number of other publicly built projects are being sold to private groups in more progressive states all over the country. New projects are regularly being bid out to private groups to either lease or own. It’s the wave of the future, not just in the U.S., but in industrialized countries worldwide.

In Virginia, the major interstate south of Washington, DC is a toll road built by a private investment group. In Detroit, there is an ordinary four-lane bridge in the busiest commercial border crossing in North America, carrying one-third of all road trade — or more than $122 billion in goods a year — between the two countries. It is owned by one man and his privately held company.

In a lengthy story appearing in Time Magazine last week, they reported that Texas has gone ahead and devised something new for the Longhorn State: their first privately owned and privately financed modern toll road. This week the Texas Turnpike Co. will start constructing a 223-mile, four-lane thruway from the Dallas area to Houston, At the same time the Sam Houston Toll Road Corp. will start building the first leg (Dallas-Waco, 83 miles) of its $2 billion 246-mile Dallas-San Antonio Thruway. Private contractors have agreed to build and operate these projects, spending several billion dollars, and even providing a $25 million upfront cash payment and sharing the revenue with the state. No state funds. Private operators. Private leasing.

Airport rail links like the Chicago Skyway and the new California South Bay Expressway are examples of many privately owned toll roads in the US. Privately owned toll roads have been popular in Europe and Australia for years. In Chicago, Mayor Richard Daley auctioned off the city’s Skyway Transportation system for $1.8 billion. And right now, he's trying to sell Midway Airport for more than $3 billion.

And take a look at Indiana. Facing a $3 billion transportation -- funding shortfall, Governor Mitch Daniels two years ago auctioned off the rights to operate the Indiana toll Road to a private group for a mere $3.85 billion.

Estimates have been made by the US Department of Transportation that world -wide there have been more than 1100 private -- public deals in the transportation field alone in the past 20 years, with a value of some $360 billion.

So what gives here? Is there any legitimate concern that private operators are only interested in making money at the expense of taxpayers, and that new owners will skimp on maintenance and repair work in order to squeeze profits out of these operations? Progressive states around the country have dealt with these objections by building in restrictions and operating requirements to the contract which allow any such deal to be canceled and the roads and bridges taken back if operators do not live up to the terms.

If you want to be a bit cynical about those who oppose private ownership, one might wonder whether those objecting are looking to maintain their hold on public assets, especially since the commissions that often run these public authorities, as we have often seen, can create real job - patronage mills. And who is really happy with condition of roads and bridges throughout Louisiana?

Here's what the Wall Street Journal has a say about private ownership of bridges and highways. "For the first time in over a generation, America's mayors and governors are looking at a realistic way to jumpstart spending they've neglected for too long. Such deals bring welcome benefits to the transportation sector."

Louisiana is facing a $14 billion backlog alone of road and bridge repairs , as well as massive new construction needs. It is completely unrealistic to think that the new governor and legislature will be able to find enough new revenue to deal with this huge transportation problem. Rather than limping along, other states are becoming aggressive and proactive in bringing in the private sector.

We need less parochial grandstanding and more well thought out vision by those who are elected to serve us in the New Orleans area as well as throughout the entire state. As Indiana Governor Daniels told critics at a congressional hearing last year: "does no one notice the risk of inaction?"


“A new leader has to be able to change an organization that is dreamless, soulless and visionless ... someone's got to make a wake up call.”
- Warren Bennis

Peace and Justice

Jim Brown

Jim Brown’s weekly column appears in a number of newspapers throughout the State of Louisiana. You can read Jim’s Blog, and take his weekly poll, plus read his columns going back to the fall of 2002 by going to his own website at

Jim’s radio show on 995 fm from New Orleans continues with a break during the spring. Look for him to be back on the air in the weeks to come.