Yesterday, we discussed a mundane reason to be leery of the sale of assets owned by the public to private parties: the outcome, almost without exception, is a ripoff. Even if the owners manage to orchestrate the bidding well enough to assure that the entity fetches a decent price, the cost of doing the deal and the investors’ return requirements assure that charges to the public will rise faster than if the property was left in government hands (and this does not preclude the owner scrimping on maintenance and service levels). Macquarie Bank has been the world leader in this business, and reader Crocodile Chuck gave some useful examples:
Ah, the Macquarie model! Clipping the ticket, at each step, and all the way through the route map from public good to ‘privatised entity’.
The Sydney Airport (a Macquarie Airports asset), boasts the second highest parking rates on Earth (not inherited with the operation; they levied this themselves). About $100 for eight hours (I’ve never used it, since it was sold down the river)
Highest: Budapest Ferihegy in Hungary. Owner: Macquarie Airports.
I happen to have flown out of Budapest last summer. The lavish fees most assuredly have not been reinvested in the physical plant; the airport looks dated and worn.
But there are even bigger reasons to worry about public infrastructure sales. It’s one thing when deals on mere income producing services like parking meters go awry. But when the services impinge on public safety or civil rights, far worse abuses can and have taken place.
Reader Deus-DJ pointed to an update on a case that has not gotten the attention in the national media that it warrants. A Pennsylvania judge, Mark Ciavarella, was convicted today for sending children to for-profit juvenile detention centers run by PA Child Care and an affiliate, Western Pennsylvania Child Care, in return for kickbacks. Judge Ciavarella and another judge, Michael Conahan, were reported to have been paid $2.6 million for their role in this scheme. Ciavarella has yet to be sentenced; the maximum prison sentence would be 157 years.
This Democracy Now report describes the flimsy grounds for some of these incarcerations and some of the horrific consequences.