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Obama Plans to Sacrifice Ordinary Americans Yet Again in “Public/Private Partnership” Infrastructure Scam

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Apparently Obama’s idea of a Holy Week sacrifice is to feed American citizens to rapacious bankers, this time through the device of “public/private partnerships” to support infrastructure spending. Some NC readers were correctly alarmed by a speech by Obama on Friday on using public/private partnerships to fund infrastructure spending. This is not a new idea; Obama first unveiled it in his Statue of the Union address. But it is a singularly bad idea, that is, if you are anyone other than a promoter of or investor in these deals.

As we’ve discussed at length earlier, these schemes are simply exercises in extraction. Investors in mature infrastructure deals expect 15% to 20% returns on their investment. And that also includes the payment of all the (considerable) fees and costs of putting these transactions together. The result is tantamount to selling the family china and then renting it back in order to eat. There is no way that adding unnecessary middlemen with high return expectations improves the results to the public. In fact, the evidence is overwhelmingly the reverse: investors jack up usage fees and skimp on maintenance. And their deals are full of sneaky features to guarantee their returns. For instance, Truthout noted:

Infrastructure privatization contracts are full of “gotcha” terms that require state or local governments to pay the private contractors. For example, now when Chicago does street repairs or closes streets for a festival, it must pay the private parking meter contractor for lost meter fares. Those payments put the contractors in a much better position than the government. It gets payments, even though Chicago did not get fares when it had to close streets…..

Highway privatization contracts also often include terms that forbid building “competing” roads or mass transit. Some even require making an existing “competing” road worse. For example, the contract for SR-91 in Southern California prohibited the state from repairing an adjacent public road, creating conditions that put drivers’ safety at risk. A proposed private highway around the northwest part of Denver required that local governments reduce speeds and install speed humps and barriers and narrow lanes on “competing” roads to force drivers to use the privatized road….

Virginia decided to promote carpooling to cut down on pollution, slow highway deterioration and lessen highway and urban congestion. As a result, Virginia must reimburse the private contractor for lost revenues from carpoolers, even though not all of the people in a car would otherwise have driven individually….

Now there is some hope in this depressing news. First, the Republicans may overplay their hand. They insist they won’t allow Obama to get any funding for these deals unless they get corresponding tax cuts. Second, with Obama’s poll ratings flagging, he’s looking more and more like a lame duck. Infrastructure is not one of his top priorities, and he may well wind up concentrating his dwindling chips on other issues.

Nevertheless, some “pragmatists,” otherwise known as the Vichy Left, may insist it’s better to have some sort of infrastructure deal, even if it means enriching financiers, than none. That’s spurious. A new post at VoxEU addresses the issue of infrastructure spending in the European context, where austerity is the order of the day, which means a lack of funding for important needs. The authors considered and rejected the idea of having private investors fill the gap. They instead argued for smarter investing, focusing more on investing to improve the productivity of existing infrastructure than costly new projects (which are often construction boondogles).

By Nicklas Garemo of McKinsey and Jan Mischke of McKinsey Global Institute. Cross posted from VoxEU

Investment in infrastructure can bring growth and social benefits. This column highlights the infrastructure opportunities open to depressed economies, stressing that the main obstacles are governance-related. To bring opportunities to life will require an overhaul of infrastructure governance – a root cause of infrastructure projects’ poor productivity.

Europe’s infrastructure programme was the big loser from February’s EU budget deal. Planned infrastructure investment of €50 billion over seven years was reduced to just €24 billion. Among the programmes that now look in doubt is the Connecting Europe Facility, which included financial support for the development of cross-European transport, cleaner energy supply, and fast broadband connections, and was designed to catalyse private investment in all three, too.

It is understandable that infrastructure has fallen victim to the age of austerity (see Besley and Van Reenen 2013). After all, western European economies regularly rank high on the World Economic Forum’s infrastructure listings (World Economic Report 2013). In the 2012 ranking, Hong Kong and Singapore took the two top slots but were followed by Germany, France, Switzerland, the UK, and the Netherlands; 15 of the EU27 rank in the top 30.

Nevertheless, cuts to infrastructure programmes risks constraining the continent’s growth (see OECD 2012). The amount Europe invests in infrastructure needs to rise, not fall, to support growth. Between 1992 and 2010, the EU invested 2.6% of GDP on average. But our research finds that it will need to spend 3.1% in the period to 2030 just to support expected growth (McKinsey Global Institute 2013). In the eastern European new EU member states, infrastructure investment of 4.3% of GDP will be necessary.

In money terms, the Europe-wide investment need is €8 trillion (in 2010 prices) or €450 billion every year. That’s €70 billion more than if Europe were to continue spending at the average rate of the past 18 years. Investing sufficient amounts to meet Europe’s ambitious energy efficiency targets, and to maintain current infrastructure capacity and future-proof it to climate change would require significantly more investment.

Even before February’s budget decisions cut planned EU-level spending, at the national level countries have been scaling back their spending on infrastructure. Germany, for instance, was investing more than 3% of its GDP in infrastructure in the early 1990s but invested less than 2% in 2010. The story is similar in France: 3% of GDP in the early 1990s to 2.2% of GDP in 2010.

Given pressure on European budgets – something likely to continue for at least the next several years – could private investment fill the gap left by the public sector? The answer to this question is that private investment from pension funds, insurance companies, and sovereign-wealth funds can make a useful contribution, but this is no panacea. Even if such investors reached their global-target allocations, this would only result in an additional $2.5 trillion of investment through 2030 of the $57 trillion or more needed globally during this period.

But there is a way to meet Europe’s infrastructure challenge even at a time of constraint – boosting the efficiency or productivity of how Europe plans, delivers, and operates infrastructure. Productivity in the construction sector has stagnated or even fallen in most European economies over recent decades.

Recent Research

Our research, based on 400 success-case studies around the world, suggests that Europe could boost its infrastructure productivity by 60%, saving €180 billion a year, in three ways – none of which are rocket science and all of which are being applied successfully somewhere in the world. Globally, the potential saving is $1 trillion a year.

Figure 1. The $1 trillion-a-year infrastructure productivity opportunity

Source: McKinsey Global Institute analysis.

Making Smarter Decisions

The first of the three is to make better decisions about the projects chosen. Globally, this could save 8% of necessary investment. Despite the fact that many governments face increasing constraints on their resources, they still continue to allocate them badly in the case of infrastructure. Spain has arguably over-invested in solar power. Many citizens consider France’s motorways to be under-used. Germany has endured a number of scandals related to major infrastructure projects. Owners need to use precise selection criteria that ensure proposed projects meet specific goals; develop evaluation methods to determine costs and benefits; and prioritise projects in a systemic way.

Lessons

A number of governments have initiated important improvements. South Korea’s Public and Private Infrastructure Investment Management Center (PIMAC) has saved 35% on the infrastructure budget by rejecting 46% of projects that it reviews compared with the 3% that were rejected before its establishment. The UK set up a cost review programme that identified 40 major projects for prioritisation, reformed overall planning processes, and then created a Cabinet sub-committee to oversee and ensure quicker delivery of projects. These measures reduced spending by as much as 15%.

The second approach is streamlining the delivery of infrastructure projects, potentially saving up to 15% of the investment. The time it takes to obtain approvals and acquire land is a major reason for cost and time over-runs. Structuring contracts to encourage cost savings; encouraging contractors to use advanced construction techniques including prefabrication and modularisation and lean manufacturing methods adapted for construction; strengthening the management of contractors; and upgrading the way construction works. Smart planning can transform delivery. One Scandinavian road authority reduced overall spending by 15% by changing standards of road design, using lean construction techniques, and using bundled and international sourcing.

Making the Most of Existing Infrastructure

The third area is making the most of the infrastructure already on the ground. Too often governments rush to build new infrastructure instead of using what they have more effectively, including managing demand. ‘Intelligent’ transportation systems, which squeeze more capacity out of existing roads and rail lines, can at least double asset utilisation, typically at a fraction of the cost of adding the equivalent in physical capacity. Demand management through congestion pricing – as London has done – has already proven itself to be effective and new traffic-monitoring technology is enabling even more effective and tailored approaches. In London, this approach has cut congestion by around 30%. The city has also improved the speed of buses at peak-hour traffic periods by up to 20%. The UK’s implementation of an intelligent transport system that directs and controls the flow of traffic on the M42 motorway has reduced journey times by 25%, accidents by 50%, pollution by 10%, and fuel consumption by 4%.

Conclusions

To bring these opportunities to life will require an overhaul of infrastructure governance – a root cause of its poor productivity. Government departments responsible for water, land, or transport need to work closely together. Politicians need to set the strategic direction of investment in infrastructure; but experts, preferably independent ones, need to put this strategy into practice. Governments need to make sure stakeholders genuinely participate early on. In Stockholm, for instance, congestion charging was launched as a test first, then briefly revoked the programme to show the effects, and had citizens vote on its introduction.

Until sound infrastructure governance systems are in place, countries will continue to fund the wrong projects, place priorities in the wrong areas, and fail to meet the needs of their people.

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133 comments

  1. hyperpolarizer

    The Chicago deal on privatized parking fees is not just terrible, but so obviously terrible that you wonder how it ever passed the laugh test. This happened (as I recall) before Obama’s boy stepped into the mayoral shoes– a sort of a farewell gift from R. Daley, Jr.

    You have to wonder if there’s any way out of this — it’s so bad for the city, in fact a real ball and chain. One reads that projected school closings will supposedly save the city $46 million. What are they losing per annum on the parking deal, just in street closure penalties?

    1. TheMomCat

      Bloomberg planned on doing the same thing in NYC but after the bcklash in Chicago, it was scrapped.

      New York Scraps Privatizing Parking Meters

      http://online.wsj.com/article/SB10001424127887323854904578264331152227780.html

      “New York City is scrapping plans to privatize management of its street-parking system, the latest sign of growing wariness in U.S. cities of initiatives to address budget woes by selling off the rights to run meters and lots.

      The decision by the nation’s largest city comes amid a backlash in Chicago, whose 2008 deal to lease rights on 36,000 parking meters to private investors for 75 years for about $1.2 billion was the first parking privatization by a major U.S. city. Chicago residents and policy makers—including Mayor Rahm Emanuel, whose predecessor presided over the deal—have criticized it for selling the rights too cheaply and for including clauses that have ended up costing the city additional funds. Pittsburgh and Los Angeles also have put privatization plans on ice.”

      1. from Mexico

        And as William Manchester noted in A World Lit Only by Fire, travel was slow and expensive during medieval times, “the expenses chiefly arose from the countless tolls.”

        1. Bill Smith

          The Middle Ages may have been better. Back then the Lords had to pay for their own castle and employ knights to enforce collection and protect their property. Nowadays, our faux Lords get to use the public court system and police, and these costs are charged to the wanderers in the form of sales and property taxes.

          1. Massinissa

            They had to pay for their own castle… By working the peasants harder. Not much different from today.

        2. Doug Terpstra

          Mexico now has some of the most injuriously extractive tolls I’ve witnessed anywhere; it’s a neo-feudal license to steal and spit on the peasantry. And it’s exactly what we’ve now come to expect and detest from obama.

          1. Bill Smith

            In the border towns in Mexico they aren’t even enforcing the official min wage of $4.50 USD. Closer to $2 I’m told by some of the locals. The factories tell the government they need to be competitive with China!

    2. NotTimothyGeithner

      I don’t know if there is a way out, but I think the public/private partnerships are wearing out there welcome with local and state electeds. In Virginia, Taliban Bob, our illustrious governor, has killed these projects because the state is on the hook for hideous projects from current Senator and Obama BFF, Tim Kaine’s time as governor.

      Taliban Bob is crazy*, and even he can grasp this problem when he is faced with the realities which were glossed over in the past. Now, there is widespread experience with this theft; although Obama has never had to take responsibility for anything with his rapid elevation in public life, our lesser electeds do have to face some responsibly and repercussions even the ones as depraved as Obama. Take sports stadiums which are not being built because there is experience with this kind of fraud.

    3. Susan the other

      Not to forget the most absurd PPP contract of all – private prisons who contract with the state for a minimum number of incarcerations per year to insure profitability.

        1. Bill Smith

          Course in the desert here they are after our water. A PE firm has been going around buying up water companies in smaller towns and doubling water and sewer rates.

          Regulators sitting in a big city office building are approving the rate increases, but the rates are still double what they are from the big city municipal water company. Seems odd.

    4. jamie kenworthy

      In Alaska the public private partnership scheme now working its way through the last days of the legislature would have the state guarantee a 35 year contract to “finance” the Bridge to Nowhere. So a AAA credit state that can borrow long at less than 4% would be paying 10-12% annually to the contractor. The difference is an extra $600 million. See http://www.knikbridgefacts.org for more info.

  2. dSquib

    You wonder what is wrong with these “third wayers”, the true believers that is, not the mere profiteers and hucksters. I’ve known of no “public/private partnership” in the US or the UK that did anything other than combine the worst of both worlds, the lack of competition in the public sector and narrow, profit motive and disregard for safety and common good in the private.

    And though third wayers love to sing the virtues of the “market” they have no idea how it “works”, when and where it does. It doesn’t involve the state granting monopolies and 75 year contracts to private companies to run parking meters, letting them pocket the money generated.

    Chicago is awful for this. Not just the parking meter deal, but public housing maintenance is particularly bad, privately. Valerie Jarrett is a profiteer in that, though also a third way zealot.

    Third wayism is the obsession of intellectual non-entities and frauds.

    1. Brindle

      Obama’s Chicago real estate developers were crucial to funding his early campaigns.

      —”Campaign finance records show that six prominent developers – including Jarrett, Davis, and Rezko – collectively contributed more than $175,000 to Obama’s campaigns over the last decade and raised hundreds of thousands more from other donors. Rezko alone raised at least $200,000, by Obama’s own accounting.

      One of those contributors, Cecil Butler, controlled Lawndale Restoration, the largest subsidized complex in Chicago, which was seized by the government in 2006 after city inspectors found more than 1,800 code violations.”—

  3. jake chase

    Just thinking about what can be done about all this. Imagine a grass roots campaign encouraging people to boycott all Democratic Party candidates in all elections until all the centerist sellout faux Democrats are weeded out.

    Of course, I have been doing this personally since 1964, and that doesn’t seem to have done much good.

    1. rob

      If you don’t vote for democrats;who do you vote for?
      In most places you would be left with the republicans,and how would that help the fight against privatization?

      1. jake chase

        No reason to vote for the Republicans we are offered. If the Democrats cannot be forced to represent the people who represent a clear majority, the system is clearly helpless and it becomes a matter of sauve qui peut.

        1. James Cole

          Jake, this is probably the least helpful or thoughtful comment from you that I’ve seen here at NC.
          The fewer people who vote, the more the results can be manipulated by party establishment. Instead of ‘sauve qui peut’ I would encourage people to vote for the virtuous in party primaries and help to inform those who are ignorant of the parties’ true agenda by sharing articles and blog posts such as this one.

      2. Brooklin Bridge

        If one’s strategy is to continue to support the theft of the many by the few until there is nothing left to steal, then continuing to support the Democrats by virtue of the lessor of evils charade will continue to be extremely effective. Once one relinquishes all values, any line in the sand, and keeps a Democrat in office by this false form of pragmatism, or grin and bear it counterfeit responsibility, they have enabled not only that Democrat, and whatever revolving doors he and his staff are part of, but they have relinquished any right to expect him or her to obey any promises made (you have my vote to do anything you want as long as your comrades to your right agree to sound a little more scary than you do), and worse, they have laid one more brick in the acceptance of corruption as a standard of normalcy for the Democratic party.

        Much the same goes for the generational notion of using primaries to cull a group of so called responsible Democrats to come to the rescue. That might work if we had generations to devote to the task, or if the DNC wasn’t itself utterly corrupt in who it even allows to get on the ticket, but we don’t and it is.

          1. Brooklin Bridge

            People need to vote the way Moneta needs to save 10%, because it’s good exercise, because your mother tells you to, and because it makes some people feel they are not succumbing to negativity. Functionally, it doesn’t do much, or at least not now. It’s not as if we are living in a representative system of government or something.

          2. Nathanael

            Protest votes *are* important. The level of protest votes is reported by the news media. Measuring the level of protest voting is how people tell whether other people are as fed up as they are. When the level gets high enough, people feel like they have a chance to organize and actually change things.

            So, goddamn it, get out there and vote for the Rent is Too Damn High Party, or whatever. Staying home sends the message “I don’t care, let the elites do what they like to me.” Protest voting sends the *opposite* message, and people need to hear that message.

          3. jonboinAR

            Yo Brooklin:
            In the last election if more people had voted for Dr. Jill Stein as I did, it would have helped a little.
            VOTE 3RD PARTY!

        1. the idiot

          Well said, Brooklin Bridge. I voted for the lesser of two evils the last election based on social issues but never again. The Democratic party is completely broken and corrupt and beyond redemption. As long as we keep rewarding bad behavior the only thing we can expect is more bad behavior.

  4. casino implosion

    I’d like nothing better than to shaft the rentiers, but how the heck in today’s neoliberal-dominated politics do we get infrastructure spending without giving them their pound of flesh?? Nothing gets done in our political system, which they own, without their approval.

  5. Moneta

    Governments want to cap their debt ratios and banks need to put their reserves to work so privatization and PPPs are the next leg.

    Some of the big proponents of these infra deals are the biggest pension plans who want stable income and to lower volatility.

    They increase infra exposure and commit millions for the years it takes to ramp up operations (7-10). In turn, during ramp-up, they get stable income which is essentially a return of capital.

    Of course, many of those projects will be badly managed and will generate huge write-downs or needed capital injections due to cost overruns but these will only be apparent in at least 5 years.

    I know a lot of people here don’t want cuts in their SS and pensions but the huge pools of capital from these pension plans are part of the misallocation of capital problem.

    IMO, the system should go pay-as-you-go. Too many people can not plan over 40 years.

    1. from Mexico

      So we’re all rentiers now?

      Well that certainly was the spiel:

      By the time the second President Bush was campaining for Social Security privatization in 2005, he was speaking of a “401(k) culture” — a culture that, not coincidentally, was wholly in keeping with his vision of a conservative ownership society. Asked why conservatives should support 401(k)s, a Heritage Foundation economist said simply, “When citizens have a vested insterest in the economy and own more property (or investment assets), the more…politically conservative your socity will be.

      – JACOB S. HACKER, The Great Risk Shift: The New Economic Security and the Decline of the American Dream

      But the highly vaunted ownership society served only the interests of those at the top of the deal-making chain. By the time the deal-makers got through picking over the carcass, the pensioners were lucky to be left with a bone with the slightest bit of meat remaining on it.

      1. Moneta

        Sticking to the pay-as-you-go system would have forced the retiring cohort to make sure that the cohort supporting them would be productive.

        If they wanted more than the pay-as-you-go amount, then workers would have needed to invest on their own without any government intervention.

        One of the biggest mistakes was government intervention in trying to generate fully funded pensions. This has created huge pools of capital that keep on getting raided by Wall Street. Also, we have a system based on multi-generational variables when we have trouble planning for the next quarter. Too many hands in the cookie jar.

        The US made this huge mistake and has exported this problem worldwide because the whole world has been forced into its dance.

        1. diptherio

          “One of the biggest mistakes was government intervention in trying to generate fully funded pensions. This has created huge pools of capital that keep on getting raided by Wall Street.” ~Moneta

          Seems like the real mistake wasn’t fully funding pensions, it was letting the Wall Street raiders get their hands on the dough.

          1. Moneta

            Good point. Chicken or the egg?

            IMO, it’s impossible to protect big pools of money over long periods of time so we should opt for strategies that avoid them as much as possible.

          2. Moneta

            Many think it’s all about the 1% but it’s more than that.
            It’s also about propping up the top 15-20% as long as possible.

            The bailouts don’t only support the 1% but all these huge pension plans that would go under if bonds were written down or written off.

            These pension plans are at the root of our problems. They are all running around like chickens without a head looking for better returns around the world. For example, some of Canada’s largest plans the CPP (Canada Pension Plan) has a position in Heathrow airport… if it was such a good investment, why wouldn’t the Brits keep it all to themselves, God knows they need the money as much as we do!

            Why don’t they invest in their own country instead of selling them out!!!

          3. James Cole

            No, not chicken or the egg. The responsibility for this lies with the legislators that made the rules that allow corporations to escape pension liabilities by gaming bankruptcy process.

        2. Thorstein

          The cohort supporting current (and future) retirees is productive. The problem is that the productivity gains have all gone to the Cayman Islands. And to your previous point, I’m sorry, but not even Moneta can plan 40 years into the future. Nobody can plan 40 years into the future. That is why individuals band together into societies.

          But I partially concede one of Moneta’s points. Unions and their pension plans have too often become part of the problem: “labor capitalists” I call them. Pension plans would rather buy government bonds than have government pay for infrastructure through up-front taxation. (Similarly, when we were trying to build a single-payer movement in Ohio, the unions largely sat on their hands, since they attract membership by offering health care benefits.)

          Nevertheless, as I’ve seen argued here before, as large and underfunded as they are, the pension funds could be rescued with only 1/10th of the money that has already been thrown into the rescue of the banking industry.

          I’m not saying it’s all that much easier to keep government honest than banks or unions, but Social Security and Medicare for All are still the way to go; not sauve qui peut.

          1. Moneta

            Even if you rescue them, you give them more money to invest where? In the same overpriced firms that everyone is chasing? In PPP projects? In governement bonds?

            In this bailout environment, a smaller number of people want to work as an incrwasing number of people look for paper gains. This means a growing pressure on the actual economic producers.

            At the end of the day, these funds will be supported by the economic producers. And it’s not by bailing out these plans so they can keep on misallocating capital that we are going to fix the problem.

          2. Moneta

            And I agree that I can not plan for 40 years. That’s why I paid off my house as fast as I could. Always saved at least 10% of my income and don’t even plan to retire.

            I’m Gen-X and don’t believe we will get to retire. If I am wrong, it will be gravy.

          3. jrs

            If no retirement, and I know retirement is dicey, why even save 10%? Nursing home care, end of life care, a nice funeral?

          4. Moneta

            Well I should have said 20%.

            Government takes 4.95% for CPP from my paycheck and employer pays other 4.95% which essentially means a lower paycheck. And I save 10%… because I have been brought up by a Scottish mother who taught me that life is hard and you have to invest in the future. Some part of me still wants to cling to the past where your savings actually made a difference.

            Also, I strongly believe that self discipline is very important for ones’s sanity. Savings 10% is quite hard considereing all the temptations around us. This discipline has pushed me away from many friends over the last decade and directed me towards different people. It keeps me real. In my case, even if that money gets stolen, it has given me a strong sense of self and self-control.

            Also, I have to say that my portfolio is more for emergencies and long term care than retirement…

            I think our system should be pay-as-you-go; people working as long as possible and the state helping out when they are sick and can’t work anymore.

          5. Moneta

            I paid off my house as fast as possible to starve the hated banking beast.

            Now that the economy is weak and consumerism for goods is excessive I have increasingly been making a consious effort to spend on services and less on hard assets.

            While times were good, I let others over-consume. Now that times are bad, I am doing my share to helpt out.

          6. Ms G

            @Doug Terpstra.

            It’s wild to revisit the Mexico bailout by Clinton through newly-opened eyes — the maneuver plausibly just a bailout of G Sachs. Continuing along the same thread — since we know GS sold Greece a large quantity of the “products” that blew up Greece, and the Cyprus was holding a lot of Greek bonds, any bets that the North European fascist intervention in Cyprus involved yet another maneuver to save Goldman Sachs’s a**?

        3. from Mexico

          It’s not a new problem. It’s one of the hallmarks of a once-great empire in its twilight years. As Martín González de Cellorigo wrote in 1600 in his Memorial de la política necesaria y útil restauración a la república de España y estados de ella y del desempeño universal de estos reinos:

          Our condition is one in which we have rich who loll at ease, or poor who beg, and we lack people of the middling sort, whom neither wealth nor poverty prevent from pursuing the rightful kind of business enjoyed by natural law.

          The uniqueness of Spain lay in the absence of a middling group of solid, respectable, hard-working bourgeois to bridge the gulf between the two extrmemes. In Spain, these people, as González de Cellorigo appreciated, had commited the great betrayal. They had been enticed away by the false values of a disoriented society — a society of “the bewitched, living outside the natural order of things.” The contempt for commerce and manual labor, the lure of easy money from investments in censos and juros, the universal hunger for titles of nobility and social prestige — all these, when combined with the innumerable practical obstacles in the way of profitable economic enterprise, had persuaded the bourgeoisie to abandon its unequal struggle, and throw in its lot with the unproductive upper class of society.

          Fast-forward the clock a hundred years and one sees the same decadence engulfing Europes’s second great empire, Holland, as decline set in. C.R. Boxer, in The Dutch Seaborne Empire 1600-1800 goes to great length to describe the “transition from a merchant oligarchy to a rentier ologiarchy, which occupied the greater part of the 17th century.” As he explains:

          In 1615 a burgomaster of Amsterdam stated that the town regents were either active merchants or those who had recently retired from business. Thirty-seven years later we find the Amsterdam traders complaining that their regents were no longer merchants nor actively engaged in overseas trade, “but derived their income from houses, lands, and money at interest.” In other words, the merchants had become rentiers

          And fast-forward the clock another 200 years and one sees the same decadence again as Britain goes into terminal decline:

          whereas at one time England was the greatest manufacturing country, now its people are more and more employed in finance, in distribution, in domestic service… I think it is worthwhile to consider — whatever its immediate effects may be — whether that state of things will not be the destruction ultimately of all that is best in England, all that has made us what we are, all that has given us prestige and power in the world.

          – JOSEPH CHAMBERLAIN, speech at Limehouse, 15 December, 1904

          1. Chauncey Gardiner

            @from Mexico,

            Just want to thank you for your willingness to share your knowledge of history and related political and economic philosophy here. I am very mindful of the observation that those who are unknowing of history are doomed to repeat it, and would include myself in the group who are deficient in this area.

            Besides Yves intelligence, knowledge and insights, and those of the writers and economists who she selects, it is observations from you and some others here that are why I spend time here.

            I will add that the differing experiences of generations and how those experiences have affected their views, like that of Moneta this morning, has been enlightening to me.

          2. Moneta

            Chauncey,

            I have been talking to a lot of people over the last decade. 10 years ago I was ridiculed, today people are opening up. In my expereince, I have noticed that Gen-X and gen-Y are not very optimistic when it comes to retirement and their future.

            Many of us have been pretending to be optimistic as a survival mechanism so as not to get chewed up and spit out by a system that expects us to be perma-optimists.

            People don’t plan for the future when they don’t see the use. So you live for today.

          3. Doug Terpstra

            “That men do not learn very much from the lessons of history is the most important of all the lessons of history.” Alduous Huxley

            The Huxley quote is from Testosterone Pit in “The Tequila Crisis: The Prelude to Europe’s Economic Storm”. Wolf Richter shows how the ’94 Latin American debt bailout is being replayed in Europe courtesy of the vampire squid. Goldman Sachs, the all-too-common denominator, has been on an unchecked, government-assisted global crime spree for decades now.

            http://www.testosteronepit.com/home/2013/3/30/the-tequila-crisis-the-prelude-to-europes-economic-storm.html

            “Clearly panicked by the potential ramifications of the Tequila Crisis for U.S. banks, the Clinton Administration quickly assembled a huge package of funds, ostensibly to bail out the Mexican financial system. After all, it was the least it could do to help its struggling neighbour.

            The fact that Clinton’s then Treasury Secretary Robert Rubin was also a former co-chairman of Goldman Sachs, the vampire squid of recent lore, which just so happened to have aggressively carved out a niche for itself in emerging markets, especially Mexico, is obviously mere coincidence.”

            Well, obviously. That would be self-serving cronyism and fraud, punishable with imprisonment.

            “Financial institutions [esp. Goldman Sachs] recouped all – or at least most – of the money they had gambled on Mexico during the boom years. So began the modern era of “no risk, all gain” moral hazard in global finance.”

          4. Nathanael

            @from Mexico:

            Britain somehow managed a pretty comfortable decline. I attribute that partly to the presence of a fairly strong middle class even in 1904, and partly to whatever political forces allowed the UK to elect Liberals with redistributionary policies in the 10s/20s and Labour with even more redistributionary policies after WWII.

            Spain and Holland did not manage the same level of, shall we say, grace in their decline. Spain collapsed in an embarassing, messy, and poverty-generating fashion, and only started recovering after Franco left (!!!) Holland I’ve studied less, but it seems to have started getting better after 100 years or more had passed.

            I would like the decline of the US empire to be like the decline of the British empire. I expect it to be as awful as the decline of the Spanish empire.

          5. Otter

            Nathanael, you did not live through the years of continued rationing following WWII. Some of my elders say the only differences were you didn’t need to put up blackout curtains and there were no Jerry bombs falling.

            Doubtless they exaggerated; but the older I get, the more I doubt.

            Sure, they had the Beatles. But then they had Maggie Thatcher and Tony Bliar. Outside the Square Mile, UK today reminds of USA in the time of burning cities.

            Genteel for the 1%, maybe.

      2. jake chase

        As for the pensions, I never understood why people preferred a pension to decent wages allowing them to provide for their own retirement needs. The natural result of these capital pools, managed by shysters and looted by Wall Street, was anticipated by Brandeis in Other People’s Money. At one time there was circulated a looney idea from Peter somebody (Drucker?), that we were moving to pension fund socialism, a pure management meritocracy. There isn’t any limit to the bullshit some people will believe, if it serves personal interest to believe it.

        1. Nathanael

          “As for the pensions, I never understood why people preferred a pension to decent wages allowing them to provide for their own retirement needs”

          The “drinking class” was completely unable to save money. Their *wives* wanted pensions (they didn’t!)

          Think about that. I’m not sure the same social pattern exists any more.

  6. Middle Seaman

    Parking lots, parking meters, traffic cameras and others are now all a partnership between local government and private businesses all over. The deals local government negotiates are pitiful; business always gets a huge disproportional amount of profits. You can be guaranteed that the equipment will be badly maintained and will tend to abuse the public. Thanks.

    It’s almost five years now since we found out that Obama works for the oligarchs. He is their ambassador and ruler to the American people. We reelected him because the alternative was worse.

    1. Brindle

      The alternative was worse but not by much.
      A pretty good argument can be made that the middle class and poor suffer more when a Dem is in the WH.

      1. sleepy

        Yes, dems are more successful at keeping their “brand” intact when a repub president pushes neoliberalism rather than when a dem president does it.

        Case in point: Bush’s SS privatization push.

        Dem progs fold when a neoliberal dem pres breathes heavily, which is the purpose of a dem president.

        Party uber alles.

        1. NotTimothyGeithner

          Bush’s privatization plan was not defeated by Democrats. It was defeated by a backlash of seniors and boomers who represented the bulk of GOP voters. There is a reason Obama hasn’t been able to go after Social Security in a meaningful way. Its because the GOP is too afraid to work with him on the issue because they know its unpopular and will get the blame. They would rather have their seats.

          That dipshit Bush nominated to the Supreme Court was defeated by…Republican voters. The other Supreme Court nominees (Alito and Roberts) were swiftly and quietly approved by the Democrats despite the filibuster. Democratic followers might nominally oppose the GOP when the party’s elite are out of power, but the Democratic Party elite did nothing to oppose W. They had to keep the powder dry for the real battle ahead.

          1. Nathanael

            The Democratic Party really does have two factions: the elitist right-wingers and the populists.

            The elitist right-wingers hold nearly every Democratic seat in the US Senate. There are fewer than 5 who voted against Alito, Roberts, the AUMF, the Bush tax cuts for billionaires and rentiers, the Obama extensions of the Bush tax cuts for billionaires and rentiers. etc. etc. (I’m being generous because I haven’t counted recently. I actually think there are NO currently sitting Senators who voted correctly on all these obvious bills.)

            In the US House, the picture is less dire; there are a fair number of decent Democrats, maybe even a majority of the Democrats in the House. The elite relies on the Senate to stop them.

      2. VietnamVet

        My last post at Booman, a year ago, I was called “silly” for pointing out that the Obama Administration is a continuation of the Bush II Administration.

    2. jake chase

      Don’t see how McCain could have been worse. He was personally rich enough not to need more money, had already been humiliated by his tapdance with Charles Keating, and might have recovered enough personal courage to move things in a better direction.

      Of course, his speeches were less exhilerating. I suppose that’s what you mean by worse, right?

  7. Andrew Watts

    That sort of political deal would only fly in a burgeoning failed state. I would pay close attention to which local and state government(s) pass that kind of legislation.

  8. TomDor

    How many times does it take to learn the same things we have learned before. Thanks for posting these obvious facts again – it seems the memories of the populace needs constant reminders to fight the constant factless propaganda spewed out by the oligarchs and their creation of neo-economics thru the Chicago school and countless self-contradictory named think tanks.

    As Simon Patten, the first economics professor at the nation’s first business school (the Wharton School) explained, public infrastructure investment is a “fourth factor of production.” It takes its return not in the form of profits, but in the degree to which it lowers the economy’s cost of doing business and living. Public investment does not need to generate profits or pay high salaries, bonuses and stock options, or operate via offshore banking centers.

  9. rob

    “privatization”;nice word for “theft” or “racket”.
    In the days of old,When you were a crook, you had to bribe officials to get “largesse”.You had to muscle around labor.You had to take your dirty money, and pay your goonsquads to “rough up” anyone who wouldn’t go along.
    When NYC had a garbage collection system strictly run by mob connected people….you knew where the money for trash pickup was going.
    But, now adays… you don’t need “goons”.You need lawyers.Sure there is still plenty of bribery/largesse given to officialdom…but now when a crook wants our money.They enter into a “contract”.The corporations took over where the mobs left off.
    The people pay over and above, either way.
    In north carolina,
    the governor pat mcCrony, wants to privatize recycling.Which considering it really is already, my guess is he has friends who don’t currently have the contracts.He also is pushing for privatizing medicaid.He is also fast tracking fracking,as well as replacing an entire regulatory commission, so that he can be a useful employee of duke energy,who are looking to shakedown energy customers all over the southeast.
    When any road project in any way gets done in central north carolina,martin marietta gets a cut.Just one way is the fact that they own ALL the quarries in the middle of the state.So any asphalt, or concrete that gets made, it has martin marietta rock in it.Not even looking at all the other business they may be in.I know that isn’t privatization, but when other roadways are “sold” to private developers who will build them,maintain them and collect tolls….for ever…these big players are all looking at what we do every day, as where they will continually extract our money.

    1. Moneta

      Many North American cities, if not all, were born out of wretchedness. A case in point, the first school board in Seattle was financed by Lou Graham, a rich madame.

      Today’s fraud is not a new phenomenon.

        1. Nathanael

          What’s new is more specific than that.

          It’s the difference between industrialists and financiers. The industrialist collects a lot of money but also does something useful for the general public as a side effect.

          The financier collects a lot of money while making things WORSE for the general public as a side effect.

          We are facing financiers now. Cities were built by corrupt *industrialists*. Financiers never build anything.

  10. Klassy!

    Nevertheless, some “pragmatists,” otherwise known as the Vichy Left, may insist it’s better to have some sort of healthcare infrastructure deal, even if it means enriching pharma, the insurance industry, healthcare facilities, medical equipment makers financiers than none.
    And if it has the happy effect of discrediting government and blunting populist rage, all the better!

    1. Doug Terpstra

      Perceptive editing, Klassy. Hmmm, seems like a pattern, huh? It’s only been going on for years now. I wonder when or if the liberal apologenstia will ever catch on.

      This is nnother Obama high crime, a calculated perversion of sensible, moral economic policy. From government as fascist Chamber of Commerce we get Pentagon-scale looting expanded to the domestic economy. Simply put, public/private partnerships mean zero-risk profit guarantees for parasitic shylocks and larcenous contractors, ending with a profusion of blood-sucking rentier toll booths for taxpaying end-users. With the ubiquitous corner-cutting built-in to privately “managed” large-scale public works, it is as grossly inefficient as Soviet central committee profligacy. Once again, Obama is inflicting intentional injury on the people, in order to rescue and subsidize his bankster backers. He doesn’t have a shred of integrity or decency.

  11. Ep3

    First yves, these public/private partnerships sound like the mafia. Skimming off the top, squeezing every nickel from the (whatever they call the sucker, they have some name for it). Then everyone skims on the project, all the way down to the company that paints the lines. Of course this all pushes the costs thru the roof and this causes all govt spending haters to say govt wastes money, all while they are lining their pockets with taxpayer money.

  12. DP

    Yves, you commented yesterday how the typical kinds of volunteering left you depressed because they put you face to face with the problem and even after you help somebody you knew there were far more people still in need than you can ever help. I’m surprised you don’t get the same feeling being face to face and reporting extensively virtually every day of the year on this public-private revolving door .01% cabal that is intent on squeezing the last drop of blood out of everybody else to feed its insatiable lust for fame, money and power.

    I look at NC for 5-10 minutes each morning, read a story or two to see nothing has changed and then tune it out. Being in corporate America and then self employed where I had to follow this corrupt mess closely every day made me literally so sick that I couldn’t work for over a year. When I decided I could afford to retire early (in my early 50′s) and live modestly is when I finally started to recover my health. I have checked out, spend my time hiking, learning photography, listening to music, etc. I don’t even own a cell phone. Didn’t vote in the last Presidential election for the first time since I was first eligible to vote in 1976.

    If we had a real newspaper industry, they’d employ (or temporarily hire) a competent MBA/financial analyst type (like I used to be) and demand that these scumbags show them the supposedly detailed financial analysis supporting their public/private partnership scam or their latest proposal for a city to put $200-$300 million into building a new football stadium (and tearing down a perfectly good one) for a privately owned team to keep them from moving, supposedly justified by the future “economic impact” of maybe getting one Super Bowl. The newspaper accounts always suggest this analysis exists, provided by some consultant hired by the project sponsors, but never bother to even look at or report on the assumptions underlying the analysis.

    I’ve now spent more than my allocated 5-10 minutes in a day thinking about this raw sewage and am feeling a little churning in my stomach. Out.

    1. Moneta

      When you volunteer, you either hope to help someone or feel good about helping. I’ve done some volunteering in the last few years which has left such a bad taste in my mouth that I now refuse to work for free.

      It has made me question the value of money and why some activities get paid and others not. Not much makes sense in today’s world.

    2. Nathanael

      Always vote. Vote write-in or third party when the official candidates suck. The media pays attention whenever the number of protest votes starts rising. That matters.

  13. Alejandro

    The 1 %( Oligarchs) love socialism, so long as it’s restrained to risk and lost. Control and profits are better handled “privately”.

  14. Chris-Engel

    I wish if when you wrote things like “as we’ve discussed at length earlier” that you would provide links to said discussions.

    I’ve hunted around in the blog’s google search for a comprehensive discussion on this topic, but am finding a mixed bag in the “infrastructure” category and it doesn’t seem to be addressed in a general overview (just pertaining to TARP, disaster relief, etc).

    Still can’t really find this detailed discussion you speak of.

    Not that i’m doubting it it’s just frustrating to not be able to find this information you’re pointing to.

  15. Maju

    I am amazed on how late Capitalism is drifting at accelerated pace towards an industrial version of the Ancien Régime, which the bourgeois class so fiercely rejected initially. If we read about the causes of the French Revolution or the long crisis of decadence of the Ancien Régime in the late 18th century, we see that they were almost exactly the same stuff that we see today:

    1. High taxes on the poor and low (or no) taxes on the rich, together with a growing public debt “unsolvable” problem caused by misspending in the wrong priorities (essentially for the rich and their wars and luxuries).

    2. Lack of effective power for the non-wealthy: all power was concentrated in the upper classes, who ruled just for the persistance or increase of their privileges.

    3. A widespread network of private tolls that hampered free trade and transport in general.

    This point three is precisely what this article denounces and something I was not really too aware of.

    In other words: while Capitalism was in its beginnings a revolutionary force, at least to some extent, it has become now in its ailing days a force of reaction and inefficiency, which is necessarily doomed. I see no Capitalist “B option” anywhere: just more of the same (the rich richer, the poor poorer) in a death spiral.

    1. Massinissa

      As the gap between the ruling Bourgoisie and the rest of society broadens, and the petty Bourgoisie is largely pushed into the working class along with most of society, they devolve/evolve (Not sure which term to use to be honest) into Aristocrats. It makes sense: The Bourgoisie has always wanted to be like the aristocracy at least superficially. Perhaps it was only a manner of time before they adopted their strategies and ways of structuring society as well.

      Maybe we should find whats left of the old Aristocrats and turn them into a new Bourgoisie or something…

      With all this Privatization nonsense going on, it would not be particularly surprising for all the roads to be privatized and slapped with penny taxes for those who use them or something. Though hopefully that sort of thing will not happen for quite some time, at least not without public outrage.

      Anyway, isnt this pretty much how taxes work in Texas? Lots of small regressive fees that fleece the working class while not touching the wealthier classes? The only difference in Chicago is that the government, which fleeces the working class, will in turn be fleeced by the bourgoisie. It should be obvious who is doing the real fleecing here.

      1. from Mexico

        Massinissa says:

        Anyway, isnt this pretty much how taxes work in Texas? Lots of small regressive fees that fleece the working class while not touching the wealthier classes?

        I’m not sure that’s an accurate description of the Texas state tax regime.

        Texas has very high sales tax, which is a regregressive tax.

        It has no income tax, which can, but doesn’t have to be, progressive.

        But Texas has extremely high property taxes, ranking within the top two or three highest in the naiton. Michael Hudson makes a good case that property taxes are progressive, and in more ways than one:

        Banks have sought to enable mortgage debtors and corporate raiders to pay their interest by cutting taxes, leaving more land rent and corporate income “free” to be paid to bankers and bondholders rather than to the tax collector.

        The result is to raise prices in two ways. First of all, “rent is for paying interest,” and so is corporate cash flow in today’s world of debt-leveraged buyouts, hedge fund takeovers, mergers and acquisitions. Whatever the tax collector relinquishes is “free” to be capitalized into higher bank loans, raising the price of assets. This raises prices for housing, of factories and other means of production. Economies polarize between creditors at the top of an increasingly steep pyramid, and debtors at the bottom sinking into debt peonage. The middle class melts away.

        http://michael-hudson.com/2012/08/financial-predators-v-labor-industry-and-democracy/

        In 1993 the Texas legislature passed what is known as the Robin Hood Act:

        The Robin Hood plan was a media nickname given to legislation enacted by the U.S. state of Texas in 1993 to provide court-mandated equitable school financing for all school districts in the state. Similar to the legend of Robin Hood, who “robbed from the rich and gave to the poor”, the law “recaptured” property tax revenue from property-wealthy school districts and distributed those in property-poor districts, in an effort to equalize the financing of all districts throughout Texas.

        http://en.wikipedia.org/wiki/Robin_Hood_plan

        It’s since been rolled back to a large degree as Texas, just like the rest of the United States, took a hard turn to the right when it comes to economic issues.

    2. Moneta

      I believe “capitalism” thrived because when one continent was all owned and suffered from overcrowding, the founding of a new continent gave us a few extra centuries.

      Now that all land is owned on the planet, the serfs are now prisoners of the system with nowhere to flee, unless we find another planet or start collaborating in a way we have never done before in the history of mankind.

      1. Maju

        You are largely right on that, of course, Moneta: taking “unowned” lands and the lives of “inferior races” did serve as fuel for the “perpetual growth” machine scam on which Capitalism is based. Hence the ecological catastrophe problem we have today as the planet is not able anymore to absorb so much “growth”… of boundless greed.

    3. sleepy

      “I am amazed on how late Capitalism is drifting at accelerated pace towards an industrial version of the Ancien Régime, which the bourgeois class so fiercely rejected initially.”

      It’s certainly amazing and also frightening on so many levels. Present policy proposals would have been considered unthinkable 20 years ago.

      Aside from the economic policies–I graduated from law school in 1978 and practiced for years. In the area of present-day civil liberties I would have no clue whatsoever how what was operative 35 years ago in civil rights would apply to today’s law. In the mid 70s, if anyone in a law school class would have proposed that indefinite detention without trial would be consitutional, that person would have been hooted out of class–by leftwing and rightwing students.

      My analogy to the PTB is they’re like an unruly kid in a classroom egging on a substitute teacher and getting away with it, and then doing more and more looking around in glee and disbelief at his/her good fortune, and going on and on with no pushback.

      1. Nathanael

        With that analogy: Eventually someone smart and powerful comes into the classroom and has the obnoxious student removed. And probably expelled.

        We don’t yet know who will do that.

    4. Nathanael

      “I am amazed on how late Capitalism is drifting at accelerated pace towards an industrial version of the Ancien Régime,”

      This is indeed why the current late-stage capitalism is doomed, and doomed in fairly short order.

      The only question is what will replace it. It could be replaced by an earlier stage of capitalism, but that seems relatively unlikely. It could be replaced by the stability of Dark Ages feudalism, which seems frighteningly likely.

      It could be replaced by social democracy, but only if enough people understand what’s going on.

  16. MG

    It’s my understanding that the financiers of these projects, the TBTF’s which I assume will borrow from Bernanke at ZIRP, receive super senior status. They get paid before police, school teachers, state medicaid patients, etc.

  17. ElisabethSpenser

    “The few own the many because they possess the means of livelihood of all…. The country is governed for the richest, for the corporations, the bankers, the land speculators, and for the exploiters of labor. The majority of mankind are working people. So long as their fair demands— the ownership and control of their livelihoods—are set at naught, we can have neither men’s rights nor women’s rights. The majority of mankind is ground down by industrial oppression in order that the small remnant may live in ease.” —Helen Keller, 1911, from Letter to an English Woman-Suffragist, Manchester Advertiser (England)

  18. JGordon

    I think that a more honest term for Public/Private Partnerships (which is a euphemism) would be “Fascism”.

    Although I am of course completely in favor of Fascism and celebrate criminality and corruption where it appears in our criminal leadership, so I don’t want anyone to get the idea that I’m not in favor of this. I’d just prefer to have some honesty brought back to our language.

    1. AbyNormal

      The most pathetic person in the world is some one who has sight but no vision. helen keller

      1. JGordon

        Oh I definitely did used to care about this stuff. But then when I realized that this culture is neither savable nor worth saving I changed my opinion quite a bit. Now I regret not voting for Obama last election and not voting period for that matter. The faster things get nasty, the sooner things will come to a head.

        1. F. Beard

          Actually, God might spare a civilization if there are only a few righteous men in it.

          It’s a pity you choose not to be one of those.

    2. from Mexico

      @ JGordon

      When it comes to evaluating the way things are, you and I are pretty much on the same page.

      But when it comes to the way things could be, you’re much more pessimistic.

      The empirical straight jacket you’ve decked yourself out in may prove appropriate for the moment in which we find ourselves. But then again, it may not.

      While I certainly have little tolerance for what Reinhold Niebuhr called “the naive optimism of the moderns,” I also have little tolerance for excessive pessimism. The problem with such a extreme pessimism is that it concedes defeat before the battle even begins. It is entirely self-fulfilling.

      1. JGordon

        Well look Mexico, you seem to be making a mistake about me. I’m not a pessimist; I’m an optimist. I see the inevitable destruction of our current order and the society, and instead of moaning about it I decided to be constructive and proactive.

        Here you people recognizing that things are abysmal, but instead of focusing on worthwhile and practical of our situations, things that would be of actual some good to the people around you, you are choosing instead to focus on things that you really can’t do anything about. I mean look: NC has been around for years railing against the corruption and criminality of our system. I know–I’ve been reading it for the past five years. And while their may have been a few Neil Barofskys and other minor victor along the way, the state of things today is much, much worse than when NC first appeared, isn’t it? I mean, that’s not something you can argue with me on: everyone sees that things are spiraling down the drain. The key to enlightenment is realizing that there’s no stopping it.

        In other words, rather than swimming against the riptide, I’m recommending that people swim perpendicular to it. You’ll get a lot more done that way, and you’ll feel a lot better about yourself too you know.

        1. Moneta

          I agree that from a top-down perspective, it is a moving train and no one is big enough to stop it.

          But from a bottom up perspective, people need TLC and that is the only thing that can create momentum that can get strong enough to stop that train.

          So I am not sure that giving the train more momentum is better than giving more TLC.

          But que sera, sera… ahhh, the law of unintended consequences.

        2. Nathanael

          JGordon: so what are you doing to build the new society for after the current unsustainable fascist mess collapses?

          This is really a serious question. Personally, I’ve been vaguely supporting the process of local sustainability (which allows a community to not be reliant on the collapsing outside areas). But I’m curious what you think is useful.

  19. tswkr

    I’m surprised at no mention of the ‘Infrastructure Trust’ established in Chicago about a year ago to provide an opaque mechanism to finance public projects using private money. At a town hall meeting with an aspirational alderman (the one who went on national TV to bash the teachers during the CTU strike) as well as the City’s financial manager, their defense to any critique was simply to ‘trust us’ since every project would be evaluated separately on its own merits compared to traditional bond funding.

    Nine months later, the CEO of this ‘trust’ was announced, and lo and behold, its a former venture capitalist with Pentagon experience. http://articles.chicagotribune.com/2013-02-01/business/chi-infrastructure-trust-taps-venture-capitalist-as-first-ceo-20130201_1_infrastructure-trust-private-equity-firm-trust-board

    No big projects yet announced, but I get the feeling the plan is to lay the groundwork and let people forget about it before some revenue stream is extracted. Anyway, people and gov’t officials will have their hands full in the coming months trying to get people to accept the new privatized transit payment sytem…

  20. DP

    Given the incestuous relationship between the masters of the universe running governments, large corporations, and hedge funds that was documented so well by Simon Johnson in “The Quiet Coup” and is also well chronicled by Yves and others on NC on a regular basis, isn’t the term “Public/Private Partnership” redundant?

    I recall from reading a Warren Buffett biography (Lowenstein’s I think) many years ago that he used to sit on his front porch as a small boy and think of how great it would be to charge everybody who went down his street a $.05 toll, how rich he would become. Now he and those he regularly professes admiration for like Barack Obama and Jamie Dimon are living the dream.

  21. Brooklin Bridge

    Obama is certainly busy. He just signed a bill protecting Monsantos from any Federal oversight. Amazing… (and sorry for the OT) but one might argue Obama is simply using Monsantos as the private component in a public effort to guarantee our bread-basket infrastructure remains ‘healthy’ as in, “Cha-Ching”.

    (Note, for the feint of heart, the link below is to “NaturalNews” which seems to be ideologically oriented towards the second amendment, Rand Paul, Ted Cruz and the like, so I can only imagine what their economic view point would be – but on the subject of Monsantos, the article seems spot-on in it’s assessment)

    Obama betrays America yet again signing the ‘Monsanto Protection Act’ into law

    (NaturalNews) President Barack Obama campaigned on promises to end secret prisons, decriminalize marijuana, balance the budget, honor the Second Amendment and make health care affordable. But what really unfolded was an explosion in the national debt (now $16 trillion and climbing), the signing of the NDAA, a claimed new power to kill any American at any time, even on U.S. soil, the use of military drones to murder American children overseas, a full-on assault against the Bill of Rights, a doubling of health insurance rates and the destruction of the U.S. economy.

    But that’s not all.

    Now Obama has signed the “Monsanto Protection Act” into law, stabbing America in the heart yet again and proving that no matter how convincing politicians appear on the campaign trail, they are still sociopathic liars in the end.

    I would love to see a whole thread on this topic even though Yves has covered it before – when it might be appropriate of course.

    1. Brooklin Bridge

      I imagine Michelle Obama, with her little garden on the White House lawn, must really really be proud of her country now. It may be the only patch of ‘farm land’ in the whole country that isn’t subject to a law suit by Monsantos if some GMO seed under one of their patents somehow gets dropped in there by some patriotic bird.

      1. Ms G

        But, but … Michelle’s garden is O-RGA-NIC and just all Goodness. A Monsanto seed surely would just shrivel if dropped in such a virtuous little orchard!

    2. Nathanael

      Obama is both evil and stupid, much like GWB before him.

      However, at this point, it doesn’t matter; like GWB before him, he will recede into nothingness in 2016: he doesn’t have the will to power which would cause him to stay.

      And there’s no way to build up enough of a movement to get rid of him before that. Even the odious Andrew Johnson, who refused outright to enforce the laws passed by Congress, couldn’t be removed from office because it’s impossible to get a 2/3 vote in the Senate for anything sensible.

      (And while I expect the federal government to collapse entirely, it has enough mass and momentum that it won’t collapse in four years.)

      So Obama is an irrelevance. It’s still worth awakening people to the evil behavior of Senators and Congressmen, because they have no term limits, and every little bit adds up to helping get rid of them.

      But there’s little point in educating people about Obama’s evil behavior any more. Only when the Crimes of the Previous Government tribunals are established in 20-30 years time will it matter.

  22. Curtis

    This will just get to the revolution quicker. Check out Resilience.org and Resilient.com. Survival will be learning Permaculture (the concept of living on the food that drops from the trees you are tending along with a few sheep and chickens.)

    1. Susan the other

      Speaking of permaculture – it makes a great model for infrastructure. Wherein no one extracts an unrealistic “profit.”

    2. Hugh

      Permaculture is only an answer for some. It requires a certain minimum amount of land and water. How can you do permaculture in arid regions like Los Angeles or in a city like New York, except on a small scale? How can you do it with all those McMansions built on postage size lots?

        1. Nathanael

          Squat. Not that I’m recommending it, mind you, but it’s an old, old alternative.

  23. Timothy Gawne

    What do you expect?

    If someone steals from you, and you do nothing, and then they steal some more, and you do nothing, and then they steal even more, and you still do nothing… This path ends only when you have nothing left to steal.

    Obama has been getting a free pass – this site excepted, most people still insist that he is a ‘liberal’ and about half the country voted for him last time, even though they had an excellent alternative in the green party. That just encourages him. The more he gets away with, the more he will try and grab for his his rich buddies. Prediction: this sort of thing will accelerate and become increasingly brazen. Why not? What’s to stop him?

    For those who insist that there is no alternative to ‘lesser-of-two-evils’ voting, hey, how’s that working out for you?

  24. F. Beard

    Public/private partnership = fascism.

    How often those who are supposedly in favor of a “free market” see nothing wrong with socialism for the rich!

    1. banger

      How do they deal with the socialism for the rich angle? Well, we in America believe to be rich is to be virtuous and that includes being rich through fraud. The con artist is a favorite type in American stories and cinema. That along with the willingness of Americans to swallow almost any lie through propaganda and mind-control techniques creates the situation we live in here. People refuse to believe in class-struggle–it just doesn’t exist–American oligarchs can’t possibly exist–they’re just well-meaning who have great ideas and cash in on it. They all start poor and work they’re way up and Horatio Alger and so on and so on. Since critical thinking is largely forbidden and freedom is slavery what can one say?

  25. Susan the other

    The premise of this post gives me a sick headache. Obama making deals with private investors to do infrastructure, without a clue, or blissfully clueless. All Obama does is deals. At our expense. The possibility that Obama and his administration could actually plan infrastructure projects prudently as outlined in this article is absurd. How will Obama make better decisions about projects? By who bribes him the most? How will the government partner with the privateers to streamline delivery? In a country whose infrastructure has already fallen apart? And how will existing infrastructure, in all its disrepair be maximized?

    The first decision to be made is a long term energy decision. What kind of cars will we have and how many miles to the gallon; what exactly will we even need? Will we have a tradeoff between broadband use and highway use? Will important decisions be put up for referendum as in Sweden? I shudder to think how Obama will make all these planful decisions.

    1. Susan the other

      Let’s outsource this task to countries with proven track reccords, who actually make decisions in behalf of their citizens and their commonwealth. Our elected “government” can just be a big sprawling figurehead.

    2. banger

      Those of us who are familiar with Obama the actual person and not the brand now him as a center-right politician whose constituency is the finance oligarchs who funded his rise to power. He is their employee and has no independent voice. This is true of any President during this era. They are subject to either character assassination or assassination should they deviate from the path they are told to follow. Presidents change and some surface changes occur in the bureaucracy but, in large part, policies remain the same–I say this as someone with many years of experience as a contractor in Washington, DC.

  26. Hugh

    What Obama advocates is just more looting of the commons. First, he manufactures a series of budget crises. Then all the “solutions” he proposes involve looting. It makes looting the default, TINA option. It is the institutionalization of the Shock Doctrine.

  27. Paul Tioxon

    There will be little rigorous analysis or methodologically sound studies of the American experience coming in the wake of THE SUPPRESSION OF UNIVERSITY POLITICAL SCIENCE RESEARCH FUNDING BY THE US SENATE:

    “Senate Delivers Devastating Blow to Integrity of Scientific Process at NSF
    Restricts Political Science Projects Receiving NSF Funds

    Alert Update (Wednesday, 3/20, 4:15pm):
    Senator Coburn’s modified amendment was passed in the Senate by voice vote. Read APSA news release to the DC bureaus of national and international media, op-ed writers and political talkshows. APSA will provide additional information as it’s known.

    A modified version of the Coburn amendment (SA 65 to H.R. 933) was submitted Tuesday. The stated purpose is:
    “To prohibit the use of funds to carry out the functions of the Political Science Program in the Division of Social and Economic Sciences of the Directorate for Social, Behavioral, and Economic Sciences of the National Science Foundation, except for research projects that the Director of the National Science Foundation certifies as promoting national security or the economic interests of the United States.”

    http://www.apsanet.org/index.cfm

    1. two beers

      In Chile in the 1970s, after Allende was assassinated and the Chicago School plan was put into operation, the humanities and social sciences were expunged from the schools.

      We’re following the same neo-liberal model.

      1. Nathanael

        The backlash on that sort of operation is hell; Chile has already joined the “South American Consensus” of fuck-the-US democratic socialism.

        Honestly, the thugs who implement this sort of crap clearly never think 30 years ahead. The Iranian coup against Mossadegh is perhaps the most impressive backlash. (Why did they have the arroagance to mess with Persia?)

        Now, failing to think more than 10 years ahead would make sense if the architects of this crap were all childless men in their 80s or 90s. But they’re not! So my conclusion is that they are mentally ill psycopaths.

      2. Nathanael

        Chile now, of course, has a socialist government which is politically opposed to the US.

        If we follow the same path as Chile, the US fascist government will be overthrown in less than 10 years. That seems a bit optimistic. It might take 20.

        1. Maju

          Chile right now has a conservative government that is only belligerant against its own citizens, be them Mapuche Natives or urban students. Even when they had a “socialist” government under Bachelet, it was very right-leaning and pro-USA. Chile still awaits its liberation.

  28. mrtmbrnmn

    isn’t it high time to impeach this shine-on artist? as the philosopher gw bush once said: “fool me once shame on you. fool me..he he he…ya cain’t be fooled agin…he he he…” jeeeze louise!!

  29. banger

    Not a surprise to read about all these little provisions for the corrupt oligarchs or, more properly, gangsters who rule the American political economy. We’ll see if Europe follows America down this road to giving all power to the oligarchs in exchange for illusions, games, entertainments and escapes.

  30. kevinearick

    keep those wheelbarrels moving, Mr Buffet doesn’t have all day.

    Dial Up Dimensions: Oblivion

    The earth revolves around its axis, relatively. The earth revolves around the sun, relatively. How many dimensions do you suppose there are in that sun? How many dimensions do you suppose are beyond the galaxy? What is heat pressure relative to space time? Where is time in PV = nRT? Why isn’t gold radioactive relative to the earth?

    The economy only has two to three weeks to catch someone falling, or the taxpayer pays, the Robber Barron, which employs the fallen to pull everyone else into the black hole. Once there is a queue, there is a queue manager, administrator, culture, and cultural rivalry…

    The school system is the empire’s queue multiplexer. Don’t send kids to learn oration, to speak in tongues. Send them to learn discipline, when to strike. It’s a line, to wait in line, to wait in another line, in which the manufactured majority is advanced relatively, by selling its own back in time. You want to work for JPM or Goldman, or be the President of the United States? Who do you have to sell out / fools to immigrate? You cannot change human behavior in real time.

    The trick to empire extortion is to have your form legally insured with the estoppel of majority consent, outlawing others in relative terms. You know…when one of us kids got chicken pox, my pop threw us all in a room. Don’t have one of your lackeys arm a WMD inside my vortex kernel and expect a happy outcome.

    …and who was that lawful a-hole that put his name on the Patriot Act, to hide its origination in legalese? Don’t play hide and seek with the old man’s son. Do you really think Jesus was an idiot feminist, that he didn’t expect the majority to praise him, while betraying him in Acts.

    Extortion only succeeds with those foolish enough to play the game. Careful upon whom you presume to declare war. Numbers don’t count, all things being equal in time. Click, click, click…There is nothing more loyal than a Basset Hound. Properly trained, it never gets lost, you can run it over with a semi, and it eats German Shepherds for breakfast. Just don’t hurry it; it’s best friend is a turtle, an effective early warning guidance system.

    Does the admiral choose the student or does the student choose the admiral? You might want to go back and take a look, now that you have the benefit of hindsight, before proceeding, to execute yourselves. Backwardization is the problem with relying on druggies to do your bidding.

    If you enter into an agreement with the thought of divorce as an acceptable outcome, you may as well cut off a limb right now instead. You’ll be better off because your identity is the only thing that stands between you and oblivion. The law grants the majority the right to to steal from the minority, outside the law. There were two tails, but the majority turns backwards every time, ultimately upon itself, and its Flag.

    Something is comin’ out of that hole alright, but it’s not Jesus. Happy Easter.

  31. Gaylord

    Corporations are now in complete control of our government. Like it or not, we have to accept the inevitability of public-private partnerships on large-scale infrastructure projects because they make it possible to get big things done quickly. The U.S. infrastructure is in shambles, thus we need massive capital inputs; the federal government is only willing to spend massive revenues on the military and/or to homeland security, and the states are strapped. Corporations and their executives and investors are flush with cash, so this is a way to get them involved in restoring our infrastructure, and thus we will all benefit rather than to stagnate.

    1. Ms G

      This comment has great potential — you could peddle it in sleek power point format to any number of clients. Unless of course, your comment is a transcription from an index card handed to you by your boss with the order “now type.”

      1. Bill Smith

        Probably should add something about how the big pay off is you get a government granted geographic monopoly and the price won’t be regulated, but the government will guarantee a floor under profitability.

        That should get even the most incompetent corporation on board.

        1. Gaylord

          OK, let me give an example: after the Northridge earthquake in Los Angeles, the city decided to forego the requirement of open bidding on infrastructure repairs. It brought in the most competent contractors with demonstrated experience to fix the freeways, and the job got done in record time.

          Here’s another example: the largest expansion of the Los Angeles International Airport is nearing completion. Billions of dollars were raised from private investors to make it possible, and no tax money was involved. It is producing thousands of good-paying jobs and making the airport more energy efficient, as well as providing enhanced convenience for travelers.

          We have an emergency — a lot of things are broken, the Congress can’t get anything done and won’t spend money on anything but the bloated military. How else is President Obama going to accomplish anything under the existing limitations? I know, I keep hearing about platinum coins, but evidently the PTB won’t allow this. Most people here seem ready to criticize but have few realistic alternatives to offer.

      2. Brooklin Bridge

        your comment is a transcription from an index card handed to you by your boss with the order “now type.”

        Now That was funny! :-) :-) :-)!!!

  32. Klassy!

    All these suggestions sound sensible, and I especially like the one about making the most of existing infrastructure– but that one probably is not showy enough.
    The author writes “Until sound infrastructure governance systems are in place, countries will continue to fund the wrong projects, place priorities in the wrong areas, and fail to meet the needs of their people.”
    The problem is is that I believe that Obama is a true believer in the ability of the private sector to distribute resources most effectively. In this way he differs from those he shamelessly fluffs. They’re just pure opportunitsts.

  33. washunate

    Thanks for highlighting this.

    I think it shows our fundamental challenge of how to reclaim a political economy interested in the public good. We have the resources and technical knowledge – those ‘concerns’ are largely ignorant, or more commonly, flat out lies.

    What we haven’t been able to solve is how to put leaders in power who care. That’s the great task of the next few years.

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