Comments on: How to prevent misguided privatizations http://blogs.reuters.com/felix-salmon/2011/06/22/how-to-prevent-misguided-privatizations/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: Danny_Black http://blogs.reuters.com/felix-salmon/2011/06/22/how-to-prevent-misguided-privatizations/comment-page-1/#comment-27871 Fri, 24 Jun 2011 14:19:57 +0000 http://blogs.reuters.com/felix-salmon/?p=8722#comment-27871 Foppe,there is a perfectly good “reason” Brown chose this way. So he pretend he was not upping the debt whilst going on a spending binge. As for sweethearts deals how is metrorail doing?

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By: jomiku http://blogs.reuters.com/felix-salmon/2011/06/22/how-to-prevent-misguided-privatizations/comment-page-1/#comment-27780 Wed, 22 Jun 2011 18:34:42 +0000 http://blogs.reuters.com/felix-salmon/?p=8722#comment-27780 Not directly responding to the Durbin bill, but we tend to privatize the wrong things anyway. An example is prisons. We don’t transfer the risk of loss to the private company but instead pay them a fee on top of cost – in several variations of cost plus. We see something similar with parking meters: you can’t park anywhere but on the street or a public garage so where is the risk of loss? With parking meters, it’s in over-payment up front that takes too long for payback but unless one pays so much prices rise to levels that reduce parking below a certain number, the private company is essentially reaping a monopoly rent. This is no different than the old Romanov method of dispensing monopolies on various goods or the Spanish / Portugese method of granting a monopoly on slave trading. With prisons, if you get back the costs, how exactly are you at risk?

The parking meters are sold with the idea that reaping current dollars for an asset is worthwhile now. The prisons are sold with the idea that bonus incentives suffice to create savings. I suspect the former will see a lot of bad deals and it’s been shown the latter does not save money but costs more.

We live in a time in which the idea of “private” is meant to carry a magical aura. As in, privatizing Medicare will per se save money because private means saving money. Since Medicare runs an admin cost at somewhere from 3-12%, depending on how one slants the numbers, and private companies run somewhere north of 25%, that requires faith, which is exactly the point.

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By: willid3 http://blogs.reuters.com/felix-salmon/2011/06/22/how-to-prevent-misguided-privatizations/comment-page-1/#comment-27775 Wed, 22 Jun 2011 17:15:07 +0000 http://blogs.reuters.com/felix-salmon/?p=8722#comment-27775 i think that if the state or local government privatizes a public infrastructure and the Feds helped fund it, they should pay back that money. that was tax dollars that would paid for a long term asset that was expected to be used by the tax paying public. it was an investment that now no longer is a public asset. in private enterprise companies selling assets do so to pay off their investment. the local government has no interest in doing so. they are just trying to fix a current budget problem. they also think they wont get the blame. they will. they also will have less in sales tax as fewer people will pay for toll roads to go shopping

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By: Foppe http://blogs.reuters.com/felix-salmon/2011/06/22/how-to-prevent-misguided-privatizations/comment-page-1/#comment-27773 Wed, 22 Jun 2011 16:48:22 +0000 http://blogs.reuters.com/felix-salmon/?p=8722#comment-27773 I don’t know if you’ve looked at any of the public-private initiatives Blair/Brown initiated, but pretty much all of are funded by private investors, in stead of large institutional investors like pension funds (who could’ve really used the high-yield, reliable investment opportunies). This should tell you something: that PPPs are almost always engaged in by pols to create such sweetheart deals, because risk-free high-yield investments, for selected companies. There is no reason whatsoever to let private companies fund these things when a government can just issue bonds, or when (state-owned) pension funds have money left to invest.

as to serfer: the politicians did not screw it up, they defrauded. Why else do you think Daley now has a job at the law firm that Daley used to seal most of the deals?

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By: serfer http://blogs.reuters.com/felix-salmon/2011/06/22/how-to-prevent-misguided-privatizations/comment-page-1/#comment-27771 Wed, 22 Jun 2011 15:41:32 +0000 http://blogs.reuters.com/felix-salmon/?p=8722#comment-27771 Politicians can attempt to shift blame to the private sector when public goods and services are leased away, but it rarely works. People still blame Daley and the city council for the Chicago parking meter debacle – it’s certainly one reason he didn’t seek reelection (in addition to the Olympics and his wife’s failing health.) Most Chicagoans probably couldn’t tell you the name of the company that now manages the parking meters (LAZ) but could certainly tell you how much their local politicians screwed up that deal.

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By: polit2k http://blogs.reuters.com/felix-salmon/2011/06/22/how-to-prevent-misguided-privatizations/comment-page-1/#comment-27770 Wed, 22 Jun 2011 15:38:07 +0000 http://blogs.reuters.com/felix-salmon/?p=8722#comment-27770 A pan European infrastructure bank to help Greece (and others) with impending privatisations might be useful too in order to distance local politicians from difficult deeds.

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By: dWj http://blogs.reuters.com/felix-salmon/2011/06/22/how-to-prevent-misguided-privatizations/comment-page-1/#comment-27769 Wed, 22 Jun 2011 15:29:46 +0000 http://blogs.reuters.com/felix-salmon/?p=8722#comment-27769 The return on investment in public infrastructure is (e.g.) the ability of citizens to be able to drive. (The line between “investment” and “durable good” is very fuzzy.)

It would be irksome if states were regularly finding ways of bringing in federal money for some purpose and flipping the infrastructure for more than the state itself spent on it, essentially laundering federal money into the general fund. I don’t know that it’s likely that they would find it easy to make a pattern of that sort of thing, though.

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By: johnband http://blogs.reuters.com/felix-salmon/2011/06/22/how-to-prevent-misguided-privatizations/comment-page-1/#comment-27765 Wed, 22 Jun 2011 14:27:04 +0000 http://blogs.reuters.com/felix-salmon/?p=8722#comment-27765 What’s a better thing to back in the current political environment: a) a strategic plan (which, I agree, is a great idea) which couldn’t pass even when there was a Dem majority; b) a much more limited piece of populist-sounding legislation that isn’t brilliantly conceived but will ultimately do more good than harm?

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