Chart: Policy Dialogues
Some think that when it comes to privatizing U.S. public assets, our nation is a laggard and we really should be following the path of Europe in selling infrastructure into private hands. Here is attorney Kent Rowey, who is a leading infrastructure privatization attorney (and whom I’ve sparred with previously):
This should be a golden age of public-private partnerships — the need exists in cities across the country. And the capital is there, from private investors seeking long-term returns. American infrastructure has fallen behind countries like France, Italy, Spain, Portugal, Poland, Hungary and countries that have long embraced privatization of urban systems. Ironically, the United States has become an emerging economy when it comes to developing P3 projects — in which opportunity needs to be matched with political will and bold thinking to undertake.
Europe went through a massive privatization process starting under Margaret Thatcher in the 1980’s. But unlike the United States, U.K. and European countries had enormous state holdings that encompassed telecoms, utilities, banks, manufacturing and energy companies and many other industries. Few of these are under public control in America, which makes the pool for privatization much smaller.
Another difference is that many of these UK and European enterprises were floated on the stock exchange and small and large investors were able to invest in British telecoms and British gas. As you can see in the chart above through 2004, the nadir of privatization, the greatest amount of revenues came from public offerings (the dark blue bars) rather than private sales (the light blue bars), which is the common model in the US. Other than floating the Tennessee Valley Authority or US Postal Service on the New York Stock Exchange, there are few equivalent opportunities in America.
And how have Europe’s privatization deals worked out? In the U.K., the cradle of privatization, not so well, at least for trains: