The Wall Street Journal published a story recently on privatization, entitled Facing Budget Gaps, Cities Sell Parking, Airports, Zoo. Ianthe Jeanne Dugan writes that
Cities and states across the nation are selling and leasing everything from airports to zoos- a fire sale that could help plug budget holes now but worsen their financial woes over the long run. California is looking to shed state office buildings. Milwaukee has proposed selling its water supply; in Chicago and New Haven, Conn., it’s parking meters. In Louisiana and Georgia, airports are up for grabs.
For those who (erroneously) think that the Wall Street Journal writes only one way – to the right — consider Dugan’s description of privatization:
“Privatization” – selling government-owned property to private corporations and other entities- has been popular for years in Europe, Canada and Australia, where government once owned big chunks of the economy.
In many cases, the private takeover of government-controlled industry or services can result in more efficient and profitable operations. On a toll road, for example, a private operator may have more money to pump into repairs and would bear the brunt of losses if drivers used the road less.
While asset sales can create efficiencies, critics say the way these current sales are being handled could hurt communities over the long run. Some properties are being sold at fire-sale prices into a weak market. The deals mean cities are giving up long-term, recurring income streams in exchange for lump-sum payments to plug one-time budget gaps.
There’s a sale, and then there’s an under-sale. Dugan’s story makes the difference clear, and describes how some municipalities aren’t just making deals with private concerns, but bad deals with private concerns.
I’d contend that one of the reasons that many municipalities across America are in trouble now is because bureaucrats falsely believed that they understood business transactions and conditions well, and consequently dabbled in too many projects styled as ‘government-business partnerships.’ These deals were often expensive and ill-conceived (as some in my own, small town have been.)
Across America, some of the same men who made fiscal mistakes (often through these wasteful ‘partnership’ ventures) are now looking to sell as fast as they can – for fire-sale prices. In doing so, they’re compounding their initial errors with subsequent ones.
As they’re the same men, then and now, this is unsurprising.