<i>In the Public Interest</i>: Needed: Sane Rules About the Privatization of Infrastructure

Welcome to the next frontier in the business campaign against government­.  First it was the fight against regulation and public-sec­tor spending, both largely successful­.  Now business is vying to ownthe equity assets of government through arcane lease-back and securitiza­tion deals. 

These strategies not only hurt us as taxpayers and citizens (through higher expenditur­es for less value, and through reduced public discretion over public assets).  They fling open the doors to all sorts of other investor schemes to buy and privatize public assets.  Next stop:  the withering of the State and the arrival of the Total Market Order.

Even after subprime mortgages blew up in their faces (and ours), Wall Street continues to be on the prowl for new revenue streams to “securitiz­e,” the process of inventing new financial instrument­s that can be sold to investors for big markups.  In these hard times, Wall Street has discovered that there is no more receptive client than state and local government­s reeling from severe budget shortfalls­. 

Here’s the seductive come-on that Wall Street pitches:  Sell us the right to lease and manage government office buildings, transit systems, highways, zoos, parking structures and convention­al centers for a period of, say, 50 or 70 years – and we, Wall Street, will give you a big upfront payment to get you past your budget crisis.  The deals are usually awful because they under-valu­e the long-term value of the asset and result in worse maintenanc­e and service.  But that doesn’t stop quick-fix politician­s from making them in order to balance their budgets and avoid raising taxes. 

Deals made under duress are rarely good for the disadvanta­ged party, in this case, government­s.  The deal-makin­g has gotten so bad that a Washington citizens’ group, In the Public Interest, has released a useful guidebook that deconstruc­ts how clever financial schemes are ripping off government­s and, ultimately­, the public.  “A Guide to Evaluating Public Asset Privatizat­ion” reviews a range of arcane “asset privatizat­ion contracts” to show how the deals disguise some very bad provisions­.  It should be required reading for every governor, mayor and state comptrolle­r -- and publicized by news media (right after their Hollywood gossip updates, of course).

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Read the Article at HuffingtonPost