Naked Capitalism Link of the Day

Today's link: America For Sale, by Dylan Ratigan:

As with mortgage securitizations, the conflicts of interest are intense. Pennsylvania nearly privatized its turnpike, with Morgan Stanley on multiple sides of the deal as both an advisor to the state and a potential bidder. As you'll see, these deals are often profitable because they constrain the public's ability to govern, not because they are creating value. For instance, private infrastructure company Transurban, now attempting to privatize a section of the Beltway around DC, is ready to walk away if local governments insist on an environmental review of the project. Many of them have clauses enshrining their monopolistic positions, preventing states and localities from changing zoning, parking, or transportation options.
While the trend is worldwide, privatization of public infrastructure only came to America en masse in the 2000s. It is worth discussing, because where it has happened it has sparked deep and intense anger. In Chicago, protests flared as Mayor Richard Daley pushed the privatization deal through. In Wisconsin, recent protests and counter-protests around controversial Governor Scott Walker revolved around, among other issues, the privatization of state medical services. In Ohio, a controversy is swirling around the political proposal to put the turnpike up for sale, while in Indiana, the state toll road has been in private hands since 2006 (upsetting the truckers who are paying much higher tolls).
The political organizing is intense - on the Republican side, conservative groups are aggressively driving it as a strategy for fiscal prudence. The American Legislative Exchange Council (ALEC), the influential think tank that targets conservative state and local officials, has launched an initiative called "Publicopoly", a play on the board game Monopoly. "Select your game square", says the webpage, and ALEC will help you privatize one of seven sectors: government operations, education, transportation and infrastructure, public safety, environment, health, or telecommunications.
On the Democratic side, the Obama administration has been encouraging Chinese sovereign wealth funds to invest in American infrastructure as a way to bring in foreign capital. It was Chicago Mayor and Democratic icon Richard Daley who privatized Chicago's Midway Airport, Chicago's Skyway road, and Chicago's Parking Meters. Out of office after 22 years, he is now a paid advisor to the law firm that negotiated the parking meter sale.

Privatizing public assets is always a losing deal for the taxpayers.  Ohio is still studying privatizing the Turnpike, and since Republicans believe taxes must always go down until they reach zero, they will continue to privatize assets to pay for those tax cuts:

Ohio might get several billion dollars if it leases the Ohio Turnpike, and the director of the state Department of Transportation says most of the money would go toward projects in the northern part of the state, where the 241-mile toll road is located.

Department of Transportation Director Jerry Wray is defending the idea of leasing the turnpike amid growing opposition from leaders in the region who worry that having a private operator for the roadway could create other problems, The Plain Dealer in Cleveland reported.

"I'm not here to pick on the turnpike," Wray said. "We are looking at what do we need to do to benefit the state, and this is an asset that has value to us that's not being leveraged."

Ohio lawmakers are working on the two-year state budget, and the Senate version would provide for the Legislature to guide the bidding process if the turnpike were sold or leased.

Republican Gov. John Kasich wants to lease the roadway but ensure the deal benefits Ohio, Wray said. He said Kasich would prefer a 30-year lease that includes a payment up front and a share of toll revenue each year, and the governor is hoping to get at least $2.4 billion from any lease deal.

I love that Jerry Wray uses the word leveraged.  That is such a private equity style word that translates to me as make a bunch of money by gambling.  Leveraged really means used as collateral to borrow against, but in the end, privatization means making private entities rich at the expense of taxpayers.  Don't let anybody tell you different.