No, we’re not talking about the construction companies who win contracts (in often rather scrupulous ways) from the city to build roads and bridges. Now the privatization scheme is beginning to include the finaciers of public infrastructure. Instead of the city paying for a construction project, a separate investor would ponie up the cash, but would also gain the return on the investment — generally through tolls.
As this NYTimes article describes, many cities are trying to substitute the contract process that often lines the pockets of public officials with one that consistently lines the pockets of Wall Street executives. The jist is that these financiers are generally more seasoned with investments, and have to answer solely to the stockholders, whose only interests relate to their success in the ongoing game of capitalism.
The Critical Badger highlights the article as a potential solution to Madison’s current fiscal woes. This might be true, but just like the old system, the new one is contingent on several factors:
First, the contract worked out between the city and the financier must be one that restricts the company from profit schemes that would ultimately cost taxpayers more than a simple tax increase. The company, under pressure to maximize profits, will not hesitate to levy heavy tolls if the city does not prohibit it from doing so.
Second, the competency of the city is just as important in contracting a financier as it is when contracting a construction firm. Picking a firm with a proven track record in infrastructure investments, whether foreign or domestic, would be important, considering that such investments are relatively new (the Times describes them as beginning only in the 90’s). T
So far the results are mixed. However, as the Times writes, the only solid conclusion we can draw is that U.S. infrastructure is drastically underfunded. The American Society of Civil Engineers recommends $1.6 trillion in infrastructure investment over the next five years, and from what I’ve read, we are performing pitifully below that expectation.
