BusinessWeek: Private Roads a Dead End
Want to buy the Brooklyn Bridge? It‚Äôs not for sale, but even if it were, BusinessWeek doesn‚Äôt think you should be able to buy it.
The May 7 issue warned that ‚Äúprivateers‚ÄĚ (another word for ‚Äúpirate‚ÄĚ) are ‚Äúclamoring to take over America‚Äôs highways, bridges and airports.‚ÄĚ ‚ÄúThe public,‚ÄĚ the magazine cautioned, ‚Äúshould be nervous.‚ÄĚ
Reporter Emily Thornton‚Äôs story, called ‚ÄúRoads to Riches,‚ÄĚ kept a consistent theme that private enterprise ‚Äď pejoratively dubbed ‚Äúprivateers‚ÄĚ ‚Äď would be more hurtful to consumers than government-run infrastructure.
Thornton predicted that government sales of big assets could hurt ordinary citizens with exorbitant tolls and fees, as well as poor service. Of course, none of those assets is going anywhere. They will all continue to operate as they have before, just under new management.
Thornton emphasized the downside of the deals. Atlanta officials had outsourced the city‚Äôs water system, only to take it back after it ‚Äúwas so poorly managed by private owners.‚ÄĚ However, even she had to admit that the private sector can work effectively and that ‚Äúnewly private toll roads are being managed well.‚ÄĚ
So well, in fact, that Chicago Skyway road crews have just 24 hours to fill potholes and eight hours to remove dead squirrels from the road. And if the city isn‚Äôt satisfied, it can end the agreement.
Thornton claimed ‚Äúthere‚Äôs a downside to the quick cash: toll hikes that are usually quite aggressive.‚ÄĚ But nowhere near as aggressive as Thornton pretended. She described the increase in Chicago Skyway tolls as going from $2 to $5 by 2017. She then applied that math across the 67-year life of the Pennsylvania Turnpike to argue ‚Äúthe toll for traveling from the Delaware River to the Ohio border would be as much as $553 now instead of $22.75.‚ÄĚ
Of course, the same theoretical math could be applied to any short-term price adjustment ‚Äď making an increase of $3 scattered across 10 years seem major. In reality, that rate hike equaled 30 cents per year. Not to mention that long-term inflation would change one‚Äôs perspective on the cost, just as hot dogs may have cost a nickel years ago but now go for $6 at the ballpark.
Yet Thornton tried that same logic to claim the tolls for New York‚Äôs Holland tunnel would be $185 instead of its current $6 if the Skyway ‚Äúscheme‚ÄĚ were employed.
Throughout the article, Thornton warned of dangers from such sales and downplayed the obvious benefits like improved service, lower payroll costs and a huge infusion of much-needed cash so governments could fund a variety of programs.
Thornton especially warned of ‚Äúthe uncertainty of service quality.‚ÄĚ She said ownership might change several times over 50 years. ‚ÄúIt‚Äôs hardly a stretch to imagine service suffering in such a scenario,‚ÄĚ the article argued.
The cover story package claimed the trend to privatize could lead to anti-commuter ideas like congestion pricing. A second article cited the efforts of New York Mayor Michael Bloomberg and London Mayor Ken Livingstone, who are trying to limit traffic by charging high fees. ‚ÄúWhen privateers took control of a toll road in Chicago, they imposed higher tolls on trucks during peak travel hours,‚ÄĚ wrote Kerry Capell in a sidebar story.
What Capell left out was that neither plan from Bloomberg or Livingstone was linked to privatization. And London‚Äôs congestion pricing was instituted by Livingstone, widely known as ‚ÄúRed‚ÄĚ Ken because of his leftist politics.