Privatizing Infrastructure (or more snow crash)
I wrote a bit before on what I think of as the snow-crashification of the world. It’s happening on a few fronts, oddly enough for such an extreme vision, but one of them was the privatization of infrastructure. So I came across another article in BusinessWeek about this very topic that I found pretty interesting (and very long).
The articles believes that around 30 funds are being raised that might have as much as $500 billion at their disposal. All this for the buying of long term leases on publicly operated infrastructure like highways, bridges and airports. Once in private hands, these corporations will be responsible for maintenance of the thing and more importantly setting the cost for using them.
Let’s think about that for a little bit. How large a stretch is it to believe that a private company that has bought several highways and bridges in one general location might try to start offering incentives to continue using all those bridges? What if now, they decided you could pay them a monthly fee for free access to their roads and if you didn’t you’d have to pay exhorbitant entry and exit fees? Or some companies might charge higher fees and maintain their roads better while others let their roads slide in to pot-holey madness but charge less? This is what happened in Snow Crash, no?
The article says that one of the obvious implications is that rates are going to go up, but mitigates that effect with this:
Of course, tolls won’t go to the moon if they result in dramatic reductions in traffic. For example, investment firm NW Financial Group estimates that if the Chicago Skyway pricing scheme were applied to New York’s Holland Tunnel over its 80 years, it would cost $185 to travel through it instead of the current $6. “No one will pay that much,” says Murray E. Bleach, president of Macquarie Holdings (USA) Inc. “It’s just not going to happen.”
But why wouldn’t that happen? There’s obviously an equilibrium point, but let’s look - as rates go up fewer people will be able to take the highway. This benefits the operator because fewer people means fewer repair costs, lowering their overhead, no? So as prices go up so do the operator’s margins, so in fact up to point reducing usage by increasing fares is a double win for them. This, as usual, impacts the poor much more than it does the wealthy.
On the flip side increased tax on driving long distances might encourage greater use of public (soon to be private?) transportation. And that’s kind of nice, too.
Who knows? All I know is that I’m just waiting for my “Smooth move, ex-lax” bumper sticker.
