Privatization Fails, Will We Learn Government Can Do Better

| Educate!

The money from the Indianapolis water-sewer utility sale is gone, and rates are going up, as the city told us would happen, sale or no sale.

The money from the Indianapolis parking meter sale is gone, and rates have risen and billable hours have lengthened, with the collections flowing past city coffers to an outfit in Texas.

The money from the Indiana Toll Road lease is gone, and now the foreign consortium running it has declared bankruptcy, ominously struggling against low use combined with raised tolls and much-criticized service.

The spectacular failure of IBM’s takeover of welfare eligibility determination, a fiasco that wrought untold suffering upon the poor, disabled and elderly, has the state before the Indiana Supreme Court trying to scratch back tens of millions of taxpayer dollars.

Could you please tell us again, Mitch Daniels and Grover Norquist and the rest of you libertarian luminaries, how privatization of basic government functions beats letting the government handle the work and control the revenue stream?

I’m no economist, Lord knows; and I’ll concede there are examples of sensible and successful outsourcing of public works. But how many times, in Indiana in particular, do we have to see sell-offs of sensitive amenities for quick bucks prove pound-foolish before we get the idea the private entity saw us coming? And how many tax dollars must we pay to unload responsibilities ($1.37 billion, with a B, would have gone to IBM) before we question the conservative Gospel that business knows better than bureaucrats?

Friends of political leaders owe fortunes to the public’s buy-in to private sector superiority – and its lust for wads of upfront money. We believe government ruined the railroads, when in fact government salvaged the railroads after government enabled the railroads to ruin themselves. We routinely make a joke of what may be the world’s finest postal service. We fixed streets in time for the Super Bowl with money from Citizens Energy and we’ll be paying when the next Super Bowl comes to town, and the next. We made guinea pigs of our neediest neighbors to partner with a vendor that formerly employed state official Mitch Roob, and the biggest welfare beneficiaries therein will turn out to be lawyers.

As sold to us by then-Gov. Daniels, the toll road deal was an exception and a steal. A stunning $3.8 billion up front; and the way Daniels put it, any less-than-satisfactory performance by the operator would bounce the highway back to the state while we kept the money.

A few short years into the 75-year lease and disaster has struck. While I suppose it’s possible we can take back the road northern Indiana folks were so furious to “lose,” matters appear to be rather more complicated, with various bondholders and lawyers and such weighing in. Who is betting that adequate maintenance, reasonable tolls and sustainable volume will emerge from this unsettling set of circumstances? What words of reassurance can the dealmaker bestow from his new office at Purdue University?

Truth be told, it is not bold entrepreneurial thinking, but rather prickly politics, that spurs many privatization schemes. Politicians don’t want to arm their opponents by raising tolls and rates, even when those raises are long overdue, as they were in the case of the toll road and Indy parking meters. So they erect a shield and bribe the voters in the bargain. Unfortunately, the morning after can come around quickly.

Take the toll road. Please. The $3.8 billion is gone and the state, now broke highway-wise, is committed to serving the highway lobby by finishing I-69 in southern Indiana. A plan to make I-69 a toll road collapsed in the face of fervid opposition. Oh, what a tangled web we weave.