Private ownership of public infrastructure… A doom of inequality

[ksen]

http://angrybearblog.com/2014/04/pr...blic-infrastructure-a-doom-of-inequality.html

As private money begins to own infrastructure as opposed to paying taxes, so that the public owns it, the American economy we once knew will be gone. Inequality will become so entrenched, that it will be very hard to reverse the process. Once private companies own a greater percentage of infrastructure, we will see laws passed to protect them. We will see subsidies when needed. We will see costs rise for using public infrastructure.

Didn’t the INET conference just discuss shared public risk in order to get shared public benefits, instead of private investors taking on private risk and getting private benefits??? Yes, they did.

This is all happening thanks to the dynamics of inequality, low demand, low taxes on capital and easy monetary liquidity to the rich. I hate to watch America go down the drain like this.

IMO, Private ownership of public infrastructure is a very troubling problem.

But maybe it shouldn't be; I mean what could possibly go wrong?

 

[Bronzeage]

http://angrybearblog.com/2014/04/pr...blic-infrastructure-a-doom-of-inequality.html



IMO, Private ownership of public infrastructure is a very troubling problem.

But maybe it shouldn't be; I mean what could possibly go wrong?

We do that now in the US, without a lot of trouble. Electric power, gas, water, and telephone systems are mostly private enterprize operation. Government keeps a tight rein on them. The power company can't raise its rates at will and is oblicated to provide electric power to everyone with an address.
The reason this works well is because the service is dispensed in discrete units, so it's fairly simple to assign a cost.

When it comes to roads and bridges, it's not so easy. I live in a city by the Mississippi River. There are two bridges which cross the river, but I seldom use either one. Even so, my life is much nicer, because of them. I can to any grocery store in town and buy a California artichoke for a very reasonable price. The bridge and the roads which lead to it, make this possible.

A bridge or road cannot be put in any arbitrary place. We could call bridge locations a very limited resource. A bridge built by private enterprise and operated for profit, would be a monopoly and could quickly become a choke point in the economy. Competition is not a solution. Two parallel bridges would compete with each other for a finite amount of traffic, and neither can operate profitably. This is why we have publically controlled infrastructure. We need it, and it must be efficient.

The linked article cited Chile as a cautionary tale. The problem in Chile is they have a weak government which cannot assess and collect the taxes necessary for infrastructure construction and maintenance. The wealthy people who dominate the government will not allow it, but are happy to profit from the government's weakness.

That is the real lesson here.

 

[fromderinside]

We do that now in the US, without a lot of trouble. Electric power, gas, water, and telephone systems are mostly private enterprize operation. Government keeps a tight rein on them. The power company can't raise its rates at will and is oblicated to provide electric power to everyone with an address.
The reason this works well is because the service is dispensed in discrete units, so it's fairly simple to assign a cost.

In 1915 Spokane Power refused to serve anyone outside city limits and even limited coverage to those within city limits who were contiguous with other customers. The got suesd. The lost. Public policy was set in 1918 to require utilities privatege and public to serve all within their territory bounds equally. Territories were apportioned to include outliying areas a part of service districts. For those still outside coverage such as REA were set up to bring utilities to the remote. Once attached they were assigned to existing districts for future service. My gramps born in 1880 got electricity in 1948 four years before he died. So he was born when NYC got electricity and died shortly after he got it near Willow Creek Montana. What a deal.

As for reasons to regulate consider the following

 

[ksen]

The problem in Chile is they have a weak government which cannot assess and collect the taxes necessary for infrastructure construction and maintenance. The wealthy people who dominate the government will not allow it, but are happy to profit from the government's weakness.

You could replace the word "Chile" with "United States" and not have to change any other wording.

 

[Jimmy Higgins]

A bridge or road cannot be put in any arbitrary place. We could call bridge locations a very limited resource. A bridge built by private enterprise and operated for profit, would be a monopoly and could quickly become a choke point in the economy. Competition is not a solution. Two parallel bridges would compete with each other for a finite amount of traffic, and neither can operate profitably. This is why we have publically controlled infrastructure. We need it, and it must be efficient.

So how is this any different than sewer, storm, or combined storm/sewer or water?

The linked article cited Chile as a cautionary tale. The problem in Chile is they have a weak government which cannot assess and collect the taxes necessary for infrastructure construction and maintenance. The wealthy people who dominate the government will not allow it, but are happy to profit from the government's weakness.

Are you aware of how many billions of dollars need to be spent to update the aging utility infrastructure in the US? Do you think that privatizing water and sewer will automatically lead to massive innovations for digging trenches and directional boring?

 

[Bronzeage]

You could replace the word "Chile" with "United States" and not have to change any other wording.

That could be said of almost any country, but we do have a pretty good road system. The fact this road system was built at public expense and is the main reason that passenger rail service(private enterprise) became unprofitable, is another discussion.

 

[fromderinside]

That could be said of almost any country, but we do have a pretty good road system. The fact this road system was built at public expense and is the main reason that passenger rail service(private enterprise) became unprofitable, is another discussion.

Unfortunately the rail system was, practically, built at government expense. Back to granddad. His father who settled at Willow Creek in the late 1840s built up quite a ranch with agreements with territorial people and indians. Along came the RR giveaway and he lost 60 square miles of range including about 10,000 acres of bottomland along the Missouri to Union Pacific in the deal the US contrived to encourage RR development. Way to go private developed and run RRs in 'merica.

Still, with efficiencies and changes in driving habits taxers no longer support highways even enough to keep them repaired.

 

[repoman]

I live in Seattle and holy crap the roads are terrible here. Bellevue and Mercer Island is a dream compared to it. Worth taking bike rides there.

 

[ZiprHead]

I live in Seattle and holy crap the roads are terrible here. Bellevue and Mercer Island is a dream compared to it. Worth taking bike rides there.

Our roads here in Michigan are crap too. Price you pay for living someplace where it freezes and thaws often.

You want to talk innovation, please, someone come up with a road surface that can withstand northern winters.

 

[Zeluvia]

Check the history of Rural Telecommunication:
https://www.ntca.org/about-ntca/history-of-rural-telecommunications.html
Communist communities all over the US gathering together to provide themselves..

Or the Rural Electrification Act of Socialist Dictator FDR.
http://en.wikipedia.org/wiki/Rural_Electrification_Act

These co-ops still operate in some places in Texas, especially the electric and water ones.

I think ALL utilities should be publicly owned.

 

[SimpleDon]

Our roads here in Michigan are crap too. Price you pay for living someplace where it freezes and thaws often.

You want to talk innovation, please, someone come up with a road surface that can withstand northern winters.

Building a roadway a that can stand up to frost heave is easy, well understood and expensive. You simply prepare the roadbed better, deeper subsurface' ~250 mm, with more finely crushed stone compacted by vibration as well as under a static load, pour a thicker roadway, say 200 mm instead of 100 or 150 mm with more steel reinforcing, rods instead of mesh. Then immediately seal the roadway surface with ~50 mm of asphalt. You will have a roadway that 99.9% of will last for a 100 years with no more repair than renewing the asphalt surface, say every 20 to 25 years. But the initial cost will be about two to three times more.

.

 

[SimpleDon]

Check the history of Rural Telecommunication:
https://www.ntca.org/about-ntca/history-of-rural-telecommunications.html
Communist communities all over the US gathering together to provide themselves..

Or the Rural Electrification Act of Socialist Dictator FDR.
http://en.wikipedia.org/wiki/Rural_Electrification_Act

These co-ops still operate in some places in Texas, especially the electric and water ones.

I think ALL utilities should be publicly owned.

The main advantage of the government building the roads and providing the utilities is that their financing is much cheaper, governments borrow money at the lowest interest rates, and that governments are happy when they pay off the loans, private enterprise expects to make a profit off of the capital investment long after the loans would be paid off. Profits are a complete addition to the costs of providing the service. And since little risk is involved in these services there is no advantage to private enterprise providing them.

 

[Jimmy Higgins]

Building a roadway a that can stand up to frost heave is easy, well understood and expensive. You simply prepare the roadbed better, deeper subsurface' ~250 mm, with more finely crushed stone compacted by vibration as well as under a static load, pour a thicker roadway, say 200 mm instead of 100 or 150 mm with more steel reinforcing, rods instead of mesh. Then immediately seal the roadway surface with ~50 mm of asphalt. You will have a roadway that 99.9% of will last for a 100 years with no more repair than renewing the asphalt surface, say every 20 to 25 years. But the initial cost will be about two to three times more.

100 years? That seems a bit much. Firstly you will have utilities that need to be replaced or worked on or replaced. Cleveland actually had it with utility companies coming and ripping up new pavements and now has 7 year "go fuck yourself" policies on new roadway surfaces.

Given a number of years, the subsurface won't drain as well either. I have seen that there are "perpetual" asphalt concretes out there, where you merely mill the top inch or two every once in a while.

Also you still need to worry about the quality of the asphalt. You have freeze-thaw issues and then the structural issue of the pavement being plowed. I pondered the idea of using geofoam for subgrade, which would eliminate freeze-thaw issues, but the cost would be huge, both in construction and materials.

I think ultimately, the value of money is too high to spend huge sums on a super road... for every road.

 

[doubtingt]

Privatization of infrastructure is a recipe for corruption that harms taxpayers and businesses (other than the few that buy the infrastructure at usually absurdly below market value prices.

Five years ago, Chicago sold its parking meters to a private company. Not only have meter fees gone up 500% in 5 years (up to $7 per hour at a meter), but also twice as many streets are metered, the hours are extended and holidays and Saturdays are not exempt . Most drivers are paying between 5 to 10 times as much in parking fees than they were and none of that money is going toward public services. Businesses are being harmed by fewer people coming into the city to shop and eat. Highly conservative estimates are that the city sold the parking meters under a 75 year lease for less then half the revenue they would have made in that time, not counting the massive increases resident are now paying. The two reasons that such infrastructure will almost always be sold at way below market value
are 1) corruption: kickbacks from the corporations that get the contracts; 2) short term self serving political interests of the decision makers, who get a massive lump sum payment that allow them to lower or not raise taxes during the years they are seeking office, but lead to increased taxes and other hardships in the long term when they no longer care. At minimum, no public infrastructure should be allowed to be sold without approval by a very wide representative panel, including non-office holders, plus majority support from a ballot initiative. In addition, as will every government contract, every meeting between a politician and a company for any contract should have to be recording and shown unedited on a podcast. There is just way too much corruption and too much centuries long damage than can and is being done by a few office holders making backroom deals.

 

[SimpleDon]

Building a roadway a that can stand up to frost heave is easy, well understood and expensive. You simply prepare the roadbed better, deeper subsurface' ~250 mm, with more finely crushed stone compacted by vibration as well as under a static load, pour a thicker roadway, say 200 mm instead of 100 or 150 mm with more steel reinforcing, rods instead of mesh. Then immediately seal the roadway surface with ~50 mm of asphalt. You will have a roadway that 99.9% of will last for a 100 years with no more repair than renewing the asphalt surface, say every 20 to 25 years. But the initial cost will be about two to three times more.

.

As far as innovation my company came up with a system for getting rid of the sludge left after treating municipal waste. We found out that if you heat the sludge to say ~800°C, ~1500°F, it sinters, it under goes a chemical reaction that is exothermic, it gives off additional heat. And the extra heat that it gives off is enough to dry the sludge which is only about ~20 to 25% solids and to get it to sintering temperature with some left over. In other words it is a thermodynamically efficient process.

What the process produces is a small particle of solid averaging about 6 to 8 mm across that looks like it is completely encased in glass. This particle contains all of the bad waste that is thrown into the sewers including heavy metals like lead and mercury, but it is stable and unlike the unburned or the dried sludge it will not leech into the ground water, even over hundreds of years. In Europe the sintered sludge is used for roadway subsurfacing instead of crushed stone. It is using a material that is normally a problem to get rid of and putting it to use. It is much stronger than stone and it doesn't compact when it is wet like stone does, meaning that it doesn't require near as much compaction as crushed stone does.

We couldn't even get a permit to try the system in the US, it was soon after the dioxin scares and we couldn't prove the we didn't produce it. Of course, the reason is that no reasonably informed person would believe that it would be possible to do it. Dioxin is produced when you burn complex hydrocarbons, for example plastic, in a reducing atmosphere, that is a low oxygen atmosphere, at a low temperature. We are burning a simple hydrocarbon, shit, in a high oxygen atmosphere, an oxygen fueled furnace at an extremely high temperature.

 

[Jimmy Higgins]

As far as innovation my company came up with a system for getting rid of the sludge left after treating municipal waste. We found out that if you heat the sludge to say ~800°C, ~1500°F, it sinters, it under goes a chemical reaction that is exothermic, it gives off additional heat. And the extra heat that it gives off is enough to dry the sludge which is only about ~20 to 25% solids and to get it to sintering temperature with some left over. In other words it is a thermodynamically efficient process.

What the process produces is a small particle of solid averaging about 6 to 8 mm across that looks like it is completely encased in glass. This particle contains all of the bad waste that is thrown into the sewers including heavy metals like lead and mercury, but it is stable and unlike the unburned or the dried sludge it will not leech into the ground water, even over hundreds of years. In Europe the sintered sludge is used for roadway subsurfacing instead of crushed stone. It is using a material that is normally a problem to get rid of and putting it to use. It is much stronger than stone and it doesn't compact when it is wet like stone does, meaning that it doesn't require near as much compaction as crushed stone does.

We couldn't even get a permit to try the system in the US, it was soon after the dioxin scares and we couldn't prove the we didn't produce it. Of course, the reason is that no reasonably informed person would believe that it would be possible to do it. Dioxin is produced when you burn complex hydrocarbons, for example plastic, in a reducing atmosphere, that is a low oxygen atmosphere, at a low temperature. We are burning a simple hydrocarbon, shit, in a high oxygen atmosphere, an oxygen fueled furnace at an extremely high temperature.

Wouldn't that create issues when digging into the subgrade for future improvements? I'd imagine you wouldn't be able to reclaim it either. Finally, this doesn't create dust?

 

[fromderinside]

In an earlier post I misspoke. It was the  Northern Pacific Railway that was granted 80 square miles, much of it used by my great grandfather Clinton Williams, in west southern Montana of its 160 million acres through land grants from uncle Sam. All in all, about 7% of all land in the US was granted to railroad companies to build west. Yikes.

No wonder people in small population states are leary for big government interference. the government also gave Anaconda, the worlds largest copper mining company special rights in Montana resulting in much ill feeling still out there about government, big Railway and big Copper. Imagine if your bottom land became slag piles for a copper company, your city was collapsed by excessive mining, moved to the slag piles when open pit mining became the vogue, not to mention being given complete absolution from responsibility to clean up or mitigate the killer chemicals left from destroying the richest mountain in the world.

 

[Clivedurdle]

Meanwhile

BRITAIN’S only publicly-owned rail route is a runaway success, official figures reveal today.

The East Coast firm provides the best value for money for the taxpayer - returning a net surplus of £16m to the Government’s coffers.

South West Trains was the only private operator to provide a surplus - £5m.

The three top payers of dividends - Northern Rail, Transpennine Express and Virgin Trains paid out £97m to shareholders last year.

The figures come from an Office of Rail Regulation (ORR) report, which details the subsidy each train company receives and just how much they pay back in premiums to the Treasury.

Last night Labour, union leaders and campaigners said it was a compelling case for the East Coast staying out of private hands.

The Tory-led Coalition wants to privatise the line ahead of next year’s general election.



http://www.mirror.co.uk/money/city-...ast-coast-mainline-rail-3418067#ixzz2z472drIJ
Follow us: @DailyMirror on Twitter | DailyMirror on Facebook

 

[SimpleDon]

100 years? That seems a bit much. Firstly you will have utilities that need to be replaced or worked on or replaced. Cleveland actually had it with utility companies coming and ripping up new pavements and now has 7 year "go fuck yourself" policies on new roadway surfaces.

Given a number of years, the subsurface won't drain as well either. I have seen that there are "perpetual" asphalt concretes out there, where you merely mill the top inch or two every once in a while.

Also you still need to worry about the quality of the asphalt. You have freeze-thaw issues and then the structural issue of the pavement being plowed. I pondered the idea of using geofoam for subgrade, which would eliminate freeze-thaw issues, but the cost would be huge, both in construction and materials.

I think ultimately, the value of money is too high to spend huge sums on a super road... for every road.

The specifications for the roads that I gave were the ones used for the Autobahns in Germany, and basically the ones used by California starting about ten years ago for freeways. Yes, they are very conservative and over the top, but they do produce a roadway that is very smooth for your BMW to go 225 kmh on and that will last longer probably than you need it to.

And yes, you won't use the same specifications for city streets, it is not necessary.

 

[SimpleDon]

Meanwhile

In the states the compelling case for privatization for any public service is that they can be non-union and they can get away with lower pay for their workers.

I would also suspect that the rail line involved in the UK is one with a high level of ridership. A complete rail system has to serve locations that produce lower levels of ridership, which the lines with high ridership subsidize in part. I am sure that the private enterprises that have produced such sterling results on a high ridership line wouldn't want to take over the lower ridership lines. This would leave the government running the low ridership lines as a public service and the private enterprises only running the high ridership lines.

The same thing happened in the US when we deregulated the airlines. It was a smashing success when you look at only the high ridership routes between large cities, but now the government is having to subsidize the smaller city airports and air routes.

For some people, including me, this is going in the wrong direction, we need to raise wages, not to lower them further, we need to lower profits and we need a balanced transport system where the users are paying for the whole system, not just for the profitable routes leaving the government to subsidize the unprofitable routes.