Selling your infrastructure for short term profit

Like the United States, Great Britain has been in a bit of a funk since the Great Recession. Government debt is through the roof, but the British Prime Minister, Gordon Brown, has a plan: Sell the Dartford Tunnel and other government assets for some quick cash.

This is the sort of thing American cities have been doing for years. Local governments are loathe to raise taxes, so when they need more money, they sell infrastructure, like bridges, to private companies. Those private companies are then responsible for maintaining the bridge, and do so by charging hefty tolls for its use. Of course, those companies are looking for a profit, so they charge more in tolls than the government.

In the end, the government balance sheet looks better, and your wallet gets lighter.

Sure, it’s a good thing our governments are concerned about debt. It’s also a good thing they are worried about raising taxes. However, they need to look at more than just the short term financial situation, and they should be honest with the taxpayers about the long term impact of the deals they’re making.

And if they’re really looking for ways to save money, I can recommend a government program they should cut

4 Comments

  1. Clint

    Did the government say whether it plans to re-purchase these assets in the future?

    Aside from problems of consumer-unfriendly corporate ownership in the short term, it seems like it could lead to a constant decreasing role of government in that area. Governments are perpetually short of cash (and harassed when they do spend), which means they’ll benefit from selling and be unlikely to buy back at a later date.

  2. Chris

    Clint,
    There was no mention of re-purchasing in the articles I’ve read. But I may have overlooked it.

  3. Selling public infrastructure is exactly what the IMF has done in third-world countries as apart of restructuring their economies according to Friedman austerity in financial markets.

    Capitalism as it stands now is just exchanging money and capitulating upon itself, like a snake eating it’s own tail.

    The fact that we are selling public assets to private companies is perhaps the greatest sin in all capitalism. Governments are there to protect people, companies as a rule only seek out profits, this is why certain activities are heavy regulated in civic life. If you want a good idea of the abuses that occur when the government hires private agencies and companies, look no further than Iraq. Yes, it is more profitable, but when you are dealing with public safety I do not think it should be a revenue stream.

  4. I forgot to add that I found the irony of Great Britain selling off it’s public assets to be quite hilarious. After 30 years of forcing countries to do the same so that foreign investors to purchase the well-being of citizens, them receiving nothing in exchange.

    Imagine China buying the NY Subway.