Following an interview with Gabriel Roth, Research Fellow at the Independent Institute, editor of "Street Smart: Competition, Entrepreneurship, and the Future of Roads", Thom went on a rant about what is wrong with privatizing roads.
Thom Hartmann rant about Privatizing Roads, 24 January 2008
The decision to hand the Indiana Toll Road to an Australian and Spanish team for $3.8 billion at the end of this month has blown up into one of the biggest brawls here in a generation...
The trend started 1 1/2 years ago, when Chicago Democratic Mayor Richard M. Daley pushed through a 99-year lease of the Chicago Skyway, nearly eight miles of elevated highway across the city's South Side, for a lump sum of $1.8 billion.
Since then, a New Jersey state senator has proposed selling a 49 percent interest in the New Jersey Turnpike and the Garden State Parkway. New York Republican Gov. George Pataki is trying to persuade the state legislature to let investors rebuild or replace the Hudson River's Tappan Zee Bridge. In Houston, Harris County officials are finishing a study on leasing 57 miles of toll roads.
Virginia transportation officials announced last month that they would lease a debt-ridden toll road outside Richmond, the Pocahontas Parkway, to a private firm for $522 million.
Pennsylvania Turnpike commission officials met with Macquarie officials earlier this year, and now the Australian firm is spending about $500,000 to study potential private-public investment in the Mon-Valley Expressway and the Southern Beltway in the Pittsburgh area.
Well, there's a couple of problems with this. There are a number of problems with this. First of all, one of the reasons why governments increasingly in the United States are increasingly looking at selling off their resources, and these are resources, by the way, that didn't come cheaply. When these roads were built, governments went to people who had homes and farms and businesses and said, "we're going to take your home or your farm or your business by eminent domain". The fifth amendment says Federal government, or the states and local government, can take things. They have to compensate you, but they can take things. And we took those things. We paid for them. Their value today would be astronomically higher, frankly.
So you've got this swath of land that in and of itself has great value, and then we spent the money to build the roads. We engineered the roads. We did all the determining of how we want the traffic patterns, and what's in the best interests of which communities, and how, and balancing the interests of interstate commerce on our roads versus the interest of communities near the roads. We did all that stuff. We paid for it.
And now, state and local governments are looking at selling off these things at, frankly, what is a fraction of their real cost, if you go back and look at their real costs, because they don't have any money. And the reason they don't have any money is in part because our gas tax is a fixed amount. You know, another triumph of the lobbying of the petroleum industry. 18.4 cents per gallon is our federal gasoline tax. Most states have fixed gas taxes; they don't have one that is a percentage of the cost of a gallon of gas.
So back, you know, when gas was 25 cents a gallon you had, I don't know what the gas tax was at the time, probably 7, 8, 10 cents
, something like that. It's gone up a few times since then, but it wasn't a whole lot. It still isn't a whole lot. 18.4 cents a gallon?
I was in London last week; it was ten dollars a gallon for gasoline. It was about a pound a liter, and in the neighborhood of 5 liters per gallon. A pound is worth about two bucks. Ten dollars a gallon. And so what happens? People drive less. It's not throwing people into poverty. More money goes into public transportation. And why is it ten dollars a gallon?
Because about $8 of that $10 per gallon or $9 of that $10 per gallon is a tax that is used to build road systems that actually work for the people, and that actually work in the interests of the people and the communities, and balance all the interests of the commons, all of us collectively. This is the commons. This stuff is the commons.
And when we start handing these things off, particularly selective, the juiciest pieces of them, the very best pieces, the most important pieces of them, to private corporations who have only one interest, by law only one interest, which is making a profit, then we ultimately, we the people are the losers.
You're going to have the situation again, as we've already seen in a number of cases, where toll roads are privatized and then the tolls start going up and up and up, or bridges are privatized and the tolls start going up and up and up. Because the private corporations have to start making money too, right. And they've got, you know, their CEOs saying, "Hey, I want another million dollars a year". And their board of directors, "Hey, I want a million bucks to be on the board", and you get the stockholders who are saying, "Hey, we want to have higher dividends so we want the stock price driven up", etcetera etcetera.
And then, not only that, oddly enough, in the United States, most of the, many of the roads, I'm not sure if it's most, but certainly in the neighborhood of half, and probably more, of the roads that have been privatized, are being privatized to companies that are based in Spain, in Australia, in Germany, in France. Soon coming to a town near you probably Dubai, I mean, they tried to buy our ports, which is another part of our public transport infrastructure. This is nuts. This is just plain old flat out nuts.
What happens is when the prime parts of the transportation infrastructure are privately owned and the prices are jacked up, people who have to use them for a living, like long haul truckers, start using the secondary parts, and that puts a burden on the people who have to maintain those secondary parts, who have to maintain the cost of those secondary parts. They can't afford to do that, those secondary parts start falling apart, local communities bear the cost in pollution, in repair, and quality of life. It's wrong.