Navigation

IN: How Privatization Undermines Democracy

Indiana legislators are proposing to privatize a major highway and give a Spanish-Australian partnership a seventy-five year monopoly on collecting tolls on the road. On one level, the deal just sounds plain financially irresponsible. The state gets $3.85 billion up front, but the partnership is projected to recoup that price in 17 years, then make an additional $21 billion in profits off tolls over the rest of the contract. Today's politicians may benefit from the quick infusion of funds, but it's a bad deal for the next generation:
"That is money that could go to our children, our grandchildren and our great-grandchildren," said the House Democratic leader, Patrick Bauer. Republicans control both chambers of the Legislature.
Inherently, this is an anti-democratic deal, stealing revenue from the future to pad the budget in the present. That has been the constant fraud of privatization around the world as governments sell off assets, usually at fire-sale prices, but glowing with the ephemeral immediate boost to current revenues. But there's an even more insidious subversion of democracy built into the details. Part of the deal for the private toll road, as this article highlights, is that no other major highway can be built or upgraded within ten miles of the Toll Road for fifty years. This is part of a "non-compete" clause in the deal to make sure the Toll Road gets all major long distance traffic in the area for the next fifty years. But this means that a legislature in 2006 is tying the hands of future voters on highway and transit planning in the state for two generations. But that's true of much of privatization. Public resources, controlled by democratic accountability, get handed over to private interests and, depending on how property rights are defined, prevent future governments from easily regaining the democratic control the present generation had. That undermining of democracy is one of the subtler but very real goals of those engaged in privatization of public services and assets.