Tuesday, November 15, 2016

The Whole Hog Question: McQuillan vs. Block on Public-Private Partnerships, Part 2

Below Dr.Walter Block responds to Dr. Lawrence McQuillan's comment, The Whole Hog Question: McQuillan vs. Block on Public-Private Partnerships:

Dr. M says this: “Given government’s record of failure, however, Washington would do better to step aside and let private entrepreneurs repair America’s roads, bridges and ports.” But if the roads, bridges and ports are “America’s” and private entrepreneurs “repair” them, this amounts to what is called “contracting out.” The government retains ownership, and hires private companies to work on ITS property. This sounds like a public-private partnership to me.

He also says this: “But even more sober assessments, by the U.S. Department of Transportation and others, agree that governments—federal, state and local alike—are not spending sufficiently on infrastructure improvements.” To call something a “sober assessment” is to support it. So, Dr. M supports greater governmental spending on “infrastructure improvements.” I find it difficult to reconcile this statement with the free enterprise philosophy, which mandates that government should spend less, not more.

Dr. M says this: “When a government “owns” an asset—such as a road, bridge or water utility—in effect nobody owns it.” Not at all, say I. And Hillary will back me up on this. The point is, yes, somebody does indeed “own” it in effect. De facto, not de jure, of course. And, members of the ruling class who are the real owners, beneficiaries, of public property, make out quite well on it. Again, just ask Hillary about doing well out of government property. She’ll tell you.

Dr. M avers: “A better model is for government to be less involved in the infrastructure business and encourage entrepreneurs to get more involved. Other countries provide a successful roadmap.” Why “less” involved? How’s about, “not involved at all!” Entrepreneurs should be “more involved” in making government property run more efficiently? This doesn’t sound like libertarianism to me. This sounds like a Milton Friendmanite attempt to become a government efficiency expert. Everyone should read what Murray Rothbard said about Milton:Rothbard, Murray N. 2002. “Milton Friedman Unraveled.” Journal of Libertarian Studies, Vol. 16, No. 4, Fall, pp. 37-54; http://www.mises.org/journals/jls/16_4/16_4_3.pdf

He continues: “Brazil auctioned off operating rights for five highways using long-term contracts. Tolls are used to collect revenue. Ivepar, the company that won a 30-year lease for one of the auctioned highways, plans to invest more than $2.5 billion (8 billion reais) to modernize the road and double the number of lanes in five years.” Yes, yes, this is a declarative sentence. It is possible that Dr. M really opposes this. But, in my attempt to toot my own horn I interpreted him as supporting this private public partnership (PPP). Am I wrong, Dr. M?

Ditto for his support of this anti-libertarian occurrence: “Spanish company Sacyr has won three highway contracts in Colombia, and also plans to invest about $2.5 billion in improvements. One of the three contracts calls for Sacyr to build a 50-mile highway in four years, complete with intersections, tunnels, bridges, culverts and viaducts. The company will operate the highway for 25 years, providing traffic monitoring services, emergency response, law enforcement, tow trucks and ambulances, among other services and amenities.” For 25 years? Whoop di do. And then what happens. Who, then, gets the ownership rights over this “50-mile highway?” And who has oversight in the interim? I’ll give you one guess, gentle reader. Can’t get it. Ok, ok, I’ll give you a hint: it begins with the letter “g.” If that is not a PPP supported by Dr. M, then nothing is.

Dr. M ends on another anti libertarian note: “The U.S. should follow the lead of other countries and auction off or lease infrastructure assets to private companies with an economic incentive to properly maintain them and avoid boondoggles.” “Auction off?” And who gets the money from this “auction?” I hate to be repetitive, but: I’ll give you one guess, gentle reader. Can’t get it. Ok, ok, I’ll give you a hint: it begins with the letter “g.” If that is not a PPP supported by Dr. M, then nothing is.

Rather than “auctioning off” anything, the government should give its assets to the long-suffering taxpayers who financed its expenditures in the first place. You won’t find any support for any government auctioning off any roads, bridges or highways in this book:

Block, Walter E. 2009. The Privatization of Roads and Highways: Human and Economic Factors; Auburn, AL: The Mises Institute
For a real world albeit imperfect example (they wouldn’t allow unlimited sales of shares in this new private corporation) of a governemnt giving away its property to citizens, not “auctioning them off,” see the case of British Columbia Resources Investment Corporation (BCRIC) in Canada in the 1980s.

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