Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
How will the company make money without raising rates so high it stifles economic activity?
The private investors will not raise rates so high so as to stifle economy activity because those private investors operating the transportation infrastructure will not want to drive away business and decrease their profits by raising prices so high that users cannot and will not pay the costs.
Quote:
Originally Posted by kferq
and, practically, how do you grant such a huge monopoly to a private company and have oversight so the best interest of the public is served and not just the most profit for that company?
You don't just hand over total control of public infrastructure to private companies without any conditions, you put specific conditions on the deal, you make continued government oversight of continuing operations a key part of the transaction and you continue close government oversight of the private companies' operation of public infrastructure during the life of the contracts.
Quote:
Originally Posted by kferq
When so much money is involved, how do we prevent bribing of officials (not just government officials, but given how much power they will have in your scheme corporate officials) and prevent people from abusing the system to punish their adversaries. We certainly have corruption with our PSC regulating utilities!
We can't prevent all bribery of officials and corruption (though we can attempt to deter it with proactive lawmaking and tough enforcement of ethics laws), but since bribery is illegal we can punish it when it happens.
As long as there are people in powerful positions and as long as money is involved we will have corruption in one form or another on this earth.
Though, we should not necessarily let fear of corruption deter us from investing in something as critically necessary as transportation infrastructure.
We also should not use the fear of corruption as an excuse not to invest in something as critical to our existence as transportation infrastructure.
If we had let the fear of corruption deter us from building transportation infrastructure in the past, then almost all trains, roads, airports and seaports would have never been built.
Quote:
Originally Posted by kferq
Maybe this would work, but it is entirely an untested theoretical plan.
Not true, my friend. Privatized transportation infrastructure from trains to roads to shipping to airports and seaports is very-common all over the world. Reason Foundation - Airport Privatization
Today, private railroads operate first class regional and high-speed service across Asia, including Australia and Japan. Britain, Sweden and Germany among others have successfully initiated controlled competition for passenger operations. In each country, these experiments in competitive passenger operations have resulted in new sleek equipment and increased ridership. Britain undertook the most extensive privatization. With new private operators, passenger traffic grew so fast it outpaced the independent infrastructure company. The infrastructure deficiency has since been corrected with creation of a new public-private hybrid organization called Network Rail. It is no coincidence that the country with the greatest commitment to private operators has had the fastest passenger growth in Europe. In Britain, between 1990 and 2005, traffic rose from about 9 billion passenger miles to 35 billion passenger miles.
To put it in perspective, the United States has a population of 300 million and Amtrak provides only about 24 million passenger trips annually. In Britain, with a population of 61 million, private contract operators manage 1.2 billion passenger trips a year.
Even here in the good ol' U.S. of A., virtually all of our FREIGHT rail infrastructure is privatized (with the exception of a few state-owned stretches of freight rail right-of-ways), most of our air and ground shipping industry is privatized (private companies like UPS and FedEx dominate the shipping industry while local ground shipping is dominated by a proliferation of small and mid-size private courier services), and all of our passenger airline industry is privatized except for airport infrastructure.
Even much of our passenger airport transfer ground transportation industry is privatized (private taxis, cabs, limos, livery, airport shuttle bus companies)...
...While our road network is already partially-privatized as the government already contracts design and construction out to private engineering and roadbuilding firms, and as the government already borrows money from the private sector to fund transportation projects in the form of long-term bonds that are sold (and paid-back over time) to private investors.
Here in the U.S., there are also examples of privatized public transportation infrastructure being turned from costly taxpayer liabilities into profitable public assets, such as when the City of Chicago sold the 7.8-mile-long Chicago Skyway to private investors (by way of an 99-year lease deal) for an upfront payment of $1.83 billion in 2004, and when the State of Indiana sold the 157-mile-long I-90/I-80 Indiana Toll Road to private investors for an upfront payment of $3.8 billion by way of a 75-year lease deal. Chicago Skyway
This is pie in the sky. PPP is great at the margins but it is not the complete answer. It is a not ready for prime time plan. It is not plan B.
I completely agree that Public-Private Partnerships are not the complete answer to our transportation challenges as traditional fuel taxes (after being modified to be indexed to inflation so that fuel tax revenues adequately cover costs) will still be needed to pay for non-controlled access surface roads that cannot collect revenues from user fees.
But when it comes to controlled-access superhighways (grade-separated expressways), PPPs backed by user fees and real estate revenues are a very-major and dominant part of the answer to the future funding of our currently lagging and declining transportation infrastructure.
Quote:
Originally Posted by kferq
It is a not ready for prime time plan. It is not plan B.
The overwhelming evidence from all over the world and even here in the U.S. says otherwise.
If PPPs can successfully finance transportation infrastructure projects and operations all over the world and even here in the U.S., then PPPs could easily and effectively finance our pressing multimodal transportation needs here in the fast-growing transportation infrastructure-challenged Atlanta metro region and North Georgia.
Quote:
Originally Posted by kferq
It is not plan B.
Unless our state and federal governments suddenly decide that they want to collect enough tax revenues to fund our severely-lagging transportation infrastructure, PPPs are not only a 'Plan B', but PPPs are likely the ONLY plan to fund critically-needed infrastructure improvements at this point.
I completely agree that Public-Private Partnerships are not the complete answer to our transportation challenges as traditional fuel taxes (after being modified to be indexed to inflation so that fuel tax revenues adequately cover costs) will still be needed to pay for non-controlled access surface roads that cannot collect revenues from user fees.
None of the projects you cite have used PPPs for everything except surface streets. None! They cherry pick individual projects where a profit can be made and sell them and then use the funds for something that will operate at a loss which they subsidize with tax dollars. This is the marginal role for PPPs that I support. Tax dollars (and some user fees) for everything else.
Quote:
Originally Posted by Born 2 Roll
The overwhelming evidence from all over the world and even here in the U.S. says otherwise.
If PPPs can successfully finance transportation infrastructure projects and operations all over the world and even here in the U.S., then PPPs could easily and effectively finance our pressing multimodal transportation needs here in the fast-growing transportation infrastructure-challenged Atlanta metro region and North Georgia.
I am not against PPPs. Just the insistence that they are the complete answer to our problems. If they could easily finance our infrastructure, why haven't they already done it? Because structuring the deals to both serve the public interest and make money is actually very hard. Mossberg made some excellent points in his post on page 6 (give him reputation if you already haven't) about the problems that PPPs face.
Quote:
Originally Posted by Born 2 Roll
Unless our state and federal governments suddenly decide that they want to collect enough tax revenues to fund our severely-lagging transportation infrastructure, PPPs are not only a 'Plan B', but PPPs are likely the ONLY plan to fund critically-needed infrastructure improvements at this point.
Now you are talking: Collect adequate tax revenues to cover infrastructure, build only critically needed infrastructure and maintain the rest! What a radical idea. In fact the combination of adequate revenue, wise management, and fiscal restraint has worked everywhere it has been tried. doesn't mean we should abandon it! . That would would be a start to plan B. PPPs could play a role, user fees could play a role, but there is no substitute for good old tax revenue.
So keep coming up with good ideas for PPPs (I know you will), but let's be realistic about what the region needs.
Ultimately what does plan B look like: What should be repaired and built? How should the tax increase be structured? How can we maximize benefits from user fees and PPPs? This is the discussion that is not happening at a realistic level in our state. Let's have that discussion!
All of the problems you cite with PPP's relate to the government side. Transportation is not different from any other industry. It should be dominated by competing private business like how we get housing, food, heat, and basically everything else in your life. Not a government-run command-control economy. Transportation infrastructure should be created people voting with their wallets. Not dictated by political kick-backs.
All of the problems you cite with PPP's relate to the government side. Transportation is not different from any other industry. It should be dominated by competing private business like how we get housing, food, heat, and basically everything else in your life. Not a government-run command-control economy. Transportation infrastructure should be created people voting with their wallets. Not dictated by political kick-backs.
Ideology again. Not all the problems with PPPs relate to the government side (nor are all on the corporate side). Anyone in power can be corrupt whether they are in government, corporations, unions or non-profits. Corporations serve their own interest and not the public. That is very good sometimes, but not always, especially when limited monopolies exist (as they do in PPPs) limiting competition. One has to think carefully how these things are structured to avoid all forms of corruption. Kickbacks certainly occur in PPPs!
Transportation for military and economic reasons has been a legitimate function of government for as long as there has been government. As I have discussed in many posts with you, the lack of transportation options decreases economic development. Even if you don't drive, you may lose your job if people or goods cannot reach your business. If wallets are all that matters then the rich will have transportation and the low wage workers will never be able to get to their jobs: economic inefficiency results and we lose economic growth to places where people can get to their jobs. That is why metro areas competing with Atlanta for jobs are investing in transportation infrastructure with tax dollars. You can hold to your ideology and watch the jobs go away if you want, but most of us prefer things that actually work.
My desire for the P3s come from Fastracs in Denver. I have read up on how they have designed the system and it is seems like a great solution. Now, being that it is relatively new, I'm sure its not going to be 100% perfect, but the system they have created is exactly what Atlanta needs. It is palatable to the political climate here and appears to be getting things done.
You do realize that P3s will receive tax money right? It will not be possible off user fees alone. The government sets the standards and creates the funding that guarantee a certain amount of funding for the private company to build and operate a system. The private company is compelled to stick with those standards, be it service, safety, and/or price, or else they will not receive funding from the government.
Basically the government will pay a certain amount to a private company to design, build, and operate a transit system that is bound by certain standards. The private company is guaranteed a certain amount of funds and it is up to them to make it profitable within specific standards.
Kickbacks and corruption are very possible in P3s and should be watched.
Last edited by tikigod311; 01-15-2014 at 12:41 PM..
Ideology again. Not all the problems with PPPs relate to the government side (nor are all on the corporate side). Anyone in power can be corrupt whether they are in government, corporations, unions or non-profits. Corporations serve their own interest and not the public. That is very good sometimes, but not always, especially when limited monopolies exist (as they do in PPPs) limiting competition. One has to think carefully how these things are structured to avoid all forms of corruption. Kickbacks certainly occur in PPPs!
I am not saying we need to get rid of smart regulation. But competing free market businesses have very low levels of corruption because they are only stealing their own profits.
Quote:
Originally Posted by kferq
Transportation for military and economic reasons has been a legitimate function of government for as long as there has been government.
But food or shelter is not as critical?
Quote:
Originally Posted by kferq
As I have discussed in many posts with you, the lack of transportation options decreases economic development. Even if you don't drive, you may lose your job if people or goods cannot reach your business.
Your statement implies that the free market would provide less transportation options. I think the opposite is true.
Quote:
Originally Posted by kferq
If wallets are all that matters then the rich will have transportation and the low wage workers will never be able to get to their jobs: economic inefficiency results and we lose economic growth to places where people can get to their jobs.
Sure they will. People already choose where to live based on jobs (along with the cost of housing and dozens of other things). With this change people would also consider the cost of transportation as a factor.
And don't you agree the poor have better access to food and housing in free market economies than places where the government provides it? Should transportation be any different?
Quote:
Originally Posted by kferq
That is why metro areas competing with Atlanta for jobs are investing in transportation infrastructure with tax dollars. You can hold to your ideology and watch the jobs go away if you want, but most of us prefer things that actually work.
Right, I realize that we have to keep competing for federal transportation dollars. Those helped build Atlanta because we got a larger share of those dollars than other places. So I am a realist and know we need to keep competing for those dollar while they exist. My point is that they should not exist. We would have more jobs and more transportation options if private companies ran things.
My desire for the P3s come from Fastracs in Denver. I have read up on how they have designed the system and it is seems like a great solution. Now, being that it is relatively new, I'm sure its not going to be 100% perfect, but the system they have created is exactly what Atlanta needs. It is palatable to the political climate here and appears to be getting things done.
You do realize that P3s will receive tax money right? It will not be possible off user fees alone. The government sets the standards and creates the funding that guarantee a certain amount of funding for the private company to build and operate a system. The private company is compelled to stick with those standards, be it service, safety, and/or price, or else they will not receive funding from the government.
Basically the government will pay a certain amount to a private company to design, build, and operate a transit system that is bound by certain standards. The private company is guaranteed a certain amount of funds and it is up to them to make it profitable within specific standards.
Kickbacks and corruption are very possible in P3s and should be watched.
Good points here. PPP's are probably even more open to kickbacks and corruption than normal. They are a kind of awkward middle ground between public and private. Controls to ensure that a fair and competitive bid process takes place is essential.
I am not saying we need to get rid of smart regulation. But competing free market businesses have very low levels of corruption because they are only stealing their own profits.
Not when it's a monopoly. Those places know you don't have a choice, and can just take the attitude of "tough" when someone complains or doesn't like the prices. There is no ability to "take your business elsewhere." Look at what's happening with the internet right now. Because the government won't step in to regulate it, the companies are about to start charging more for "premium" sources on the serving-end similar to cable channels. There are only a handful of ISPs that control everything and they know that there's not going to be any competition so they can do this.
Quote:
But food or shelter is not as critical?
Of course it is, that's why we have programs like food stamps and section 8. Are they perfect? No, and I do think they need reform so people aren't cheating the system or buying smokes with money meant for food.
Quote:
Your statement implies that the free market would provide less transportation options. I think the opposite is true.
Do you have any basis for this? Well I have basis for the opposite. Any private-capital transportation system funded today would have a monopoly. There won't be five competing routes, there would be ONE.
Quote:
Sure they will. People already choose where to live based on jobs (along with the cost of housing and dozens of other things). With this change people would also consider the cost of transportation as a factor.
They already do. People factor in cost of gas, and maintenance and car insurance right now. They just usually have no choice.
Quote:
And don't you agree the poor have better access to food and housing in free market economies than places where the government provides it?
No, because in a free market economy, they have NO access since no one looks out for the community as a whole.
Quote:
Should transportation be any different?
It shouldn't, see above.
Quote:
Right, I realize that we have to keep competing for federal transportation dollars. Those helped build Atlanta because we got a larger share of those dollars than other places. So I am a realist and know we need to keep competing for those dollar while they exist. My point is that they should not exist. We would have more jobs and more transportation options if private companies ran things.
Not when it's a monopoly. Those places know you don't have a choice, and can just take the attitude of "tough" when someone complains or doesn't like the prices. There is no ability to "take your business elsewhere." Look at what's happening with the internet right now. Because the government won't step in to regulate it, the companies are about to start charging more for "premium" sources on the serving-end similar to cable channels. There are only a handful of ISPs that control everything and they know that there's not going to be any competition so they can do this.
I agree smart regulation and breaking up monopolies is still required from the government.
Quote:
Originally Posted by MattCW
Do you have any basis for this? Well I have basis for the opposite. Any private-capital transportation system funded today would have a monopoly. There won't be five competing routes, there would be ONE.
Even going back to the original transit companies in NYC and else where, it was not one company. It was multiple. But yes, the number that comes after 0 is 1. However there are already private, un-subsudized transit companies offering cheaper rates than MARTA on some of it's under served routes.
Quote:
Originally Posted by MattCW
They already do. People factor in cost of gas, and maintenance and car insurance right now. They just usually have no choice.
I disagree about choice. And gas and automobiles are private industires, so yes those two factors get accounted for. But not free public roads and other subsudized options.
Quote:
Originally Posted by MattCW
No, because in a free market economy, they have NO access since no one looks out for the community as a whole.
But yet it all seems to work without a government bureaucrat issuing quotas of food. And where you have a control economy "looking out for the community" you have starvation.
Quote:
Originally Posted by MattCW
Can you provide any evidence for this last part?
Yes, almost every private industry is better off than it's command economy counter-part. Look at all of the food options you have and variety of jobs created compared to Soviet Russia.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
