Saturday, January 7, 2017

How Privatization Works (Part 2,351,142)

Here's a recent story from the DC area Fox affiliate that shows how things play out when you privatize a public service.

In this case, the service is roads. And this picture tells you what you need to know.

That's right-- $30 to use the express lane.

Express lanes are managed by Transurban, an Australian company that manages, develops, and owns urban toll roads. There's a whole website just for the express lanes of Transurban's piece of the giant paved hellhole that is DC roadways, and it offered an explanation of why they were suddenly gouging commuters on this particular evening:

Tolls for the Express Lanes are dynamic, meaning they change periodically based on real-time traffic conditions to keep the Lanes free-flowing. Because toll prices are based on demand, it is difficult to predict exactly what the tolls will be at any given time.

Tolls can range from as low as $0.20 per mile during less busy times, and up to approximately $1.00 per mile in some sections during rush hour. However, rates may rise significantly above the typical range for periods of time in the event of unusually heavy congestion or a specific event like a traffic accident or lane(s) closure.

Dynamic pricing means that tolls on the Express Lanes change periodically to keep the Lanes free-flowing. Sensors alongside the road monitor traffic levels and speed, and toll prices adjust to maintain free-flowing conditions in the Lanes – even during peak times – to provide value to customers. A network of electronic signs displays the latest toll prices.

Those of you who aren't east coasters may note that tolls for the express lanes are EZPass, a nifty system by which you put a sensor in your car and just breeze through toll booths and pay your toll electronically. So if you are plenty wealthy, or driving a company car, a toll like this doesn't affect your travels other than by keeping the riff-raff off the road so that you can still enjoy a speedy express lane trip. Perhaps that's what we mean by "provide value to customers." Of course, providing value to one customer means discouraging or blocking other customers from using the service at all. And suddenly-- voila!-- you can end up paying taxes to create a public service that you can't afford to use yourself.

All of this makes perfect business sense, right down to using high prices to manage demand for a service that is momentarily "scarce." Sure, it means that you have to forget the whole purpose of the operation in the first place-- in this case, providing roadways that serve all drivers in the DC area and keep the community as a whole functioning well. Now, instead of a single efficient(-ish) public roadway system, you get a two-tiered system, with better services for those who can afford them, and a guaranteed profit for private interests. Does this all seem vaguely familiar?

This will sound familiar, too. The argument for privatizing key roadways is that the state doesn't have enough money to do a really good job, and by bringing in private corporations, the service can get a great new infusion of cash and support-- an odd argument, since no corporation will fail to get every cent of their cash back, and then some, and the public will have lost any say over this. DC customers who find the price of the express lane obnoxious are free to call a "customer service" number at the company and register their distress with an answering machine. Good luck with that.

This is how charterized roads work-- service for some people, big costs for all people, and a voice for no people.This is what privatizing a public service looks like. (This is also, incidentally, what Herr Trump's proposed umpty-zillion-dollar infrastructure plan look like-- use a pile of money to get companies like Transurban to buy and run a bunch of US infrastructure.) (It is also a good analogy for the whole argument about net neutrality.)

Private enterprise and the free market do not-- can not-- value all customers equally. Some customers are "worth" extra attention and service, and some customers (poor customers, customers who can't pay to make themselves worth the company's while) are "worth" little or no service at all.

If we intend to hold onto the value that there are some services that ALL Americans deserve, we cannot privatize those very services. If we want to say that America is a country where we declare that some people just don't deserve anything-- well, then, we need to have some hard conversations about what that means to our national and personal character.


  1. I just told my husband about this DC road system and he said, "That's good." My head about exploded, but when I calmed down enough for him to explain himself he said (more or less), it's good that things are getting this nuts. It's good that prices are getting extremely outrageous so that the two-tiered system is obvious. That's what it will take to get people off their @$$es. As long as it's just fifty cents here, a dollar there, we sheeple will continue to take it. We might grumble and gripe, but we'll go along with it. It's only when the majority of us are suffering beyond what we can afford that anything will change.

    And that speaks to why I'm not entirely distressed that Trump is now our president. Under Clinton, things would have continued to get worse and worse, just as they have the past 16 years, but it would be incrementally worse - frog in the slowly boiling pot of water. We'd allow ourselves to boil before we'd hop out.

    But Trump is going to make things so much obviously worse that people are going to have to stand up and speak out or just die quickly. There is going to be no more ability to stand around and pretend we don't see what's happening or to see that our country does, indeed, suck.

    Hillary (and Obama for that matter) has never been substantially different than Bush or even Trump. The differences are in the speed of the destruction and the "polite" veneer Hillary (and Obama and most of the Democrats) put on the destruction. Personally, if I have a choice between an obvious @$$hole attacking me from the front, or a "nice" guy stabbing me in the back, I'll take the former.

  2. This is congestion pricing. The most famous example is central London, where using the price system has increased travel time in central London, reduced driving and pollution in central London, and increased funding for public transportation and non-polluting sources of transportation like cycling.

    For anyone that cares about the environment, it is a very very good idea. As long as people are allowed to pollute the air you breath at no cost, they will pollute it. Start to charge those people for polluting your air and they will do less of it. Hell, if you pay the fee, you might even pollute less of their air as well.

  3. Consider that your highway analogy actually reflects the way things are now under government schools. Those with money pay premium house prices and higher property taxes in order to get into the fast lane. Since parents have no school choice those in the slow lane are prohibited switching.

    1. Nope. There's no need for a connection between house costs and schools, except that people in the expensive houses don't want to pay and of "their" money to educate "those children." School choice and charters are about making that lane business worse by creating a system in which folks in the big house can get away with paying even less to educate anyone else's kids.

  4. Trump's plan is especially egregious since taxpayers would pay .82 of every dollar for projects then the contractor keeps the tolls. It's beyond privatization to downright piracy. Very few projects will appeal to these investors, so it won't help many folks in flyover country.