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U.S. PIRG Releases Critique of Public Private Partnerships

Samuel Staley
April 2, 2009, 4:09pm

Surprise! The US Public Interest Research Group Education Fund, a nonprofit organization that claims it offers an "independent voice that works on behalf of the public interest," has published a report highly critical of private sector involvement in managing roads. The report, "Private Roads, Public Costs: The Facts About Toll Road Privatization and and How to Protect the Public," provides little new to the debate. In fact, most of the arguments have been around for a long time and debunked by Reason Foundation analysts.

The authors seem to begin with the counterfactual presumption that governments are good stewards of roads and transportation infrastructure, and that private companies are pulling a fast one on elected officials who really don't know the value of the assets they are leasing. The report, for example, is highly critical of the Indiana Toll Road lease but doesn't acknowledge that the state was losing money on every toll transaction while the road was falling into disrepair. The lease to a private consortium provided a way to generate revenue that didn't exist before and dramatically increased the quality of the road and service provided.

For me, one of the more telling aspects of the report's analysis was in the begining. The authors first define privatization as the "transfer of traditionally public services or property to the private sector," implying that the service is now a private good independent of public control or regulation. In fact, all road transactions have been leases that include extensive regulatory oversight and control by the public sector. They also have significant clawback provisions and performance criteria that can trigger reversion back to the state or local government if the private company fails to perform. Risks are largely transferred to the private sector.

For more information, take a look at the Reason Foundation's Frequently Asked Questions on the Pennsylvania Turnpike lease debate, our critique of a PIRG-like analysis of the lease from the Pennsylvania Democratic Caucus, and our review of the potential for PPPs to improve the quality and management of roads at the state level for Missouri's Show Me Institute.


Samuel Staley is Research Fellow


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