Convicted One Euclid Pence was asked to explain how the private sector will help finance the public infrastructure rebuilding. He completely dodged the question. He gave no answer, but said it will be answered in the future after they find the answer. Privatize (and toll) the interstate highways, add "truck only" toll lanes to existing highways, and creating new psuedo-government independant economic development groups with authority to levy taxes have been proposed.
Euclid Pence was asked to explain how the private sector will help finance the public infrastructure rebuilding. He completely dodged the question. He gave no answer, but said it will be answered in the future after they find the answer.
Pence was asked to explain how the private sector will help finance the public infrastructure rebuilding. He completely dodged the question. He gave no answer, but said it will be answered in the future after they find the answer.
Privatize (and toll) the interstate highways, add "truck only" toll lanes to existing highways, and creating new psuedo-government independant economic development groups with authority to levy taxes have been proposed.
I guess that is the only way that a private investor can fund infrastructure improvement. The private investor can invest in infrastructure if it is privatized. Then it becomes a capital investment that generates a return to pay back the investment.
Otherwise, if a private investor were to fund public infrastructure, I don’t understand where the revenue comes from that pays back the private investor. Let’s say the infrastructure project is to build a new public highway, and it is financed by a private investor. Where does the payback to the private investor come from? The highway is not generating revenue. It only provides its use for the public.
There is also a lot of talk about the trillion dollar infrastructure plan being revenue-neutral. When a change in tax rates does not alter the amount of revenue collected, it is said to be revenue-neutral. What is meant by spending a trillion dollars in a way that is revenue-neutral?
Cintra also has major stakes in the Chicago Skyway and Indiana Toll Road, as well as numerous toll roads in Spain, Ireland, and Latin America. The highways are toll roads open to anyone who will pay the tolls. Cintra has been granted contracts to collect the tolls for periods up to 50 years. It recoups its investment plus a profit through the tolls.
Rio Grande Valley, CFI,CFII
JPS1 “Otherwise, if a private investor were to fund public infrastructure, I don’t understand where the revenue comes from that pays back the private investor.” Cintra is a Spanish company headquartered in Madrid. It has participated in the construction and operation of a variety of public infrastructure projects in numerous countries. In Texas it partnered with TXDOT to build Sections 5 and 6 of Texas 130, which is the southern section of the highway that runs from just north of Georgetown, TX to just north of Sequin, TX. It has also been a major funding source for LBJ Express (I-635 Lexus Lanes), North Tarrant Express and I-77 Express. Cintra also has major stakes in the Chicago Skyway and Indiana Toll Road, as well as numerous toll roads in Spain, Ireland, and Latin America. The highways are toll roads open to anyone who will pay the tolls. Cintra has been granted contracts to collect the tolls for periods up to 50 years. It recoups its investment plus a profit through the tolls.
But yes, I could see our entire infrastructure system being privatized and financed by the private sector on a for-profit basis. If that is what Trump has in mind, I would be all for it. The efficiency that would be gained by privatizing the whole thing would probably indeed upgrade 100% of our infrastructure at no cost to the public. It might even return a dividend in the form of lower taxes.
EuclidOtherwise, if a private investor were to fund public infrastructure, I don’t understand where the revenue comes from that pays back the private investor. Let’s say the infrastructure project is to build a new public highway, and it is financed by a private investor. Where does the payback to the private investor come from? The highway is not generating revenue. It only provides its use for the public.
"Public" infrastructure funded by private investment is quite common. With the investors being paid back by the users of the infrastructure through "User Fees". Think of electricity, natural gas, sewerage, and sometimes water from a private company. I get electricity and natural gas through such systems but I have a well and a septic system. So I pay for electricity and gas but maintain my own personal sewerage and water systems. (Well, actually I don't personally maintain them, I pay skilled people to do that when needed.)
Today, with modern technology, the same thing can be done with road useage. So why not give it a try?
EuclidWhen a private investor funds infrastructure that collects user tolls and pays off the private investor with those tolls, I would not consider that infrastructure to be public. It would be privatized infrastructure, at least while it is paying back the investor.
You do know what a service agreement is right? The problem with your scenario and understanding is the land under the toll road would need to transfer and then be taxed under the Private Operator but it is not........it remains a state asset. Stands to reason the toll road built with the help of a state or federal guarantee is an asset of the guarantor in part or in full even though the service agreement states another party constructs it and collects tolls on it. It's the same as subsidy to frieght railroads we see in some cases. State owned line, state pays railroad to keep it maintained and operate it. The rail line never transfers over to the railroad unless a specific lease is involved AND if the ownership of the line transfers over to the railroad the railroad has to pay taxes on it. Also roughly akin to Equipment Trust certificates.
greyhounds Euclid Otherwise, if a private investor were to fund public infrastructure, I don’t understand where the revenue comes from that pays back the private investor. Let’s say the infrastructure project is to build a new public highway, and it is financed by a private investor. Where does the payback to the private investor come from? The highway is not generating revenue. It only provides its use for the public. "Public" infrastructure funded by private investment is quite common. With the investors being paid back by the users of the infrastructure through "User Fees". Think of electricity, natural gas, sewerage, and sometimes water from a private company. I get electricity and natural gas through such systems but I have a well and a septic system. So I pay for electricity and gas but maintain my own personal sewerage and water systems. (Well, actually I don't personally maintain them, I pay skilled people to do that when needed.) Today, with modern technology, the same thing can be done with road useage. So why not give it a try?
Euclid Otherwise, if a private investor were to fund public infrastructure, I don’t understand where the revenue comes from that pays back the private investor. Let’s say the infrastructure project is to build a new public highway, and it is financed by a private investor. Where does the payback to the private investor come from? The highway is not generating revenue. It only provides its use for the public.
I agree that we should give it a try. That was my point above when I said this:
"I understand your point. My point was that I don't understand how the private investor gets paid back when investing in a public sector infrastructure. When a private investor funds infrastructure that collects user tolls and pays off the private investor with those tolls, I would not consider that infrastructure to be public. It would be privatized infrastructure, at least while it is paying back the investor.
But yes, I could see our entire infrastructure system being privatized and financed by the private sector on a for-profit basis. If that is what Trump has in mind, I would be all for it. The efficiency that would be gained by privatizing the whole thing would probably indeed upgrade 100% of our infrastructure at no cost to the public. It might even return a dividend in the form of lower taxes."
I began my inquiry by asking how Trump would fund public infrastructure by private investment, which requires paying back the investor. I understand that it is possible to do by adding user fees to the public infrastructure to pay back the investor. I did not ask the question because I disagree with the approach. I asked it because the explanation seems to be lacking in the coverage of having private investment pay for new infrastructure.
The emphasis in the news coverage seems to assure the taxpayers that spending a trillion public dollars will be worth it. So we are told that some of that money will come from private investment. I would say that opens the door to enormous tax relief and private sector prosperity, going way beyond just reducing the first public cost of new infrastructure. So yes, if we can mine that vein of gold, let's do it.
Euclid But yes, I could see our entire infrastructure system being privatized and financed by the private sector on a for-profit basis. If that is what Trump has in mind, I would be all for it.
But yes, I could see our entire infrastructure system being privatized and financed by the private sector on a for-profit basis. If that is what Trump has in mind, I would be all for it.
But what do you do if the private interest fails to maintain the asset as specified, pocketing the MRO funds instead as clandestine profit, then ultimately files for bankruptcy as their exit strategy?
Convicted One Euclid But yes, I could see our entire infrastructure system being privatized and financed by the private sector on a for-profit basis. If that is what Trump has in mind, I would be all for it. But what do you do if the private interest fails to maintain the asset as specified, pocketing the MRO funds instead as clandestine profit, then ultimately files for bankruptcy as their exit strategy?
I think that would have to be monitored for compliance with a performance agreement. I suppose it would involve a lot of regulation, which unfortunately, might make the whole public/private partnership infeasible or unable to save any money. But if it is done right, the private sector could build infrastucture and operate as a business with no excess regulation. If that were the case, it would be a very lucrative business, so the private operator would want to hold onto it and make money rather than milk it and bail out.
Infrastructure would be a whole lot more affordable to the user if you take the goverment overhead out of it.
EuclidInfrastructure would be a whole lot more affordable to the user if you take the goverment overhead out of it.
Alas, the government overhead will be replaced by the need to show a profit...
A while back the government (at least the military) was big on "Commercial Activities" studies. Although the process was actually a thinly veiled method of enacting a reduction in force, it became clear that no single business could replace any of the organizations.
When I asked what would happen if a study found that an activity actually needed more resources, the reply was "it better not..."
The public works department does everything from plowing snow to electrical work (consumer and high voltage), to plumbing, to carpentry, to HVAC, to sewers, to water mains, and a few other things. As a result, the only contractors who could bid on it were those who would be able to marshall all of the necessary disciplines under one roof. Those companies exist, but not in most communities.
Joe's Plumbing and Heating was left out of the process.
In the end, nothing changed, except the activities being "studied" had to handle the same workload with less resources.
There were some attempts to farm certain functions out to contractors, but usually the job eventually came back to the government activity, with government workers doing the work.
Larry Resident Microferroequinologist (at least at my house) Everyone goes home; Safety begins with you My Opinion. Standard Disclaimers Apply. No Expiration Date Come ride the rails with me! There's one thing about humility - the moment you think you've got it, you've lost it...
tree68 There were some attempts to farm certain functions out to contractors, but usually the job eventually came back to the government activity, with government workers doing the work.
I think privatization would be good, but I agree that it would not be easy. Government would take it as an act of war and fight it every inch of the way. Fundamentally, government wants to grow for its own interest, and looks for ways to grow. But if privatization could be done, I do not believe that the profit of privatization would wipe out the savings in government overhead. I think that savings of government overhead would be at least ten times a fair and healthy profit. It would add immense new prosperity to society.
I've worked in both government & industry. The pay was about the same for the job but the government benefits were so much better that the overall cost per job was higher for the government. But it took some getting used to working in government as the productivity of the average worker definitely was less than what I experienced in industry. And there really wasn't any award for being an above average government worker.
alphasthe productivity of the average worker definitely was less than what I experienced in industry.
I worked in data processing, and the message center for a number of years for the Army. For security reasons, there had to be at least two people working. And once the data processing was done, the messages logged, and any ancillary chores were completed, it usually was a matter of finding a magazine to read (or other activity).
On the other hand, there were times when taking a break was a challenge.
I always found it curious that anyone would be able to study production efficience in such a situation. You can only process the widgets that you're sent to process...
Let's see, Betsy DeVos wants to privatize public education, George W Bush partially privatized war with the various and sundry private security firms (mercenaries) in Iraq. Any other suggestions??
CSSHEGEWISCHLet's see, Betsy DeVos wants to privatize public education, George W Bush partially privatized war with the various and sundry private security firms (mercenaries) in Iraq. Any other suggestions??
Seeing Trump's resistance to separating himself from his businesses, it appears we have privatized to Presidency.
Never too old to have a happy childhood!
BaltACD CSSHEGEWISCH Let's see, Betsy DeVos wants to privatize public education, George W Bush partially privatized war with the various and sundry private security firms (mercenaries) in Iraq. Any other suggestions?? Seeing Trump's resistance to separating himself from his businesses, it appears we have privatized to Presidency.
CSSHEGEWISCH Let's see, Betsy DeVos wants to privatize public education, George W Bush partially privatized war with the various and sundry private security firms (mercenaries) in Iraq. Any other suggestions??
...Or heading for a form of progressivism government called Adminstrative State.
One thing to think about regarding privitization of "public" infrastructure is the justification for the services are not dependent on need, but on profit.
Privitization of the road structure sounds good, but what happens when the "profit" is marginal. Railroads are private entities, when they have lines that fall below a profitability threshold, they abandon or sell off the underperforming lines. Would a private owner want to maintain a highway in a rural area to a high standard? How much of the highway network in the western US, outside of the interstate system, would be economically viable to operate and make a profit?
Dave H. Painted side goes up. My website : wnbranch.com
Far too much political opinion from one side in this thread. Time for some people to grow up and accept reality.
Norm
Norm48327 Far too much political opinion from one side in this thread. Time for some people to grow up and accept reality.
Reality has been accepted - how to deal with the reality is the question that needs to be worked with, as reality seems to be a erratically moving concept.
dehusmanOne thing to think about regarding privitization of "public" infrastructure is the justification for the services are not dependent on need, but on profit. Privitization of the road structure sounds good, but what happens when the "profit" is marginal. Railroads are private entities, when they have lines that fall below a profitability threshold, they abandon or sell off the underperforming lines. Would a private owner want to maintain a highway in a rural area to a high standard? How much of the highway network in the western US, outside of the interstate system, would be economically viable to operate and make a profit?
How are you determining "need"? And how are you defining "Profit"?
Anyone can say: "We need this or that." But if they people who "Need" it are unwilling to pay the costs to cover the benefits, the road (or whatever) will be a net loss to our society. What you seem to be seeking is a cross subsidy for rural people. A system where others are taxed to pay for something from which they receive no significant benefit makes the society less well off.
As to "Profit", it has come to be used so as to wrongly include the cost of capital. Capital is a necessary input just like labor, fuel, etc. And just like labor, fuel, etc. it must be paid for. It has a cost. If the rural people don't benefit enough from their roads to pay all the costs, why have the road? Politics?
About twenty-five years ago, I worked with a young man who did not know who our enemies were in the Second World War.
Johnny
greyhounds dehusman One thing to think about regarding privitization of "public" infrastructure is the justification for the services are not dependent on need, but on profit. Privitization of the road structure sounds good, but what happens when the "profit" is marginal. Railroads are private entities, when they have lines that fall below a profitability threshold, they abandon or sell off the underperforming lines. Would a private owner want to maintain a highway in a rural area to a high standard? How much of the highway network in the western US, outside of the interstate system, would be economically viable to operate and make a profit? How are you determining "need"? And how are you defining "Profit"? Anyone can say: "We need this or that." But if they people who "Need" it are unwilling to pay the costs to cover the benefits, the road (or whatever) will be a net loss to our society. What you seem to be seeking is a cross subsidy for rural people. A system where others are taxed to pay for something from which they receive no significant benefit makes the society less well off. As to "Profit", it has come to be used so as to wrongly include the cost of capital. Capital is a necessary input just like labor, fuel, etc. And just like labor, fuel, etc. it must be paid for. It has a cost. If the rural people don't benefit enough from their roads to pay all the costs, why have the road? Politics?
dehusman One thing to think about regarding privitization of "public" infrastructure is the justification for the services are not dependent on need, but on profit. Privitization of the road structure sounds good, but what happens when the "profit" is marginal. Railroads are private entities, when they have lines that fall below a profitability threshold, they abandon or sell off the underperforming lines. Would a private owner want to maintain a highway in a rural area to a high standard? How much of the highway network in the western US, outside of the interstate system, would be economically viable to operate and make a profit?
Absolutely right. Profit is necessary. Government waste is not.
Capital is an essential component of a free market system of producing goods and services. You can’t set up a lemonade stand without capital. Capital costs money and that cost comes before a business makes any money. So someone has to provide that capital money on the bet that the business will succeed and pay back the capital investment.
But that is not a sure bet. Any business can fail to pay back the capital investment. So a person who invests in startup capital takes a risk of losing that invested money.
Profit is the reward for taking that risk. Nobody would risk losing the startup investment or be willing to make the ongoing commitment to running a business without the reward of profit. Profit is not evil, as the Marxists teach. Profit is an essential economic component of a free market system.
So, yes, when you privatize government functions, you introduce profit. But the cost of profit is what makes it work. And at the same time that you introduce profit, you eliminate the wastefulness of government overhead. There is no benefit in that waste. It is entirely parasitic.
I wonder what the over-and-under is on this thread being locked after a few more posts?
The folks who enjoy off topic political bickering should have their own sub-forum..
"I Often Dream of Trains"-From the Album of the Same Name by Robyn Hitchcock
carnej1The folks who enjoy off topic political bickering should have their own sub-forum..
Amen to that, but other sites with political sub-forums have closed them because politics keeps inching back into the main forum.
carnej1 The folks who enjoy off topic political bickering should have their own sub-forum..
Remember railroads and politics have been entwined in each other since local merchants in Baltimore came up with the idea of building a railroad instead of a canal to enhance economic activity in Baltimore back in 1827.
BaltACDRemember railroads and politics have been entwined in each other since local merchants in Baltimore came up with the idea of building a railroad instead of a canal to enhance economic activity in Baltimore back in 1827.
While that statement is true, does it justify bashing current-day politicians one just happens to dislike? It goes on on both sides of the fence and is getting boring.
Norm,
Nobody is bashing politicians here. It is mostly Economics 101.
EuclidNorm, Nobody is bashing politicians here. It is mostly Economics 101.
And Alternate Economics 101
Norm48327While that statement is true, does it justify bashing current-day politicians one just happens to dislike?
Yes.
The opinions expressed here represent my own and not those of my employer, any other railroad, company, or person.
+1 Good post. Apparently extremists continue to believe the myth that the profit motive guarantees that operations are always better by insisting it is more efficient. For a dose of reality, I suggest looking at the best hospitals. They are mostly non-profits.
C&NW, CA&E, MILW, CGW and IC fan
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