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Transportation Infrastructure - Who Will Finance Rail?
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<P mce_keep="true">[quote user="The Butler"] <P>[quote user="Bucyrus"]</P> <P class=MsoNormal style="MARGIN: 0in 0.5in 0pt"><FONT face="Times New Roman" size=3> furthermore, <U>all</U> public funds are available as private funds.</FONT></P> <P class=MsoNormal style="MARGIN: 0in 0.5in 0pt" mce_keep="true"> </P> <P class=MsoNormal style="MARGIN: 0in 0.5in 0pt"><SPAN style="FONT-SIZE: 12pt; FONT-FAMILY: 'Times New Roman'"><BR><SPAN> </SPAN></SPAN></P> <P>[/quote] </P> <P mce_keep="true"> </P> <P><SPAN style="FONT-SIZE: 12pt; FONT-FAMILY: 'Times New Roman'"><FONT color=#0000ff><FONT size=1><FONT face=verdana,geneva>Please, explain, I don't understand this statement.</FONT></FONT></FONT></SPAN><BR></P> <P>[/quote]</P> <P class=MsoNormal style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=3>I said <U>all</U> public funds are available as private funds.</FONT></P><FONT size=3><FONT face="Times New Roman"> <?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" /><o:p></o:p></FONT></FONT> <P class=MsoNormal style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=3>That statement about the sufficiency of the amount of investment capital available was in response to this statement by jeaton, which was in response to what I said earlier about letting the private sector do all financing.<SPAN style="mso-spacerun: yes"> </SPAN>jeaton said: </FONT></P><FONT size=3><FONT face="Times New Roman"> <o:p></o:p></FONT></FONT> <P class=MsoNormal style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=3><FONT size=4>“The premise that if there is a real need, then private financing will fulfill the need is faulty because it assumes that there are unlimited private funds. That is simply not the case.”</FONT> </FONT></P><FONT size=3><FONT face="Times New Roman"> <o:p></o:p></FONT></FONT> <P class=MsoNormal style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=3>I take the implication of this statement to mean that, since the private sector only has so much funds, the government sector can step in and make funds available if needs exceed what the private sector can provide.<SPAN style="mso-spacerun: yes"> </SPAN>I disagree with that premise for the following reasons:</FONT></P><FONT size=3><FONT face="Times New Roman"> <o:p></o:p></FONT></FONT> <P class=MsoNormal style="MARGIN: 0in 0in 0pt"><FONT size=3><FONT face="Times New Roman">Nothing I have said assumes that there are unlimited private funds.<SPAN style="mso-spacerun: yes"> </SPAN>Private funds are not unlimited.<SPAN style="mso-spacerun: yes"> </SPAN>There is only so much money in existence at any given time.<SPAN style="mso-spacerun: yes"> </SPAN>All of it is available for investment if the investment pays enough.<SPAN style="mso-spacerun: yes"> </SPAN>Basically the non-government or private sector owns all of that money because the private sector produced it.<SPAN style="mso-spacerun: yes"> </SPAN>The only way the government can invest any of that money is if they take it away from the private sector.<SPAN style="mso-spacerun: yes"> </SPAN>The issue of how much they can take is the centerpiece of an eternal tug-of-war between the private and public sectors.<SPAN style="mso-spacerun: yes"> </SPAN></FONT></FONT></P><FONT size=3><FONT face="Times New Roman"> <o:p></o:p></FONT></FONT> <P class=MsoNormal style="MARGIN: 0in 0in 0pt"><FONT face="Times New Roman" size=3>Since the public sector produces nothing and therefore creates no money of its own, it would take all the money the private sector has if not for the resistance put up by the private sector.<SPAN style="mso-spacerun: yes"> </SPAN>In economic terms, government is a beggar with power.</FONT></P><FONT size=3><FONT face="Times New Roman"> <o:p></o:p></FONT></FONT> <P class=MsoNormal style="MARGIN: 0in 0in 0pt"><FONT size=3><FONT face="Times New Roman">So when I say <U>all</U> public funds are available as private funds, it simply means that there are no public funds unless they are taken from the private sector.<SPAN style="mso-spacerun: yes"> A</SPAN>ll public funds already exist as private funds.<SPAN style="mso-spacerun: yes"> </SPAN>So it is faulty to conclude that if an economically legitimist need is too large to attract sufficient private funds, then the public sector can make up the difference by providing public funds.<SPAN style="mso-spacerun: yes"> </SPAN></FONT></FONT></P><FONT size=3><FONT face="Times New Roman"> <o:p></o:p></FONT></FONT> <P><SPAN style="FONT-SIZE: 12pt; FONT-FAMILY: 'Times New Roman'; mso-fareast-font-family: 'Times New Roman'; mso-ansi-language: EN-US; mso-fareast-language: EN-US; mso-bidi-language: AR-SA">Yet government is often successful in making this case.<SPAN style="mso-spacerun: yes"> </SPAN>They are typically successful in cases where the legitimate need is not sufficient to attract all the private capital it requires, so government persuades the public that there is some greater good that redounds to society at large.<SPAN style="mso-spacerun: yes"> </SPAN>But whether or not this is true, in economic terms, government is not an investor with its own money.<SPAN style="mso-spacerun: yes"> </SPAN>Government is only a middleman in the transaction, and as such, they take what amounts to a commission on the deal.<SPAN style="mso-spacerun: yes"> </SPAN>They impose an added cost on the transaction that would not exist had the project been financed privately.<SPAN style="mso-spacerun: yes"> </SPAN></SPAN></P>
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