Business Week Highlights Fatal Flaw in Private Toll Roads

Business Week has a great article (“Roads to Riches”) this week on the sell-off or leasing of public infrastructure to private companies. Bottom line, it’s a GREAT investment opportunity.

The reason why it’s such a great investment is exactly the fatal flaw from a public point of view: the ability to increase tolls sharply. The idea is that the private companies can charge tolls that politicians who are accountable to voters could not get away with. So the political calculus is: current officeholder gets the credit for a one time revenue boost (or new projects in lieu of cash). When the chickens come home to roost, someone else is in office and says: “don’t blame me, I didn’t cut this deal and I can’t break the contract.”

This is what Peter DeFazio called “outsourcing our political will.”

14 Responses to Business Week Highlights Fatal Flaw in Private Toll Roads