Thursday, January 01, 2009

The tax base is dead, so the sellof begins.

If you recall I explained recently that the "full faith and credit" of the US entails two things, 1) its ability to tax you, and 2) the value of the hard assets it possesses. I pointed out that government is largely at the end of its ability to tax, so the only options left will be to sell off assets to debtors. So you can kiss your favorite free parks, museums, zoos, and toll-free roads goodbye. They're all going to be for-profit now. And, for good measure, wages will be lowered more, too.

USA Today
U.S. states consider selling off roads, parks

ST. PAUL, Minnesota (AP) — Minnesota has a huge budget deficit, but the state still owns a premier golf resort, a sprawling amateur sports complex, a big airport, a major zoo and land holdings the size of the Central American country of Belize.

Valuables like these are in for a closer look as 44 states cope with budget deficits.

Like families pawning the silver to get through a tight spot, states such as Minnesota, New York, Massachusetts and Illinois are thinking of selling or leasing toll roads, parks, lotteries and other assets to raise desperately needed cash...

..."Infrastructure is more attractive today than ever," Gilroy said. "It's tangible. It's a road. It's water. It's an airport. It's something that is — you know, you hear the term recession-proof."

Labor unions do not like privatization deals out of fear that worker wages and benefits will be squeezed as private operators try to boost their profit by streamlining services.

Taxpayers, too, can lose out if the arrangements do not work — and sometimes even if they do, said Mark Price, a labor economist with the Keystone Research Center in Harrisburg, Pennsylvania. Higher tolls on privatized roads can push drivers onto state-operated roads, wearing them down faster and raising public costs over time.

"You're privatizing some profits in this process and socializing some losses," Price said.

Selling or leasing public assets can produce an immediate infusion of cash for the state, while foisting the tough decisions, such as raising tolls, onto private operators instead of the politicians.

"The downsides are often after they leave office," said Phineas Baxandall, a researcher with the consumer-oriented U.S. Public Interest Research Group in Boston...

Now, I am not completely against privatization per se - there are many things that government simply does not need to do and should not be doing. Frankly, in these times, government has no business funding arts and recreation whatsoever. All non-essential functions of government should be looked at long and hard, just like any family would have to do with their own budget - in order to balance the budget, some expenses that are non-essential simply have to go. Those are real life decisions that will have to be made - we cannot keep pouring money into the bottomless pit of government when they refuse to balance the budget and prioritize spending on things that really matter, like national health care.

But it's a shame we're going to lose the parks and give up discretionary government spending on programs that have benefited many millions of people - and it would never have happened if government had not allowed the Robber Barons to externalize all their costs and stagnate US wages in the globalization scam, don't forget. A full employment base of living wage jobs would have prevented all of this from happening, class. So you can thank the CEOs of the transnational corporations for the loss of your parks, because the final "first cause" of this mess is their greed.

1 comment:

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