Saturday, December 31, 2016

The United States Of Privateers

You may, like me, have become accustomed to looking at the world around you, and thinking in terms of the public and the private sectors, of resources owned by some of us, and those owned by all of us.  Schools, utilities, roads, parks--these and others are things we all own.

That's turning out to be less and less true.  Thanks to the New York Times, recently, I had my eyes opened to the extent to which the whole concept of public ownership has been reduced to obsolescence.  Follow this link, and the Times will be happy to walk you though a typical day in your life.  You will find that much of it is not owned by you, me, or the general population.  It's owned by equity firms--private investment firms with clients now willing to look for and profit off of assets formerly owned and controlled by the public.

The reasons behind this phenomenon are transparently obvious.  State and local governments with shrinking tax bases and rising costs, combined with voters less and less willing to pay taxes to governments they trust less and less, are looking for alternative ways to provide services that people need.  Equity firms are willing to provide those services, either through direct ownership or by management of assets still owned by the public.

Sounds great?  What happens to these assets and services in a financial downtown?  Do they just shut down, and leave everyone desperate for help that's no longer available?  Does the government step back in?  Can they do that quickly, if necessary?  And who pays then?  And how much?  Is the government on the hook for bailing out the investors, as was the case in 2008?  Are the taxpayers?

We might want to search for answers to those questions before the crisis hits.  It's only a matter of time before it does.  If we the people ultimately end up getting stuck with the bill when it come due, we might want to have a say about how much we want to pay.

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