Highway Robbery

January 9, 2007

Like Jason Voorhees rising from Crystal Lake to slaughter yet another batch of teenagers, the notion of raising cash by privatizing the New Jersey Turnpike and/or the Garden State Parkway keeps returning to stalk the halls of Trenton. In fact, it’s rampant throughout the land, and both parties are vulnerable to its siren song. Only today, in his State of the State speech, Gov. Jon Corzine said he would consider selling the state’s toll roads to pay down its debt.

This eye-opening report from Daniel Schulman and James Ridgeway in the current Mother Jones shows how the notion of selling off economically vital public assets at fire-sale prices to private companies, which can then proceed to wring “untapped value” from those assets through toll hikes and anything else they can think of, is being pushed by a marriage of convenience between overseas firms like the Spanish developer Cintra and the Macquarie Infrastructure Group of Australia, ideologues for whom privatization is an end in itself, fee-hungry investment bankers, and politicians anxious to paper over budget holes but terrified of taking the blame for any tax or fee increases.

The first steps came in 2004 when Chicago mayor Richard Daley signed off on a $1.8 billion lease-out of the Chicago Skyway, followed last spring by Indiana governor Mitch Daniels’s ramming-through of a long-term lease on the 157-mile Indiana Toll Road to a Cintra-MIG partnership, a $3.8 billion investment that will yield the consortium well over $11 billion over the course of the 75-year agreement.

Do you think Turnpike tolls are high now? Wait until the road is privatized and the new owners introduce innovations like a variable toll plan that, say, doubles rates during peak hours. Maybe we’ll see a return to the venerable practice of shunpiking, or using back roads (“rat routes” as they say in Australia, where privatized toll roads are more common) to avoid exorbitant fees. I’m sure the communities along Route 130 will be delighted to see the highway become an alternate turnpike.

There’s no doubt that the existing Turnpike Authority is a realm of political patronage and cronyism. The authority’s headquarters building in East Brunswick is a virtual retirement home for former county party chairmen and employees. But the Authority is very, very good at fulfilling its primary role: maintaining New Jersey’s economic backbone and keeping it passable and clean in all sorts of weather. Turning it over to a private management group will generate short-term budget benefits while transferring greater costs to the public, which will have to deal with a company accountable only to its shareholders.

Phyllis Schlafly, doing the right thing for the wrong reason, opposes infrastructure privatization because of hysteria over foreign ownership. (Seeing commuters and long-haul truckers wrung out like wet mops by an American firm apparently wouldn’t bother her none.) More rational opposition comes from Ralph Nader, who may be a lousy presidential candidate but can still smell a fishy business deal, and the trucking industry, which understands that its members will become rolling ATMs under these privatization schemes.

It’s interesting to note that the chief marriage broker in these business-government get-togethers is Goldman Sachs, the former employer of our current governor. A point that bears watching, should privatization efforts really get rolling here in New Jersey.

During the early years of the 20th century, when the creation of good local and state roads became a priority, and the creation of the interstate highway network during the Eisenhower administration, it was recognized that the nation’s economic well-being depended on the free flow of people and goods along properly maintained roads. Out-of-fashion terms like “public trust” and “stewardship” crop up frequently in state and federal highway department reports.

Those terms are still applicable. Our elected representatives should remember them when they find themselves considering short-sighted proposals for selling off a vital asset that was created through the foresight and planning of their predecessors.


2 Responses to “Highway Robbery”

  1. Caveat Says:

    The only toll road we have here in Ontario (the 407)is privately owned – but also privately maintained. There are rules governing increases and lower rates for regulars. As we have many alternates, I only take the road if I’m in a rush to get where it goes. It’s a thing of beauty. Reminds of when I was a kid and we’d go on road trips, same amount of traffic, like none.

    I read something, can’t remember where, that stuck with me. It was about roads.

    The railroads, which predate the automobile, were built by the railroad companies using private money, which was fair as the owners were the beneficiaries and needed tracks for their trains. The public benefited from the system.

    Yet roads are paid for with public money, even though using the above logic they should be funded by automobile manufacturers, since they benefit directly from roads. No roads, no auto sales. Kind of makes sense.

    So, out of interest, how much do the auto makers kick in for road construction and maintenance?

  2. Steven Hart Says:

    As you say, private money built the railroads and they were privately maintained. Maybe the rise of the automobile made the decline of railroads inevitable, but the railroad owners themselves contributed substantially to that decline by cutting back on rolling stock at crucial times and abusing the power they held.

    We are now in a position where we may find our once-public roads used for the same kind of abusive pricing schemes by leaseholders. The difference is that we now have no other alternative mode of transportation.

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