"While there is certainly a case to be made for public-private partnerships, as these arrangements are often called, there are numerous public policy questions that have yet to be adequately addressed. One, as Business Week points out, has to do with the "quality of service on deals that can span 100 years.”
The newly private toll roads are being managed well now, but owners could sell them to other parties that might not operate them as capably in the future. Already, the experience outside of toll roads has been mixed: The Atlanta city water system, for example, was so poorly managed by private owners that the government reclaimed it."
While the Business Week piece provides a comprehensive and appropriately skeptical take on the privatization push, it fails to mention a key issue. These deals are rife with the possibility of corruption and cronyism and conflicts of interest. On the latter, Goldman is a prime example. Beyond its persistent lobbying efforts to open U.S. infrastructure to private investment, the firm has acted as an outside financial advisor to states considering public-private partnerships (ostensibly providing disinterested advice to their clients), while simultaneously raising a $6.5 billion fund whose sole purpose is to buy infrastructure on the cheap. Last fall, at a privatization conference in New York, I had the opportunity to ask Goldman's Mark Florian about the firm’s various roles in the emerging infrastructure market. When I asked him whether Goldman wants to be an adviser or an investor in the road business, he replied, simply, "both."