There's an unsettling murmur building about how Gov. Arnold Schwarzenegger will get on board the high-speed rail proposal on the November ballot: privatize the system. That’s a deal killer.
The attraction, as Robert Cruickshank writes in his California High Speed Rail Blog, is the $1 billion in surplus revenues — profits, to a private company — that the high-speed system is expected to generate annually.
There's no problem with involving the private sector in the funding and construction of the system. Indeed, that’s both necessary and desireable. But turning the completed system over to private hands would be a catastrophe.
The $1 billion a year the rail system is expected to produce will be needed to build extensions and other connecting lines over the years. Left in the hands of the public, that’s how it will be used. Turned over to private hands, the money will end up as dividends in the pockets of company officials and shareholders, not the public. No. Bad idea. Forget it.
You may or may not be right about who should manage this project: the goverment or the private sector.
But you completely misunderstand the options. It's not 'public' vs. 'private.' It's government vs. people. Shareholders *are* the public, they are the retirees and workers and anyone else who puts their savings into the bonds that would finance things like this.
Why shouldn't the people who put their hard-earned capital at risk earn the returns on their investment?
You also misguess what would happen to any surplus cash flows. Under government ownership, they would be soaked up by union salary contracts. Under private ownership, owners would have every incentive to invest in expansion, upkeep, and service.
Tony-You make too much sense.Russ-The ball is in your court...
Kind of an odd way of looking at it. The "government" is all of us (if it doesn't act that way, its because we the people haven't been paying enough attention). If the project is financed by the government (i.e. we the people), then we are all stakeholders, and the project should be run for the benefit of us all. If its a private venture, then the only people it is ultimately responsible to are those who happen to invest in it. And only the biggest stakeholders (and the top executives) will be paid attention to.
Most rail projects don't make any money. The costs alone, if built by the government, will be exorbitant thanks to the selfish unions.
I'm still trying to find one thing the government runs that is economically sound. Any ideas out there?
You're traveling in a vehicle that's scooting along at about 2.5 times the speed of the average Highway 99 driver. Who would you rather have running that system, some $94,000 per year hormone-crazed libido boy who doesn't even know that paying $300 to touch a female is wrong, or someone who had to prove their ability to lead a company or division on the project?
Matt: And, the public worker,if failing to do his/her job, is protected by the union and can't be fired.
Once you reach your destination on this new train, how do you get around town? Why, you rent a car, of course.
I applaud Governor Schwarzenegger for participating in a public discussion this week regarding the importance of investing in California's infrastructure and maintaining the state's economic growth through public private partnerships. These partnerships are proven methods to finance, construct and operate important infrastructure investments that benefit all of us.
Some have voiced concerns over the relinquishing of control of high-speed trains to the private sector. High-speed trains in California will always be owned by the public and regulated accordingly. Binding contracts will be put in place to protect important safety rules and operational regulations that will guarantee high-quality service to the public. And while profit is not a dirty word, we will never allow unfair profit-taking. Instead we will deliver fair rewards commensurate with private sector risk.
Make no mistake private investors and the marketplace will carry design risk and operational risk and they will deserve to be compensated for it. But at no point will partnering with the private sector involve a wholesale selling of taxpayer assets or a diminishing of the responsible regulation of California’s system of high-speed trains. In short, the system will not be “turned over to private hands.”
California’s proposed system of high-speed trains offers a unique opportunity to develop a new model for “P3” or public private partnership financing. Our high-speed trains are attractive to private investors because the system will bring a $1 billion annual profits once constructed as has been the case with other similar systems already built and functioning across the globe. The Authority welcomes the public-private partnership opportunities that will include project debt financing, vendor financing, system operations and private ownership.
Just a side note: The Chronicle reports that their Muni train system has an $85 million deficit.