In American Towns, Private Profits From Public Works

[SecularMotion]

BAYONNE, N.J. — Nicole Adamczyk’s drinking water used to slosh through a snarl of pipes dating from the Coolidge administration — a rusty, rickety symbol of the nation’s failing infrastructure.

So, in 2012, this blue-collar port city cut a deal with a Wall Street investment firm to manage its municipal waterworks.

Four years later, many of those crusty brown pipes have been replaced by shiny cobalt-blue ones, reflecting a broader infrastructure overhaul in Bayonne. But Ms. Adamczyk’s water and sewer bill has jumped so much that she is thinking about moving out of town.

“My reaction was, ‘Oh, so I guess I’m screwed now?’” said Ms. Adamczyk, an accountant and mother of two who received a quarterly bill for almost $500 this year. She’s not alone: Another resident’s bill jumped 5 percent, despite the household’s having used 11 percent less water.

http://www.nytimes.com/2016/12/24/business/dealbook/private-equity-water.html

[safeinOhio]

1. Pinochet and Chile's

economic miracle. Thank you so much U. Chicago School of Economics.

Rich and connected get rich, poor get poorer.

[tenorly]

7. The very thing happened to public services in neighboring Argentina under Menem (1990s).

Quality did improve somewhat, but rates shot up 5-fold or more. Privatized utilities enjoyed privatized profits (which they mostly offshored) but continued to receive state subsidies that in some cases equaled or exceeded those they were collecting as public enterprises.

By 2001, it all came crashing down in a sea of foreign debt - much of it taken up to compensate for all the offshoring going on at the time. The only real difference with Chile in the 1980s is that Reagan bent over backwards to bail Chile out (favored nation trading status, renegotiation of foreign debt w/ steep discount, etc.).

It was literally more important to St. Ronnie to make Pinochet look good, than to protect California and Washington orchard farmers (many of which then went out of business under a wave of Chilean imports).

[HAB911]

2. The mantra going forwand will be

Socialized costs, privatized profits

[beemer27]

3. Amazing !!

It has always been a mystery to me why our elected leaders can "privatize" services, and admit that they are not smart enough to run what they are paid to run. Perhaps we should have an IQ test for people running for office. We can not keep electing these stupid ones any longer. It is perhaps a coincidence that the leaders who passed the privatization always end up making money on it after their term in office is over. Sometimes while still in office.
What a sorry state of affairs!

[CousinIT]

4. This is what happens when public services are privatized. n/t

[sab390]

5. Government is inefficient

is news? Business sucks as well. For 50 years I have worked in countless companies. All of them have been wasteful, incompetent, and mainly based on power grabs by petty little managers. The only difference I have seen is that business has the added overhead of profit. Private health insurance has a GS & A and profit of 12 to 15%. Medicare is at 3% and no profit. Government is wasteful but everything is. Nothing is perfect. Privatizing only shifts the work from on flawed group to another and addes profit for a few. I have never seen it do better. Can anyone say "Charter Schools".

[yurbud]

6. privatization is corruption. Dems need to say and act on that

[tenorly]

8. Profitization: they privatize profits, but socialize costs and losses.

I love it when apologists claim that once privatized, firms "make a profit" - while conveniently neglecting to mention the much higher public subsidies they collect once privatized (to say nothing of debt write-offs and abusive tax waivers).