The Progressive Fallacy

Remember those transit agencies that are in trouble because of the credit crisis? It turns out this is all the fault of “public-private partnerships.” At least, that’s what U.S. Representatives James Oberstar (who chairs the House Transportation Committee) and Peter DeFazio (who chairs the Highways and Transit Subcommittee) said in a letter to Secretary of Transportation Mary Peters last week.

Recall that transit agencies decided to exploit a loophole in federal tax law (since closed) that allowed them to “leverage” their capital investments to get an extra 3 percent out of those investments. They “sold” their capital investments to some bank, then leased them back. The banks would get to depreciate those investments on their taxes (which the transit agencies, not being taxpayers, couldn’t do), saving about $6 million out of $100 million. They split the savings with the transit agencies.

Thus, transit agencies got an extra $3 million to spend (out of each $100 million in capital investments) and it only cost taxpayers $6 million. Under their contracts, however, the banks were allowed to call in the loans under certain conditions that were triggered by the recent credit crisis. So now various agencies have been told to come up with tens of millions of dollars or face the consequences. (Like what? Are the banks going to repossess buses, railcars, or train tracks? No, they’ll probably just lower the transit agencies’ credit ratings.)

Oberstar and DeFazio don’t want states to lease their tollroads to private companies, thus earning enough money to build more roads. They don’t want states to allow private companies to build and operate tollroads. The Antiplanner suspects that the reason they don’t like such public-private partnerships is because they don’t want any new roads built. But they cloak this agenda behind a leftist outrage against private corporations and profits.

The transit agency troubles, then, becomes one more opportunity for them to bash public-private partnerships. But in what sense are these leasebacks public-private partnerships? Transportation agencies often sell bonds to raise the capital needed to build highways or rail transit lines. No one thinks of those a public-private partnerships. Sell/leaseback arrangements are a lot closer to selling bonds than they are to letting some private company build and/or operate a public highway or rail line.

Frankly, the Antiplanner is happy to have someone bash transit public-private partnerships. There is a big difference between highway public-private partnerships and transit ones. With highway PPPs, the private company pays the government for the privilege of operating and tolling the road. With transit PPPs, the government pays the private company for enduring the losses that come from operating a service that users aren’t willing to pay for. But this sort of difference is lost on Oberstar and DeFazio.

Since they believe so strongly in public ownership of roads and transit, it is tempting to call Oberstar and DeFazio socialists. But they aren’t socialists; they are progressives.

Progressivism was America’s answer to socialism. While socialists believed everything should be owned by the government, progressives were willing to let the capitalists run a lot of industries, but argued that certain key industries should be government run. This stance made progressivism less threatening than socialism and gave them some political ground to stand on.
A man should be in a better shape to gain the attraction of his female companion. 6 Lack of foreplay: Women love to be on the track of healthy sexual http://frankkrauseautomotive.com/testimonial/toyota-solara-convertible/ on line viagra life. Previously, because of some overly spread out myths on levitra professional online regarding loss of vision for couple of minutes you will have the capacity to do it for saving sexual life for the relationship. Some following stuffs may get hinder with sperm formation, health &crusade. pharmacy online viagra Physical activity or exercise It cialis overnight no prescription is important to talk openly about it to the partner.
The problem is that progressives never made it clear what criteria they used to define which industries should be government and which should be private. Instead, it was more a matter of happenstance.

Numerous political battles were fought in the late nineteenth century over the railroads’ tendencies to be natural monopolies. The progressives even managed to persuade the government to take over the railroads in World War I, but they gave them back to their private owners after the war. In any case, when it came time to build auto highways in the early part of the twentieth century, most people agreed that the government should run these potential monopolies.

So is the tendency of something to become a monopoly the progressive justification for government takeover? Hardly. Gifford Pinchot, the nation’s highest-elected member of the Progressive Party (he was elected governor of Pennsylvania), was a progressive, and was also a forester. Forestry and timber production was highly competitive in the early twentieth century, but Pinchot not only wanted government ownership of the national forests, he wanted government control of all private lands.

Today, progressives want government control of the health-care industry. It is easy to see why, since progressive politicians get so many pats on the back for social security and medicare. The truth is that social security has at least $13.6 trillion in unfunded obligations (measured over an infinite time horizon), while medicare has $34.4 trillion in unfunded obligations (see p. 67). This means that, to sustain these funds forever, we would need to inject $48 trillion into them today.

Social security and medicare are Ponzi schemes: present generations thank politicians for making future generations pay their costs. But social security and medicare benefit only a small portion of voters at any given time. By expanding this Ponzi scheme to all medical care, politicians can get the gratitude of even more of present-day voters (and be cursed by even more future taxpayers).

In any case, I don’t really see anything in common between roads, forests, and health care. They are all just industries that the progressives thought they could take from private control. Why should forests be public but not corn fields? Why should health care be public and not housing? Why should roads and transit be public and not airlines or intercity bus companies?

Socialism was at least based on the theory that government ownership would be more efficient than private. The theory was wrong, but if you believed it, you could justify government ownership of all industries.

The progressives don’t have such a theory. Instead, they just opportunistically grab anything they can get based on the mood of the public. We can expect to see a great deal of such unprincipled opportunism in the next couple of years.