MUNICIPAL PRIVATIZATION: SUBSITUTING ONE MONOPOLY FOR ANOTHER

4/28/13

I sent the following letter to the Chicago Sun-Times in response to an article by Better Government Association (“BGA”) President Andy Shaw on the Midway privatization.   Such a Midway dealer has been on and off and on again, if you will, for years and is reportedly now bubbling up again:

4/28/13

In his 4/28/13 Commentary piece (“Don’t Keep Midway Deal in Shadows”), BGA President Andy Shaw urges the mayor not to

“…play games with city residents who are still angry about that (parking meter) deal, and wary of any more privatization that doesn’t dot every illuminating “i” and cross every transparent “t” before we have to live with it.”

This is indeed a worthy sentiment, but there are more problems with big privatization deals, like the meter deal and the reportedly brewing Midway deal, than lack of transparency, illumination, and accountability.  

The inherent flaw in much of what we call “privatization” is that it merely replaces a public sector monopoly with a private sector monopoly.   For example, instead of the city of Chicago having a monopoly on parking meters in our city, now a politically connected, largely foreign financed Morgan Stanley partnership has a monopoly on parking meters in our city.   Monopolists act pretty much the same whether their origins are in the public or private sectors…they use their monopoly power to maximize revenues.   If anything, private sector monopolists behave even more badly, from the consumer’s standpoint, than public sector monopolists; at least the latter have to answer, however indirectly or apathetically, to the voters.

Regardless of whether our “transparency and accountability” mayor finally lives up to his self-styled billing in any Midway deal, the privatization of our second airport is doomed to failure simply because the airport’s monopoly, or duopoly, depending on one’s perspective, nature will not change.   The only thing that will change is the collector of what economists call the “monopoly rents.”

See my two books, The Chairman, A Novel of Big City Politics and The Chairman’s Challenge, A Continuing Novel of Big City Politics, for further illumination on how things work in Chicago and Illinois politics.