Monday, July 17, 2017

Beware the False Promises of ‘Faux’ Privatization

As a general practice, privatization of certain government operations can be a good thing. Government should be in the business of doing things that are inherently governmental, and anything that the government is doing that isn’t “inherently governmental” should be done by the private sector.
But problems arise when policymakers, in the name of privatization, use the promises of privatization’s benefits (namely, lower cost and better service) to lead the public down a false path… to create entities that aren’t really privatized, but are, instead, these bizarre hybrids of government and “private” sector, government-sponsored enterprises (GSEs). Anyone who has ever gotten stuck on an Amtrak train knows just how inefficient GSEs can be — the maddening aspect of an entity that has no incentive to provide a maximized customer service experience at a cost that is competitive enough to keep a consumer coming back time and again.
Given the nation’s track record with GSEs, one would have thought that policymakers would have learned their lesson. Yet here we are, talking about creating another GSE in the form of a “privatized” Air Traffic Control system — the central issue in the 21st Century AIRR Act, currently wending its way through Congress. While technically being proposed as a not-for-profit, publicly chartered independent corporation, supporters point to it as an American analog to Canada’s non-profit ATC system. 

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