Examples of How City Services Privatization Leads to Inequality Are Piling Up
I consider myself a relatively gung-ho free-market type, where it&#x27;s appropriate. Utility and transport networks are one place where it isn&#x27;t appropriate. This is for three fundamental reasons:<p>1. A free-market dynamic requires an actual market. If the buyer can&#x27;t chose among competing sellers, then it&#x27;s not a market. At the grocery store you can choose from among many different sellers: that&#x27;s a functional market. The point where your plumbing connects to the water main, simply isn&#x27;t.<p>2. The entire purpose of infrastructure is to generate positive externalities. Ready availability of transport, water and electricity, etc., makes it easy and desirable to do business in a place and with each other. This leads to emergent urban economies, where mutual comparative advantage among a heterogeneous population leads to mutually beneficial exchange, which in turn leads to more growth and prosperity for everyone. The fewer low-level frictions, the more prosperous everyone becomes. But capturing value at the point-of-use -- which is what private operators generally do -- creates a low-level friction with substantial knock-on effects. Every dollar you extract from the farebox of a public transport system, for example, is many dollars removed from the wider economy. It&#x27;s much more appropriate to subsidise the infrastructure networks and then tax the positive externalities (via sales, income, and property taxes) <i>after</i> the uplift has been created.<p>3. There are broader socio-economic issues of accessibility to services that profit-driven companies have no incentive to be responsive to.