As we look forward into the new year, and the looming state budget crises, what should we anticipate?
Tom Ferguson told me last year that the “powers that be” were going to start forcing states to sell off their assets in order to plug their budget holes. It’s the next phase of disaster capitalism, the equivalent of the IMF forcing countries to sell off their airports and their factories to private companies in order to qualify for relief:
Broke States Should Save Themselves By Selling Off Roads, Schools, Parks, And Other Assets, Says Altucher
James Altucher, managing director at Formula Capital, floats an innovative solution to this problem….If New Jersey were to sell the New Jersey Turnpike, for example, it would immediately raise tens of billions of dollars, which would radically improve the state’s financial health. And a private road operator might do a better job of running the turnpike than the state can.Cities and states across the nation are selling and leasing everything from airports to zoos — a fire sale that could help plug budget holes now but worsen their financial woes over the long run.
Gov. Bobby Jindal’s proposal to sell some state-owned assets to help plug an expected $1.6 billion budget shortfall came under bipartisan criticism Friday by legislators and others who said the plan is short-sighted and would only postpone a day of reckoning for the state’s shaky finances. The criticism from members of the Senate Finance Committee came a day after the governor suggested the state could generate more than $800 million in one-time money by selling various state assets, including the Allen Correctional Center in Kinder and the Winn Correctional Center in Atlanta.
Some states, struggling to balance their budgets, are selling or leasing public property, including state office buildings, prisons and major toll ways. While a quick way to raise revenue, this strategy is attacked by some as a short-term fix that postpones making more difficult decisions.
With another budget crisis looming, the state has put together a list of assets that it might consider selling….The Kansas Department of Administration has compiled the list, which runs 90 pages long and includes thousands of entries. The total value of the assets isn’t known.
No company wants to buy something that it can’t run at a profit. So Bobby Jindal and other governors who want to do this are basically acknowledging that they’re poor managers who couldn’t cut it in private industry.
Good to know.
Naomi Klein documented this phenomenon in The Shock Doctrine, referring to it as “orchestrated raids on the public sphere” — privatization of assets such as school systems and civic spaces that the public has decades’ worth of investment in.
For a glimpse of how well the public fares in these deals, see the Chicago parking meter fiasco.
Think of the sale of Russian assets to the Russian oligarchs – financed by public money. From the Shock Doctrine:
Forty percent of an oil company comparable in size to France’s Total was sold for $88 million (Total’s sales in 2006 were $193 billion). Norilsk Nickel, which produced a fifth of the world’s nickel, was sold for $170 million — even though its profits alone soon reched $1.5 billion annyaly. The massive company Yukos, which controls more oil than Kuwait, was sold for $309 million; it now earns more than $3 billion in revenue a year. Fifty-one percent of the oil gian Sidanko went for $130 million; just two years later that stake would be valued on the international market at $2.8 billion.
But that’s really just the tip of the iceberg. The real bounty will be in the looting of natural resources, facilitated by the demonization of the EPA and fueled by a public desperate for jobs. Meanwhile, the tax dollars that could be supporting these public services continue to flow out the door in support of wars in Afghanistan, Iraq, and Joe Lieberman’s Homeland Security State.
Welcome to 2011.