As many of you know, Chicago sold its parking meters.
In December of 2008, Chicago needed money -- badly. So it sold many of its city-owned parking meters -- or rather, the city sold the use of the things for 75 years. The selling price was a bit under $1.2 billion, which was much less than the amount of money the meters could generate over that period of time at then-going rates. The purchaser was a mysterious concern called Chicago Parking Meters Limited, which seems to be headquartered in Abu Dhabi.
Now, the first thing you have to understand is this: When the meters were privatized, the price of parking in Chicago went up. Way up.
But by handing over municipal parking meters to a private company, the city has given its citizens a colossal case of sticker shock. The cost of most meters will quadruple by 2013.
My question is a simple one. If (as our nation's economic theologians constantly assure us) private firms are invariably more efficient than gummint-run concerns, why did the price of parking in Chicago shoot up?Another question:
During the debate over Obama's health care program, we were constantly told that a public option would not be fair to private insurers. Why not? If the government is (as we are incessantly reminded) always
less efficient, then wouldn't it always lose to a private firm in head-to-head competition? Wasn't the public option an excellent opportunity for the libertarians to prove their case?Let's get back to the parking meter business.
Nobody really know who owns Chicago Parking Meters, although we do know that the deal was put together by Morgan Stanley. It appears that one of the largest shareholders in Chicago Parking Meters may, in fact, be the government of Abu Dhabi.
However, a tad over 50 percent of the company is owned by a Luxembourg-based entity called Redoma SARL. I've been trying to find out who and what they are. So far...zilch.
Aside from the price hike, the folks in Chicago are also angry about no longer being able to use their streets for parades and fairs. (The parking meter owners demand recompense if traffic is shut down temporarily.) That's why we now hear talk of buying back the meters
Unfortunately, the rise in parking prices means that the meters are now worth about ten billion dollars, and Chi-town can't afford that.
Gosh. I don't understand. If private enterprise is always more efficient, then why didn't the rates go down?
Perhaps the answer has something to do with a simple fact that used to be taught in elementary school (back when this country was a whole lot saner): Capitalism only works when healthy competition exists. If there is a natural monopoly, capitalists will screw you every time.
This truism was widely understood in the 1960s, because "company towns" were still a matter of living memory. Now they aren't remembered at all.
Okay, so the competition thing explains the parking meter problem. There's not much place for competition when it comes to this particular commodity. In such a situation, the only way to keep prices down is through a messy mechanism called democracy
: If the city owns the meters and if you don't like the price of parking, vote for the guy who promises lower prices.
Selling your parking meters to a private firm is therefore a really, really stupid idea. Neither the market nor the vote will discipline the price-gougers.
But what about health care?
There are lots of private insurance firms. Why were private insurers so afraid of the public option? If, as we are so often told, the government can't do anything right, why would the private firms fear such an inept competitor?