Is it time to privatize cities?

[Disgustipated]

http://www.nytimes.com/roomfordebat...r-cities-and-states/the-pendulum-swings-again

Rigorous quantitative analysis of every published study from around the world of water delivery and garbage collection (the two most commonly privatized services at the local government level) finds no statistical support for cost savings under privatization. Economic theory would predict this result. Private firms have incentives to reduce quality to enhance profits. Hence careful monitoring is required. But monitoring is expensive and it requires continuing knowledge, within government, of how services are produced.

Many public services are natural monopolies. In these cases, monopoly provision is cheaper than competition. But monopolies require public control. Even in services which initially experience competition, a competitive market erodes after the initial contract. Fully 75 percent of contracts are given to the incumbent without rebidding. For most local government services the average number of alternative providers is less than two. Only one third of the 67 most common local government services have two or more alternative providers in the market. So in many cases, all privatization does is substitute a private monopoly for a public one. There is more potential for public control over a public monopoly.

I'll fully admit I don't have enough knowledge about the subject to make an informed judgement on this. But I look forward to reading interesting discussion from you all.

Now the above article mainly references privatizing certain social services. But what about a completely privatized city? I admit I'm fascinated by this, and think this would make a good thread topic. I'm talking about of course the plan in Honduras to build 3 private cities. Could this work? They mention Hong Kong and Singapore, but I have not been to either city, so I don't know exactly how privatized those cities are. Judging from some of the problems big corporations have had in the past in Honduras, I'm a little uneasy about this deal. As the article says, this could further weaken the government.

Would you live in such a city?

http://www.independent.co.uk/news/w...on-with-worlds-worst-murder-rate-8113966.html

he government this week signed an agreement with US developers MKG group to begin building the cities – complete with their own governments, laws, courts, police forces and tax systems – from scratch early next year.

The plan's backers say it is the only way to kick start development in Honduras, which has the world's worst murder rate – 68 times higher than the UK's – and where 65 per cent of the 8 million-strong population lives below the poverty line.

However, critics warn that it could mark a return to the dark days in Honduras when US companies controlled the government, owned vast tracts of territory and ordered police to massacre striking workers – an era which prompted political scientists to coin the term "banana republic".

MKG will initially invest $14m for construction of the first phase of the first city, near Puerto Castilla on the Caribbean coast, which it says will immediately create 5,000 jobs. In total, the company predicts the three cities will lead to 200,000 new jobs.

 

[downtown]

There are some city services that can make sense if they are privatized. There are lots of others that can't, for exactly the reasons that the article explains.

I would never want to live in a totally private city.

 

[hobbsyoyo]

I would never want to live in a totally private city.

Because you're not Ayn Rand. Oh wait, didn't she end up on medicare and social security? Nevermind then, even she wouldn't want to live in a totally privatized city.

 

[Murky]

A totally privatized city would probably end up being 90% slums controlled by gangs like Kowloon city or Mogadishu Somalia.

 

[innonimatu]

Economic theory would predict this result. Private firms have incentives to reduce quality to enhance profits. Hence careful monitoring is required. But monitoring is expensive and it requires continuing knowledge, within government, of how services are produced.

It's funny, I was just trying to explain this exact problem to Arwon on his thread about privatizing power grids. If states are going to need people with expertise to monitor and regulate the private monopolies they may as well employ those people managing public monopolies and thus save some money!

 

[Save_Ferris]

I'd like to see how they do first. It sounds like it would work in a perfect world, but then again, a lot of things do.

 

[JohnRM]

Because you're not Ayn Rand. Oh wait, didn't she end up on medicare and social security? Nevermind then, even she wouldn't want to live in a totally privatized city.

I don't find this to be a fair knock at Ayn Rand. You may disagree with a particular aspect of the system, but when you've been taxed by the government to pay for a specific program such as Social Security and Medicaid, instead of being allowed to utilize those funds at your discretion, perhaps to secure your own retirement, one can hardly be faulted for taking advantage of what you've paid for. Miss Rand was all about self interest and it was definitely within her own self-interest to accept government assistance, in this case. I find her actions to be entirely consistent with her philosophy.

 

[Quackers]

Ayn Rand mentioned within the first few posts. You just know the rest of the thread will be fruitfull discussion and we will see adjicia call her a "an old bat" at some point too
Disillusioned Quackers

 

[phoenix_sprite]

This idea is closer to socialism in my opinion.

 

[Marla_Singer]

Thanks Disgustipated for this interesting topic.

First thing, let us clarify the definitions about what is a good management at the scale of a city. As I see it, it is to optimize the conditions in which its citizens evolve : this includes infrastructures, facilities and services which constitute the common good.

A private company has as purpose to maximize its individual profits. Hence, in order to make a private city a working business, we should determine a frame in which it would be beneficial for a private business to run infrastructures, facilities and services dedicated to its customers. I hardly see how this could work without making pay citizens of that private city fees to live in it, which as a concept wouldn't be really different from local taxes.

So in the end, a private city would actually work very similarly to a public city (as stated in the very interesting NY Times article you've quoted). The only difference would be that shareholders would determine the company executives instead of citizens electing a city council.

As the purpose would be to maximize profits, I guess such a business would necessarily focus on serving its most profitable customers (the richest citizens). As a result, the poorer ones would probably be incited to leave. But as no society can work with only highly qualified jobs, these poor will probably stay in the area to keep their job, so they'll just move to the city nearby. So in the end, it would probably result in something like the Principality of Monaco, in which most workers are actually French people living in Menton or Nice metro area.

 

[Crezth]

I say privatize away.

 

[gangleri2001]

I say privatize away.

Damn! I was about to make a reference to feudalism!!

YOU TOOK MY JOKE!! DURKA DURR!!

 

[Quackers]

Somalia in 3....2.......1......

EDIT: oh wait..murky got there a few posts before...excuse me...

 

[Cutlass]

hmmmmm. 2 people voted for the Yes option and 1 shows up in the count....

 

[Marla_Singer]

Ayn Rand mentioned within the first few posts. You just know the rest of the thread will be fruitfull discussion and we will see adjicia call her a "an old bat" at some point too
Disillusioned Quackers

Somalia in 3....2.......1......

EDIT: oh wait..murky got there a few posts before...excuse me...

Quackers, instead of complaining about others constantly repeating the same things, could you give us your original insight on the issue? Indeed, while it's true those arguments have been advanced, others have too. So maybe we could bring this discussion to somewhere else...

 

[Marla_Singer]

hmmmmm. 2 people voted for the Yes option and 1 shows up in the count....

The CFC server doesn't like them, because they are wrong.

 

[Quackers]

Downtown pretty much nailed it in post #2. The extremists on this forum just get tiring after a while.

 

[hobbsyoyo]

Downtown pretty much nailed it in post #2. The extremists on this forum just get tiring after a while.

I've never spoken about or participated in a thread that had anything to do with Ayn Rand before. Also, it was a lame joke and not really much of a political statement.

I don't find this to be a fair knock at Ayn Rand. You may disagree with a particular aspect of the system, but when you've been taxed by the government to pay for a specific program such as Social Security and Medicaid, instead of being allowed to utilize those funds at your discretion, perhaps to secure your own retirement, one can hardly be faulted for taking advantage of what you've paid for. Miss Rand was all about self interest and it was definitely within her own self-interest to accept government assistance, in this case. I find her actions to be entirely consistent with her philosophy.

It was a joke, and a bad one at that. However, I do find it amusing that for whatever reason she didn't get rich enough from her own works to be able to avoid the safety net. From what I know about her philosophy, it must have been depressing for her.

 

[Quackers]

Don't get yer knickers in a twist Hobbs It doesn't take a lot to get you angry does it?

I am fully entiltled to a moan once in a while

 

[Antilogic]

Yay corporate feudalism! Could they issue their own scrip only valid at the company store?