CT Blue

Apparently there is yet another showdown looming. The Highway Trust Fund is scheduled to run out of money in the summer. If nothing is done (and nothing ever is ) ongoing highway projects will be shut down. Yves Smith has some interesting observations at Naked Capitalism. She suspects that this will give Obama another chance to work with Republicans toward forming more “Public/Private partnerships”, which is another term for handing taxpayer money over to rich people, by giving them monopolies on what were previously publicly funded and operated services. In this case, Smith suspects a push to hand our highway system, or chunks of it, over to the rent seekers. I suspect it won't happen, because although the Republicans normally are quite anxious to serve the interest of the rent-seekers, it's a different story if Obama wants to do it too. Visceral Obama hatred has served us surprisingly well in the last few years; it may have saved Social Security as we know it. This trust fund issue may be a recurring topic over the next few months, but this post will veer in a slightly different direction.

It occurred to me that the experience of some states in privatizing infrastructure may hold some lessons for those like our own Dannel Malloy for the likely outcome of his efforts to hand our schools over to corporations. It turns out that, once they get the ability to do so, these rent-seekers start to demand terms that turn the situation into a heads they win, tails we lose situation (okay, that’s the norm, but this is particularly outrageous). If things go bad, the state steps in to help, and in some situations, the states involved have agreed to let purely public infrastructure deteriorate in order to benefit the rent seekers.

Infrastructure privatization contracts are full of “gotcha” terms that require state or local governments to pay the private contractors. For example, now when Chicago does street repairs or closes streets for a festival, it must pay the private parking meter contractor for lost meter fares. Those payments put the contractors in a much better position than the government. It gets payments, even though Chicago did not get fares when it had to close streets…..

Highway privatization contracts also often include terms that forbid building “competing” roads or mass transit. Some even require making an existing “competing” road worse. For example, the contract for SR-91 in Southern California prohibited the state from repairing an adjacent public road, creating conditions that put drivers’ safety at risk. A proposed private highway around the northwest part of Denver required that local governments reduce speeds and install speed humps and barriers and narrow lanes on “competing” roads to force drivers to use the privatized road….

Virginia decided to promote carpooling to cut down on pollution, slow highway deterioration and lessen highway and urban congestion. As a result, Virginia must reimburse the private contractor for lost revenues from carpoolers, even though not all of the people in a car would otherwise have driven individually….

via Truthout via Naked Capitalism

It is entirely foreseeable that once the school privatization train gets rolling, the rent seekers in that area will also demand protections for their profits and, indirectly but surely, deterioration of the remaining public schools. They are actually already achieving the latter by avoiding or discouraging children with special needs, who are then disproportionately the responsibility of the public schools. They are already exempt from some legal requirements that are imposed on public schools in many states, including, apparently, here in Connecticut. As they gain more influence by buying more legislators (given that they already own the governor here in Connecticut) they will be given ever greater leeway to allow education quality to deteriorate. After all, a guaranteed profit comes first.

I got a bit of a laugh when I read this in the Times yesterday:

The Federal Communications Commission’s chairman delivered a tough message to cable and broadband executives Wednesday, saying a lack of competition in their industry has hurt consumers.

The chairman, Tom Wheeler, said that the F.C.C. intended to address the problem by writing tough new rules to enforce so-called net neutrality, preventing big broadband and cable companies from blocking access to innovative new technologies and start-ups that might emerge as competitors.

via The New York Times: Stern Talk from Chief of FCC on Open Net

I imagine that the assembled executives did their best to appear frightfully concerned at the prospects of Wheeler taking “stern” action against them, but it is all really kabuki. They all know he's on their side.

Consider this:

Here's the dirty truth behind proposed rules gutting net neutrality the Federal Communications Commission will be considering next month: The FCC is “stocked with staffers” who just went through the revolving door from the internet service providers who would most benefit by the new rule. Lee Fang reports:

Take Daniel Alvarez, an attorney who has long represented Comcast through the law firm Willkie Farr & Gallagher LLP. In 2010, Alvarez wrote a letter to the FCC on behalf of Comcast protesting net neutrality rules, arguing that regulators failed to appreciate “socially beneficial discrimination.”

… Alvarez is now on the other side, working among a small group of legal advisors hired directly under Tom Wheeler, the new FCC Commissioner who began his job in November.

As soon as Wheeler came into office, he also announced the hiring of former Ambassador Philip Verveer as his senior counselor. A records request reveals that Verveer also worked for Comcast in the last year. In addition, he was retained by two industry groups that have worked to block net neutrality, the Wireless Association (CTIA) and the National Cable and Telecommunications Association.

Then there's Matthew DelNero, who was hired to work specifically on net neutrality. He used to work for an ISAP called TDS Telecom which has, of course, lobbied against net neutrality. One new advisor to FCC Commissioner Ajit Pai, (who used to be associate general counsel at Verizon and has called net neutrality a “problem in search of a solution” ) is Brendan Carr. Carr has worked for AT&T, CenturyLink, Verizon and the U.S. Telecom Association, “a trade group that has waged war in Washington against net neutrality since 2006.”

Chairman Wheeler, of course, came directly from lobbying for the telecommunications industry. There's obviously a high degree of expertise on telecommunications issues among all these people who seem to flow seamlessly between roles in industry and regulating that industry. But they aren't the only experts. There are dozens of people working in public interest groups who know these issues just as well who could be staffing the commission.

via Daily Kos

Amazingly, the article in the Times proves it's all a charade, though perhaps the reporter was unaware of that fact:

People who have been briefed on the chairman’s proposal say that while he opposes the blocking of content by an Internet service provider, his new outline would allow broadband companies to offer some content providers a faster lane through which they can transmit video and services, as long as they do not slow down other content to do so.

Some might say that there if you build a road and only let some people on the fast lane then you are not being neutral so far as users are concerned. It doesn't change the situation if instead of building a new road you turn a one lane road into two lanes, but charge a toll to anyone wanting to use the passing lane.

Anyway, here's how it will work. The present quite slow state of affairs in American internet service will become the ghetto for the content providers who can't afford to pay to go on the “fast lane”. But who says there can only be one fast lane? Why not multiple fast lanes at different speeds and different prices, always, of course, leaving that one slow, overcrowded, lane for the unwashed. Over at Daily Kos, they suspect that monopolists like Comcast will slow down the slow lane to force content providers onto the fast lane:

There's absolutely no question that Internet service providers will happily take the power to sell fast-lane delivery to the highest bidder Wheeler is proposing. There's no reason to believe that they won't use that power—just like Comcast did with Netflix—to slow down networks to try to force content providers to pay up.

But really, that won't be necessary, at least not directly. All they have to do is keep the speed limit on the slow lane right where it is, and, as potholes develop, be quite slow about fixing them.

So yes, I'm sure those executives were absolutely terrified as they listened to Tom Wheeler's threaten to make them even richer.