No moonlight here, so surroundings lit up by the aurora, hence the slight green snow.
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The outrageous polemicist is still attacking liberals. She’s also showing unexpected contempt for right-wing charlatans.
This month at a Republican Party event in Vero Beach, Florida, conservative polemicist Ann Coulter poked fun at Sarah Palin, alluded to Gov. Rick Perry’s comically bad debating skills, and made headlines: “The conservative movement does have more of a problem with con men and charlatans than the Democratic Party,” she said. “I mean, the incentives seem to be set up to allow people — as long as you have a band of a few million fanatical followers, you can make money.”
The insight that the conservative movement is plagued by entrepreneurial hucksters is hardly a new one. Human Events advertising, Glenn Beck’s relationship with Gold Line International, the K Street Project, Sarah Palin’s fantastically successful effort to cash in after leaving the Alaska governor’s mansion: what Sean Scallon at The American Conservative dubbed “Conservative Inc.” is widely lamented. What’s unexpected is hearing this admission from Coulter, who has made a career pandering to conservatives with shocking comments that she adeptly turns into attention and paychecks from… well, Human Events, among many other sources.
Today Coulter is still writing columns that turn the rhetorical equivalent of a flamethrower on liberals. Her most recent book bears the characteristic, self-parodying title, “Demonic: How the Liberal Mob Is Endangering America,” and the effect of her work is still to cast more heat than light. But there are more and more heretical statements making their way into her oeuvre. She defended the health-care law Mitt Romney passed in Massachusetts. “If only the Democrats had decided to socialize the food industry or housing, Romneycare would probably still be viewed as a massive triumph for conservative free-market principles,” she wrote, “as it was at the time.”
Remarking on the socially conservative agenda of Rick Santorum, Coulter caustically observed that he “genuinely does not seem to understand the Constitution’s federalist framework.” In a television appearance she suggested that voters in South Carolina’s Republican primary were too emotionally immature to vote their interests. She even defended CNN’s John King when he was criticized for asking Newt Gingrich about his affairs, and pointed out that the former House Speaker was only going on the attack against the liberal media to distract from his own shortcomings. Since when do conservative polemicists object to Republican politicians doing that?
Coulter’s heresies transcend the internecine squabbles of GOP primary season. After turning against the War in Afghanistan, she took aim at Bill Kristol and his hawkish allies. “Didn’t liberals warn us that neoconservatives want permanent war? I thought the irreducible requirements of Republicanism were being for life, small government and a strong national defense,” she wrote, “but I guess permanent war is on the platter now, too.” It’s almost as if she’s had a sophisticated grasp of movement conservatism’s least defensible pathologies all along.
Perhaps that’s why the backlash has thus far been relatively muted. Every plugged in conservative tempted to insult her knows that she’s dangerous, knowing better than most where the bodies are buried. She’s nevertheless been called out on Fox and conservative talk radio. If she keeps up her critique of foreign policy hawks long enough they’ll perhaps drudge up her politically incorrect comments about Jews and imply that she is an anti-Semite. Then again, there’s a sense in which Coulter can never lose by being attacked: the whole logic of her career is that being talked about is all that matters, even if you’re being mercilessly savaged.
Perusing the books Coulter has written, I see that she drummed up attention by calling liberals liars in 2003, “treacherous” in 2004, “godless” in 2007, brainless in 2008, “guilty” in 2009, and “demonic” in 2011. You can see her problem. Where do you go from demonic? She hasn’t the capacity to shock liberals anymore. But conservative hucksters? She can totally get attention attacking them.
There are less cynical explanations. Maybe she’s just tired of holding her tongue about the idiocy she sees on “her own side.” Wouldn’t you be? I can’t imagine it’s very much fun, especially if your self-mythology involves always speaking your mind, those who take offense be damned. Yet another possibility is that Coulter has always been an amoral ideological warrior and only now grasps that hucksterism among conservatives is killing the movement. Whatever the cause, she’s got me wondering what she’ll say next for the first time in years. I hope its more uncomfortable truths that help spur the right to confront its pathologies. I fear that once the primaries are over she’ll just start shilling for Romney and get predictable again. After getting rich through years of poisoning public discourse what sort of redemption would that offer?
Image credit: Reuters
Ameritopia debuted at the top of the New York Times bestseller list. The right embraced it. Why didn’t anyone else?
Since late January, when news broke that talk radio host Mark Levin’s latest book, Ameritopia: The Unmaking of America, would debut at number one on the New York Times bestseller list, movement conservatism has been abuzz about the release. In National Review Online, its author was described as a “methodical, eviscerative attorney whose command of the facts is unquestionable.” Said Andrew McCarthy in The New Criterion, the book is “insightful, fact-driven, pulling no punches,” and its author “characteristically declines to don rose-tinted glasses.” On Amazon, where 1,500 plus reviewers combined to give the book four out of five stars, the praise is even more effusive, and the cover copy takes it a step farther: Ameritopia is “the most compelling defense of freedom for our time,” Rush Limbaugh raves. But perusing the Web, you’ll search in vain for a review in The New York Times, the New York Review of Books, or the Washington Post.
Conservatives aren’t surprised, for it’s long been their complaint that right-leaning books aren’t given their due in academia or the left-leaning media. Their beef is legitimate. A politics, philosophy and economics curriculum ought to include F.A. Hayek. A masters in journalism ought to include exposure to William F. Buckley. They don’t always. And neither do prominent book reviews always highlight worthy work from conservative authors who are publishing today.
Yet if neither academia nor the mainstream media’s book reviews can be relied upon to highlight the best conservative titles, neither can movement conservatism’s publications or personalities, especially when the author is a popular broadcaster. If Mark Levin praises a book on air, it could help it go viral or double the author’s royalties. Imagine the temptation to say nice things about his book. Every ideological movement reviews the books of intellectually friendly authors with less rigor than is ideal. Conservatism is as rife with such acts of tribal loyalty as any other network.
The financial incentives skew matters even more.
The resulting discrepancy between how good a book is and how good conservative fellow travelers say it is was evident to me when I read Levin’s last book, Liberty and Tyranny. A phenomenal commercial success, much of the right was seemingly blind to its glaring flaws. Foremost among them was the premise that America today is best understood as the scene of an epic struggle pitting champions of liberty against statists intent on tyranny. I’d go so far as to say that any book built on the thesis that America is engaged an epic struggle between x and y is overly simplistic nonsense. Talk to conservatives about John Edwards’ “two Americas” conceit or Occupy Wall Street’s “the 99 percent versus the 1 percent” frame and they’re quick to recognize that hyperbolic dichotomies are more useful for propaganda than rigorously describing reality.
Or consider this passage: “For much of American history, the balance between government authority and individual liberty was understood and accepted,” Levin wrote. But “in the 1930s, during the Great Depression, the Statists successfully launched a counterrevolution that radically and fundamentally altered the nature of American society.” Actually, the balance between government authority and individual liberty has been in flux throughout American history: think of the Alien and Sedition Acts, the treatment of Native Americans, the decades long struggle over slavery, the Civil War, the draft riots, Jim Crow, the women’s suffrage movement, and the imposition of Prohibition. Why misinform readers by telling them that the relationship between government authority and individual liberty was mostly uncontested and unchanged until FDR started pushing the New Deal?
This dearth of rigor is one reason Liberty and Tyranny was ignored outside of the conservative movement. As Jim Manzi wrote at National Review Online, focusing on its climate change chapter (Manzi is perhaps best known as a staunch conservative opponent of both a carbon tax and cap and trade legislation, and has written against the liberal position on those topics many times):
I started to read Mark Levin’s massive bestseller Liberty and Tyranny a number of months ago as debate swirled around it. I wasn’t expecting a PhD thesis (and in fact had hoped to write a post supporting the book as a well-reasoned case for certain principles that upset academics just because it didn’t employ a bunch of pseudo-intellectual tropes). But when I waded into the first couple of chapters, I found that, while I had a lot of sympathy for many of its basic points, it seemed to all but ignore the most obvious counter-arguments that could be raised to any of its assertions… I’m not expert on many topics the book addresses, so I flipped to its treatment of a subject that I’ve spent some time studying – global warming – in order to see how it treated a controversy in which I’m at least familiar with the various viewpoints and some of the technical detail. It was awful. It was so bad that it was like the proverbial clock that chimes 13 times – not only is it obviously wrong, but it is so wrong that it leads you to question every other piece of information it has ever provided…
I get that people often want comfort food when they read. Fair enough. But if you’re someone who read this book in order to help you form an honest opinion about global warming, then you were suckered. Liberty and Tyranny does not present a reasoned overview of the global warming debate; it doesn’t even present a reasoned argument for a specific point of view, other than that of willful ignorance.
Conservative authors are already at a disadvantage when they release a book. When they’re also known for their bombastic shouted tirades on talk radio and a previous book that seemed more like “comfort food” for fellow travelers than a rigorous attempt at persuasion, they’re easy to ignore. This is a huge problem for the right, which is good at producing content that sells to the shrinking base, but bad at reaching persuadable outsiders and converting them to conservatism.
What changed my mind and prompted me to invest the 15 hours required to read and review Ameritopia? Chapman University law professor and talk radio host Hugh Hewitt, who challenged me to do so. Since discovering him after his 2006 profile of Columbia’s journalism school, I’ve followed the underappreciated newsmaker interviews that he posts in transcript form to his Web site. If Hewitt was urging a staffer at The Atlantic to read and review a conservative title, I reasoned, it must be a book that reflects well on the conservative movement, or at least one that he regards as reflecting well on it. At worst I’d see what so many American conservatives are reading. At best, I’d find that they’re reading something enjoyable, the possibility of which I didn’t discount, for I’ve enjoyed any number of titles that conservatives love: Friedrich Hayek’s fantastic The Constitution of Liberty, Milton Friedman’s Free to Choose, Barry Goldwater’s The Conscience of a Conservative. So what about Ameritopia?
Its thesis: At the heart of what threatens America today is the ideology of utopianism. What follows are summaries of Plato’s Republic, Thomas More’s Utopia, Thomas Hobes’s Leviathan, and Karl Marx’s Communist Manifesto. These are Levin’s villains. In their ideas he finds the roots of our demise. Part II of the book is Levin’s explanation of “Americanism.” Again he sets forth a general definition, then delves into what he regards as its intellectual roots. Chapters are built around his heroes: John Locke, Charles de Montesquieu, America’s Founding Fathers, and Alexis de Tocqueville. In their times, they did their utmost to warn against utopianism, he argues, and while their ingenious framework succeeded, we’ve strayed so far from it that utopianism is now overtaking Americanism; we’re no longer living in a constitutional republic, but a worrisome “Ameritopia;” and if we don’t change course soon, all will be lost.
I cannot argue with a mistrust of utopianism.
“To know oneself,” Michael Novak once wrote, “is to disbelieve utopia.” It’s as concise a statement as you’ll find of this truth: no one who understands human nature would be so foolish as to urge on society a utopian scheme. That doesn’t mean the temptation hasn’t always been present in America. In John Winthrop’s attempt at a “shining city upon a hill,” we can see both the utopian impulse and the authoritarian tendencies it spurred. But America also has always had voices to remind us of utopianism’s limits. On that score, Nathaniel Hawthorne’s quip is my favorite: “The founders of a new colony, whatever Utopia of human virtue and happiness they might originally project, have invariably recognized it among their earliest practical necessities to allot a portion of the virgin soil as a cemetery, and another portion as the site of a prison.”
Levin merits praise for invoking, in his critique of heavy-handed utopian schemes, the underappreciated concept of spontaneous order. In contrast to a planned order, like the one God created in Genesis as he placed each creature in turn upon the earth, a spontaneous order is like evolution via natural selection: the prevailing order emerges out of seeming chaos thanks to impersonal forces that humans can observe and exploit but cannot improve upon or triumph over.
Writing against the planned order of socialist economies, Friedrich Hayek touted the superiority of the free market, the spontaneous order with which he is most associated, and its “more efficient allocation of resources than any design could achieve.” Less remembered is Hayek’s belief that law and culture too should evolve via spontaneous order rather than overarching design. Better rules come about gradually as successful practices are imitated rather than being imposed, he argued, for much of the important information contained in prudent rules is not explicitly understood. When we have children, for example, the decisions we make about how to raise them are largely determined by societal tradition, what our own parents did, and what we observe parents around us doing. If a new parent approached and said, “Look at all the warring and racism and sexism that there is in this broken world — I’m going to move to the woods, where I’ll raise my baby according to a radically unorthodox method I’ve been extrapolating from first principles,” we wouldn’t need to hear the particular method or the first principles to worry that the child will be worse off than if his parent drew at least partly on tradition.
Americans would benefit if they applied the skepticism they feel toward utopian schemes to other planned orders. I’d personally urge more skepticism of democracy building abroad, drug prohibition at home, and a health-care system where the federal government increasingly determines what surgeries, treatments and pharmaceuticals should and shouldn’t be covered by universally mandated insurance. But is it accurate to call the proponents of those policies utopians? Is utopianism in fact the root of what ails America? Isn’t utopianism less prevalent than it once was?
When I last read the full texts of the authors covered in Ameritopia I was in college. I have not re-read them for this review. Though I found myself mistrusting Mark Levin’s summaries, I am content, for the purposes of this review, to proceed as if everything he writes in his chapters on bygone philosophers is accurate, for it is the opening and closing chapters of the book, where he describes utopianism and applies it to America, that constitute most of his original thinking. What I’d love to know is why Hugh Hewitt finds his thesis persuasive, unless he was merely satisfied by Levin’s affirmation of what the vast majority of Americans already believe: that the Framers conceived a governing framework that is superior to any utopian scheme. On that we can agree.
The book’s first problem is Levin’s working definition of utopianism. “What kind of power both attracts a free people and destroys them?” he writes early in the book. “The heart of the problem is, in fact, utopianism… the ideological and doctrinal foundation for statism… Utopianism is irrational in theory and practice, for it ignores or attempts to control the planned and unplanned complexity of the individual, his nature, and mankind generally.” In fact, utopianism is often excessively rational. It proceeds as if logic, planning, or technology should re-order the whole of society, ignoring the wisdom of tradition and the benefits of spontaneous orders.
Levin proceeds to say that utopians promise a perfect society “if only the individual surrenders more of his liberty and being for the general good, meaning the good as prescribed by the state.” Throughout he conflates utopianism and statism, treating them as if they’re the same thing, which is a strange mistake for a writer so focused on the Founding generation. As Levin knows, the statism they rebelled against wasn’t grounded in utopianism. The monarch to whom we sent the Declaration of Independence wasn’t a utopian, just a tyrant. The loyalists in the American colonies were not motivated by utopian promises, and were surely less utopian than Thomas Paine. “Americanism” wasn’t a reaction against Plato, More, Hobbes, or utopianism generally.
Levin doesn’t just write as if all statism is utopian. He also seems to be under the misimpression that all utopianism is statist. “Utopianism’s authority… knows no definable limits,” he writes. “Utopianism relies on deceit, propaganda, dependence, intimidation, and force… In utopia, rule by masterminds is both necessary and necessarily primitive, for it excludes so much that is known to man and about man… Utopianism requires power to be concentrated in a central authority with maximum latitude to transform and control.” So many counterexamples come to mind. Has he never heard of Ayn Rand? In her utopian novel Atlas Shrugged, the plot unfolds with all the capitalists in society withdrawing to a hidden Colorado valley where private property is sacrosanct, the initiation of force is prohibited, and sex among consenting adults proceeds after a completely rational assessment of partners. There are all sorts of reasons Galt’s Gulch wouldn’t work. But no one can say that it relies on a central authority with “maximum latitude to control.” And it is anything but statist!
Objectivists are hardly the only people to envision utopias that show Levin’s generalizations to be nonsense. The Shakers don’t fit his description, nor does Robert Heinlein’s libertarian Utopia. A moment’s reflection is enough to see that the utopian strains in undertakings as diverse as the Quaker movement, Disneyland and Burning Man were hardly malign, statist threats to American liberty. Utopianism is, remember, the main subject of his book. He doesn’t seem to understand it, perhaps because he never actually grapples with it outside the texts he’s chosen.
One of the most glaring flaws in Ameritopia is its attempt to tease out the relationship between utopianism and Americanism without spending any time researching or remarking upon any of the actual utopian movements that have waxed and waned in America. There are many of them! The author himself affirms the importance of grounding our political thinking in the observed reality of the world rather than airy intellectual abstractions. So why does Levin spend so much time and space critiquing the pretend utopias of Plato and More that no one has ever sought to implement, and so little time on the myriad actual utopian communities that sprang up on American soil?
Communism and socialism are the exception, the real world utopian movements that are discussed (though even they are mostly discussed as abstractions). As it turns out, utopian socialists existed in the United States during the 1930s in numbers far greater than they do today. But contra Levin, President Roosevelt wasn’t one of them. For all his faults, FDR thought the utopians of his era were nutty. Witness his snub of Upton Sinclair, who in 1934 ran for governor of California on the Democratic ticket, a bid that included the publication of a pamphlet titled, “I, Governor, and How I Ended Poverty in California.” FDR had no illusion that he would end poverty in America, and his governing rhetoric was far from utopian. “This country needs bold, persistent experimentation,” he said in one characteristic statement. “It is common sense to take a method and try it: If it fails, admit it frankly and try another. But above all, try something.” On another occasion he said, “I have no expectation of making a hit every time I come to bat.”
In subsequent decades, the federal government would grow and grow, but as Communism and centrally planned economies became increasingly discredited even on the left, the utopian impulse in American life waned. Today liberal college students aren’t hippies, they’re aspiring management consultants and corporate lawyers; our religious fringe is charging Hollywood celebrities fees to rise in their church; the signature achievement of a Democratic president is a corporatist tweak to health care policy that’s to the right of what statist Richard Nixon was advocating for half a century ago. I don’t like Obama’s health-care bill, or his Detroit bailout, or his failure, along with Republicans, to address the deficit, but utopianism isn’t the problem. Obama supporters are under no illusion that his policies are going to bring about an earthly paradise. He hasn’t attempted to sell them that way. Neither have his Democratic allies. It isn’t an accident that prior to Levin’s book exactly no one settled on “utopian” when criticizing Obama.
Where are the utopian pronouncements in our politics today? Mostly absent, but among viable politicians I’d actually sooner look for them on the right than the left. President Bush said, in his second inaugural address, “it is the policy of the United States to seek and support the growth of democratic movements and institutions in every nation and culture, with the ultimate goal of ending tyranny in our world.” Newt Gingrich is surely the most utopian politician currently hoping to be president of the United States, unless I missed the Obama plan to start colonizing space. What’s more utopian, the Democratic Party’s national platform or the Project for a New American Century?
Mark Levin has good taste in political philosophers. Locke? Montesquieu? The Framers? Tocqueville? All awesome. Summarizing them for chapters on end, often using cumbersome block quotes, it’s inevitable that he managed to squeeze in some great insights that they had. If Levin adds anything beyond that to justify buying his book, rather than a Locke CliffsNotes, its his brief discussion of spontaneous orders, but they’re much more adeptly described by Hayek. Is there any original insight in Ameritopia that would justify its purchase price? There is not. He manages to list a lot of problematic things about the United States, including the budget deficit, excessive regulations, and the gradual erosion of enumerated powers as a lodestar. But he is unpersuasive in pinning these problems on utopianism, which he cannot even adequately define. And for reasons discussed here and here, he is totally lacking in perspective when he attempts to assess what in American life represents the most dire present threat to liberty and the constitutional order.
As someone outside movement conservatism who is nevertheless invested in shrinking government, repealing excessive regulations, and preserving liberty, it drives me nuts to see conservatives squandering their credibility by effusively praising this book as if it’s a rigorous work of uncommon insight. As it turns out, the author’s command of facts is not “beyond question,” his argument is rhetoric driven, not “fact-driven,” and God help us if it is, as Rush Limbaugh insists, “the most compelling defense of freedom for our time.” Effusive praise like that, absent any mention of the flaws I’ve noted and the many others I haven’t, erodes the right’s credibility, and for what? A boost in the sales of a book that repackages ideas its audience already believes, and is written and marketed in a way that guarantees it won’t win converts.
Conservatives can do better. But the status quo of selling lots of books to adoring fans while losing the larger battle of ideas is fantastically ego-boosting and lucrative, so I am not sure conservative entertainers will do better unless their audiences stop being so sycophantic and demand it.
If I were back in DC today, which I’m not, I would be going to the National Archives for the premiere screening of California State of Mind, a documentary about former governor Edmund G. “Pat” Brown by his granddaughter, Hilary Armstrong. Pat Brown is best known these days as the father of the past-and-present governor Jerry Brown — officially, Edmund G. Brown Jr. (at right, the two Governors Brown) — but he is known to me and other Boomer-era Californians as the man who presided over the age-of-abundance California of the post-World War II decades. This was the period of all-fronts ambition for public wealth of all sorts in California: K-12 schools, the three-tier California university system*, new freeways, new parks, new hospitals, new water systems, new everything.
The subject — including its budgetary implications, which were the backdrop to the second Gov. Brown’s stint in office – has been examined before, for instance in Kevin Starr’s Golden Dreams. But I’d love to see this film about the elder Brown and what he tried to create. If you’re in the vicinity, check it out. In the meantime, trailer is here.
* As we learned in our “state civics” class, itself a quaint concept now, the California higher ed system was intended to provide an integrated ladder-up for students of a wide range of ambitions and preparation levels from across the state. The first tier was the network of JC’s and community colleges, matched to each high school district. Then, the Cal State system; and at the top, the mighty UC system, which was expanding so rapidly that two entire new campuses, at Irvine and San Diego, opened in one year while I was in high school. At the time, it seemed a perfectly normal level of ambition and growth — sort of like the cities of Beijing and Shanghai opening entirely new subway lines year by year while we were living there.
A reader sent this message after he read an item yesterday:
Looking at your note on this online and seeing Trayvon Martin’s picture juxtaposed by Obama’s picture on the Atlantic cover made me think – this kid could have grown up to be President.
In the same vein:
The effect of Trayvon Martin’s photo at the top of your blog post was quite stunning, on me anyway. More powerfully than any of the very well written commentary I’ve read so far, it said to me simply: Who would find this person so threatening as to shoot him – apparently while *walking away*? And who could find that shooting not to be worth a homicide investigation?
Let us stipulate that Trayvon Martin might have looked different that night than he did in this angelic photo. Still, the person in this picture is the same one who was shot — and who, according the 911 tapes, was begging for mercy before the killer fired the fatal shots. If humanizing this tragic slaughter, by literally putting a smiling face on the victim, attracts attention to the racial and broader civic and legal issues it raises, then let it do so.
From a reader with a military background, on one of those broader issues:
I am following this story with interest, but less from a black vs. white story perspective than one of gun ownership out of control…
I’ve done a lot of weapons firing and have a sizeable collection of military firearms as well as a number of acquaintances who share my enthusiasm for firearms. I get tired of hearing periodically from one of my well-meaning but not well-informed shooting buddies about how the Obama administration is going to end gun ownership as we know it. I get more tired of hearing about the incidents where gun owners just plain act irresponsibly in exercising their so-called rights.
This story from Florida makes me sick. No one has the right to go around armed and taking the law into his own hands. I personally hope that the Department of Justice gets involved in this case since the accounts I’ve read so far seem to pretty clearly suggest that Trayvon Martin was deprived of his civil rights, and the authorities in Florida so far have made no effort to bring this matter to justice. sincerely hope Mr. Martin’s parents can find a competent attorney to bring a civil wrongful death suit against Mr. Zimmerman and the local police department. Clowns like Zimmerman end up branding all firearm owners as out-of-control bullies who can shoot unarmed people with impunity.
For the record: in the page the first reader originally saw, the pictures of Obama and Trayvon Martin were farther apart on the screen, though both visible in the same glance. For clarity I’ve moved the Obama image down parallel to Martin’s.
I’m in Britain at the moment and suffering a severe case of déjà vu all over again. Granted, I was already a bit disoriented after flying overnight from San Francisco at the weekend and heading straight from Heathrow into a philosophy symposium at Oxford. (I don’t recommend it. But the gathering was to mark the retirement of Ralph Walker of Magdalen College, a distinguished philosopher and the best teacher I have ever known. An event not to be missed, despite the strain.) Head still aching, I arrive in London in time for tomorrow’s budget to find that private finance for public investment–roads, in this case–is back on the UK’s political agenda. What does it take to put this perpetual fiscal gimmick to rest?
There’s nothing wrong with pricing the use of infrastructure. I’m all for it, especially if the infrastructure is congested, and many of Britain’s roads would seem to qualify. Making sure there’s real competition in the building of infrastructure also makes sense, obviously–competitive bidding for the contracts, benchmarking of contractors against best practice, and so forth. But arrangements that simply take the assets off the public sector’s balance sheet and thereby increase the cost of finance make no sense at all. The British government can borrow long-term for roughly nothing at the moment. If the country needs infrastructure investment, there’s no cheaper way to pay for it. There’s no financial advantage in these “private finance initiatives”. Just the opposite: they’re more expensive. The potential gains are economic (so long as pricing and competition are actually allowed to work, and regulations imposed on private providers are well-conceived) and/or political (disguising the public sector’s assets and liabilities).
The National Institute’s Jonathan Portes explains it very well.
The key point is that “privatising” a service can, in principle, result in two types of benefit:
- competition to provide the service; in principle, allowing the most efficient (lowest cost and/or highest quality) provider to do so, benefiting consumers;
- allowing market-based pricing for the service; so that both producers and consumers have the right incentives, the former to produce the products consumers want, and the latter to consume only products that they are willing to pay a market price for.
The problem is that in services that are a “natural monopoly” (either on a national basis, or locally) the latter benefits do not flow automatically from privatisation. So when a natural monopoly is privatised but the pricing structure is left unchanged, then the benefits are far from clear. And against the potential benefits of private provision must be weighed the costs; first, that private providers will generally demand a higher cost of capital than applies to the private sector; and second, and more seriously, that if there is a regulatory framework post-privatisation – and almost inevitably there has to be, otherwise the service would never have been public in the first place – the providers may game the system and find a way to extract supernormal profits at the expense of consumers.
Note that I don’t mention the aspect of the announcement that has been most hyped; encouraging “sovereign wealth funds from countries such as China to lease roads in England”. Not because I think there’s anything wrong with the idea; but because if that’s all the scheme does, without realising any of the benefits of competition, then it amounts simply to off-balance sheet financing, with no long-term gains either to taxpayers or drivers.