Thursday, January 25, 2007

Illinois Bets on a Sure Thing

Does anybody have any idea what Governor Rod Blagojevich of Illinois means to accomplish by privatizing the state lottery (link)? I almost said “anybody but the governor himself, but of course, there is no necessity that he know either, even though he is the proponent, and even though he thinks he does. Nor does apparently, does the New York Times, linked above, which surveys the inevitable range of possible opinions on the topic without introducing anything that you couldn’t have guessed on your own.

Lots of people oppose privatization on principle. Not me. I think the chances are there are plenty of resources that might well be managed as well or better in private hands. And if there are buyers queueing up to pay for them, why then I say take 'em for all they're worth.

The trouble with most privatizations is not the principle of the thing; it is the fact that they are too often just ripoffs. The no-privatizers just take it for granted that the government will sell out too cheap, and they are right just often enough to make the point plausible. On this theme, the Times does fall into one tantalizing byway of confusion that may help to clarify matters. The Times says:

The sale … would not be the first privatization of public property (duh!—Buce) — both Chicago and Indiana have recently earned billions of dollars by signing long-term leases with private companies to run toll roads (emphasis added).

The Times missed it, but there’s a critical distinction here. A lease may be a privatization of sorts, but a lease is not a sale. Howard Hughes’ father did not get rich by selling drill bits; he leased them. Same with IBM and mainframes, same with Ma Bell and telephones. Same, pretty much, with Tony Soprano and the towel concession at the restaurant: if the lottery is so great, give yourself a chance to share in someone else’s success. Carpers will say this sounds suspiciously like some kind of a sales tax; the answer is sure, but so what?

The proponents of the sale say the point is that revenues will never be as healthy again, and that they are getting out at the top. Well they would say that, wouldn’t they?—I mean, because that is the only condition on which the deal makes any sense. But they’ve also made it clear that an argument for getting out is that they don’t understand the business. Uh, and the prospective buyers are likely to know less about it, and are likely to queue up for the chance to be taken to the cleaners? Lands sakes, they might even read the New York Times. Illinois’ governor needs a little lapel pin saying “Hi, I’m Rod, Take All the Money You Want.”

1 comment:

Bob Lawless said...

Coincidentally, "Take All the Money You Want" is the official state motto of Illinois.