Commentary: Andrew Steele: The toll of politics as score-keeping
By Andrew Steele email@example.com December 11, 2012 1:50PM
Updated: December 11, 2012 1:50PM
A professor in Virginia did a study evaluating whether the lease of the Indiana Toll Road to a private company was worth doing.
His answer was no, because, as best as I can figure from the Associated Press report, the upfront payment of $3.8 billion cheats future generations. He reportedly argues that a good deal would have provided periodic payments over the course of the lease. Or, that a lease should not have been done at all.
I had a couple quick reactions: first, that it is incredibly complicated to determine the value of this deal to Indiana; second, that an argument like this comes perilously close to arguing that investment funded by debt is inherently bad because it “cheats” future generations.
At its heart the deal is a financial transaction. Indiana sold a future stream of revenue for a lump sum payment upfront. It used that lump sum to fix and build roads and bridges, which have an economic return that is theoretically calculable but practically impossible to predict.
Further, it’s terribly difficult to predict the net value of the stream of revenue the state sold. The two sides were obviously confident enough to reach an agreement, but whether or not the state sold its asset too cheaply is unknowable.
Ultimately leasing the toll road and spending the proceeds on infrastructure improvements is similar in impact to borrowing money to spend on infrastructure improvements. The former relinquishes a future stream of revenue; the latter promises a future stream of payments.
So the idea that the lease cheats future generations is akin to the idea that borrowing money cheats future generations. Either might be true in any particular case, but neither is true in every case. Debt is a necessary part of progress. It can be regulated in objective ways, but always includes some degree of risk.
Whether the toll road lease was “worth it” or not is a question containing so many variables that a reasonable argument can be created to fit any political perspective, and I’m afraid that’s what’s being done with the Virginian’s study.
I would hope the study itself is more detailed than the newspaper story on it implies, but in any case its use as a political weapon was easily predictable and is as unfortunate and tedious as the hyper-critical and overly dramatic electoral campaigns we’ve seen in recent times.
Neither side is constituted solely (or even mostly) of idiots and knaves. There are reasonable arguments on each side of every policy decision. Those arguments are always reduced to caricature, but we only fall for that if we let ourselves.
Whether the toll road lease was worthwhile can be debated, but it isn’t necessary, nor is it helpful, to paint issues like this with brushes so broad that they call into question the use of common financial tools to address policy problems.
The scoring of political points without regard to how they’re scored corrupts and clogs the system much more than the imagined skullduggery of elected officials.