Re “Public-private infrastructure fight ruinous, 1/26/09”:
Bill Lockyer is correct when he writes that governments generally have lower costs of capital than do private companies. However, he’s wrong in suggesting that means government rather than the private sector should provide all infrastructure.
Capital cost is just one component of the life-cycle cost of infrastructure. The others are the costs of erecting, operating and maintaining that infrastructure. According to the United Nations, in many cases private-sector innovation, expertise and competition can yield big benefits in those areas, more than enough to offset higher capital costs and to provide better government buildings, transit systems and more. Were that not the case, then government should provide not only our infrastructure but also our computers, shoes, cars and more. After all, government also has a lower cost of capital than do the companies that make those products.
Monopolies never like competition, and the government is no exception. But consumers benefit from competition, and so will their infrastructure.
– David Crane, Special Advisor to the Governor for Jobs and Economic Growth