A recent AP article says that New York state’s Governor Paterson is considering leasing some state assets to private contractors to “trim costs and provide long-term, steady revenue.”

Under consideration for leasing could be everything from state highways and bridges to the lottery, golf courses, parks and beaches.

Let’s think about the economics of the situation for those who bid on such projects, assuming there are multiple serious bidders. They are willing to give some up front concessions, because they believe that things will turn their way within a few years. By that time, today’s governor and legislator will have moved onto other pursuits, and the people of NYS will be receiving a small fraction of what they should be getting for scarce rights of way (highways, bridges, beaches, golf courses, parks) or monopolistic privileges (lottery). Yes, the current governor and current legislature will have solved their current problems, but they will have effectively turned parts of the commons and special privileges over to special interests, likely on long-term leases that effectively turn over to private entities an increasing amount of economic rent.

Likely the folks negotiating such deals on our behalf don’t even know what economic rent is.

It would be bad enough if these things were being turned over to America’s corporations and entrepreneurs for privatization into their already significant stores of wealth. But the article goes on to mention, quite casually, that it is an Australian-Spanish partnership which paid $3.8 billion to lease the Indiana Toll Road, and $1.83 billion to lease the 8-mile Chicago Skyway, and an Australian company that bought the 99 year lease on a parkway in Virginia, and a Spanish-American partnership which is building and running for 50 years a toll road from Austin to Seguin.

Guess what America’s investment banks were up to? (I wonder whether this is still on their list.)

Nationally, Wall Street investment houses have courted more than a dozen states to lease state lotteries to private investors. The Illinois House last month approved a plan to raise $10 billion for building roads and schools by privatizing its state-run lottery for half a century, with the Senate scheduled to vote on the measure this fall.

And while this article doesn’t address it, some of America’s ports are also privately owned or leased long term, by foreign entities. See also: wealth transfer overseas!