Professor: It does sound good, but a lot of people are very wary of privatizing pieces of infrastructure and rightly so.
For instance, in almost every case thus far, the first thing private companies do is drastically raise user fees because they say, "Oh, we must do critical maintenance that's gone undone for years and years.
And because we're a private company, we can't use tax money to do it. Our only option is raising tolls."
But what's the impact on people who use a toll road to get to work?
What if a private owner doubles or triples the toll overnight?
Student: Uh, users would have to spend a higher percentage of their income on commuting.
Professor: And depending on their income, that percentage could be significant.
Student: But if tolls went up, me, I'd just avoid the toll road and take smaller back roads where there aren't any tolls.
Professor: That's a good point, secondary roads would become attractive to lots of other people too, and private companies know this.
They also know that dramatic reductions in traffic would hurt their bottom line.
So market forces do play a role in keeping private companies from raising their tolls too much.
But the mere prospect of astronomical toll hikes is still alarming to governments when they think about selling or leasing parts of an infrastructure.
Now, from a business standpoint, infrastructure purchases can be great investments.
If a company buys or gets a long-term lease on a toll bridge from the government, it's got an almost guaranteed steady source of revenue for years and years, which means that if the company decides it wants to sell the bridge to another company, say ten years from now, it'll have no problem finding a buyer.
Student: But what if that buyer, this new owner, continues to charge a high toll but doesn't do the same amount of maintenance because they want to squeeze more money out of the assets?
Professor: In that case, could the governments buy the asset back?
Well, to do that, it would have to raise money either by raising taxes or by selling bonds, both of which are politically sensitive.
So it's unclear in a practical sense whether these deals are truly reversible.