Yale Open Course <Power and Politics in Today's World>
Lecture 8: Privatizing Government I: Utilities, Eminent Domain, and Local Government
Notes
Neoliberalism (domestic) & Washington Consensus (abroad)
components: deregulation, privatization, free trade
hegemonic through 2008; then starts fracturing
backlash after 2008
Dodd-Frank Act to regulate
Hegemony is never complete
Michael Walzer <Interpretation and Social Criticism>
internal resources within any hegemony that enables criticism of it & possibility of changing it into something different
“imminent criticism”
Water privatization ↑ 1991-2007 around the world
in developing countries (imposed by the IMF/World Bank and developed countries)
Eminent Domain
right of the government to take private property for a public good
“Privatizing” eminent domain in India
1984, 2007 → expansion of the definition of “public purpose” in the Land Acquisition Act
70% rule: companies need to acquire 70% of the land; the rest is bought by the govt and sold to the company
prevents hold outs
Special economic zone with regulatory/tax breaks → magnet for capital
Ex. the Tata Nano in Singar, West Bengal
Bengal governed by the Communist Party operating a capitalist economy
the govt started firing farmers off their lands, some without given any compensation
People + opposition party began attacking the car plant
“just compensation” → flash point
informal transfer & tax evasion
land sold at “official price” not “unofficial” price which was higher
increased land value after the project was launched
moral hazard of the 70% rule
people can still hold out for higher prices
many farmers unlikely to reap Tata employment benefits
Case of eminent domain backfiring
lands bought for the purposes of “economic development” but resistance and mobilization of the affected population
Privatizing eminent domain in the US
Takings clause of the 5th amendment + due process clause of the 14th amendment
private property can’t be taken for public use without just compensation
what makes a use “public”?
public good:
non-excludable (creating benefits for me also gives them to you)
non-rivalrous (my having it doesn’t stop you from having it)
inevitably politically charged question
bc of alternative courses actions that could’ve been taken
there are always winners and losers
externalities: costs that some people will have to bear
valuation
Case: Kelo v. City of London 2005
Supreme court in favor of the city deploying ED to build a shopping mall for economic growth even when there is no blight
Back lash:
widespread diverse coalition opposition
2019, 45 states against private use of ED
conclusion:
neither efficiency or “just” compensation enough for people to greenlight privatization
loss aversion might be important
unexpected externalities can trigger opposition
Privatizing local government
downstream effects of Proposition 13
CA with less revenue, needed to make up with other taxes
but revenue still growing slowly
local governments response: privatize government
Common Interest Developments (similar to condo associations)
condo owners pay a fee to receive utility services that local govts typically provide
2009, ~20% of US population living in CIDs
some states (ex. CA) don’t allow any other kinds of residential developments
saves money for governments
consequences for democratic politics?
private government (board) chosen by developers → undemocratic boards
accountability problems
entry barrier → what about the homeless?
“Segmented democracy” (Douglas Rae)
people spending time with people like themselves
which can lead to political polarization (Kahneman & Cass Scutean
Privatizing of policing; CIDs essentially gated communities
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