Okay, I'm going to commit heresy. My liberal friends aren't going to like this one bit, but I'm gonna say it: the toll road deal, where we leased the Indiana Toll Road to a foreign consortium, was a good idea. A really good idea.
And I hope it doesn't end there. I'm not a fan of wanton privatization, far from it, but I am a fan of getting rid of assets that have no future, especially when you can do it at the top of the market — i.e. before the future arrives.
So keep lookin', Governor Daniels, and keep flippin' Indiana roads for Bourbon euros and Aussie dollars. We don't want to hold onto those turkeys, and we can certainly use the cash.
Since I've already stepped this far off the reservation, I'll go even farther: let the Governor have his I-69 toll road, just so long as we (I mean us Hoosiers) don't pay a dime for it. Just so long as it's the mother of all foreign infrastructure outsourcing deals.
Major Moves, major mistakes
Eight score and fourteen years ago, Indiana turned the dirt for what was going to be the bestest and most modern transportation system, ever — a network of internal canals that would run the length of the state, north to south, and east to west, bringing jobs and permanent prosperity.
Indiana got the idea the way Indiana gets most of its ideas, a day late and a dollar short. Or, as in this case, about a decade late and billions of dollars short.
Indiana had looked to the Erie canal, which opened in 1825, and it said "I want one too!" And by 1832, Indiana started building. By 1836, it decided it needed even more, more quickly, and it passed the "Mammoth Internal Improvements Act" to do it.
By 1841, Indiana was bankrupt. Unable to pay even the interest on the money it had borrowed to build the canals.
What went wrong? Well colossal bad judgment, for starters. The state borrowed the money for the canals from private banks (the fallout from that is why Indiana's constitution forbids the state from going into debt) and then proceeded to build both as a recession gripped the country and as technology made canals obsolete.
The railroad had arrived. Canals were so, like, yesterday.
Twenty-first century canals
Hoosiers are a stubborn lot. Add to the stubbornness a general lack of interest in education and you get all the ingredients for a perfect public policy storm, a little storm named I-69. AKA "We done forgot, or never learned in the first place, about that canal thingie. So we're gonna do it again, this time with emphasis."
Forty years after the rest of the nation gave up building interstate highways, Indiana came roaring back from the future with a brand-new twenty-first century canal. It came back with an Eisenhower-era transportation mode to be built brand-new only a decade or so after 2001: A Space Odyssey said we were supposed to have bases on the moon and computers so advanced that they had bipolar disorder.
Only in Indiana could people reach so far into the past to solve tomorrow's problems.
... oil prices will steadily increase as world production approaches its peak. The doubling of oil prices in the past couple of years is not an anomaly, but a picture of the future. Peak oil is at hand [and] Oil wars are certainly not out of the question. United States Army Corps of Engineers, "Energy Trends and Implications for U.S. Army Installations," September, 2005
The real horror, of course, has always been that Indiana would build the obsolete monstrosity using taxpayer funds only to find, just as it came online, that it no longer made economic sense to mindlessly motor up and down from Evansville to Indianapolis while burning fuel purchased at great expense from people who hate us.
But luckily, this time we don't have to get canaled. We have an out. We can get foreigners to build it, using their money. And when the global shitstorm known as peak oil tanks the project, this time at least it won't be the state blinking into the headlights, wondering where all the cars, trucks, and money went.
Some previous proposals were studied as toll roads. These proposals were not recommended because the road would not be financially feasible as a toll road. "Toll feasibility" requires that traffic levels not only pay ongoing operating and maintenance costs, but that they also provide revenues sufficient for construction debt service. INDOT, "I-69 Final Environmental Impact Statement," Chapter 1, Page 1.
Don't think so? Think we can have our cake and eat it too? Think that not only are foreigners going to build our road for us, but they'll pay us for the privilege? Think again.
One-hundred-and-forty-two miles, $3 billion to build, and 25,000 vehicles a day (25,000 is what currently goes up and down I-69 at Fort Wayne, why would it be any different down here?).
Let's say an average toll of $15 per vehicle per day (about what the Pennsylvania Turnpike collects along a 142-mile stretch). That's $137 million a year in tolls.
Unfortunately, just servicing the debt on a $3 billion dollar bond would require payments of $150 million a year (assuming 5% interest).
It's going to tank, just like the canals. Only this time, when the dust settles and the Spaniards are crying in their Tapas and the Australians are nursing their Fosters, we can pick up the pieces. We can take the empty right of way and decide to do something actually economically productive with it.
Like lay a railroad down it. Back to the future.
Gregory Travis can be reached at Greg at littlebear.com.