France Sells Toll Roads \u2026 2
Privati\ue002ation Brie\ue001s \u2026 3
Coming to America? \u2026 4
Pricing to Please Bus Riders and Motorists \u2026 5
Slovakia\u2019s Re\ue001orms \u2026 6
Corporati\ue002ing Air Tra\ue001\ue000c Overseas \u2026 7
Japan\u2019s Postal Privati\ue002ation \u2026 8

Is European Health Care Better? \u2026 9
Global Aid Gone Bad \u2026 10
Losing Patients \u2026 12
Forget the Housing Bubble \u2026 13
How Schools Cheat \u202614
Who, What, Where \u2026 16

Reason\u2019s Jacobs Fellow spent \ue000ve years with ABC Network News producing pieces on government re\ue001orm, regulation, and privatization.

A pioneer in privatization and transportation policy,
Poole has advised several presidential administra-
tions. His transportation work has spurred innova-
tions in toll roads, congestion pricing, airport privati-
zation and air tra\ue001\ue000c control corporatization.

As Director o\ue001 Privatization and Government
Re\ue001orm Policy at Reason, Segal has authored
many studies on privatization, competitive sourc-

A leader in education policy research, Snell has
authored many studies and articles on education
re\ue001orm and child wel\ue001are.

Frequently cited by journalists and sought a\ue001ter by policymakers, Moore is one o\ue001 privatization\u2019s lead- ing authorities.

Reason Foundation, a national organization
dedicated to advancing a \ue001ree society through
the promotion o\ue001 choice and competition.

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Los Angeles, CA 90034\ue000
800/391-2245; 310/391-4395 (\ue001ax)\ue000
www.reason.org\ue000

Few Americans realize that France pioneered the idea o\ue001 long-term toll road \ue001ranchises. Its autoroute system, o\ue001 tolled intercity motorways (the equiva-

lent o\ue001 the U.S. Interstate highway system) began in the 1960s and was expanded throughout the remainder o\ue001 the 20th century, encompassing some 5,000 route-miles today. From the outset, the model was that o\ue001 the long-term \ue001ranchise (or concession, in the terminology generally used in Europe): a private \ue000rm or consortium would bid \ue001or the right to design, \ue000nance, build, operate, and maintain the toll road \ue001or a long enough period o\ue001 time (typically 30 to 40 years) to recover its investment. The initial concessionaires were all private-sector \ue000rms, but most were bailed out by the state a\ue001ter the oil crises o\ue001 the 1970s. Generally, however, while the state invested large sums in the \ue000rms, it did not acquire them outright. In most cases, it simply became the largest shareholder.

In the spring o\ue001 2005, the French government announced that it would sell its remaining stakes in the three largest toll road companies. They are:

The Budget Ministry hopes to raise $14-16 billion \ue001rom the sale, most o\ue001 which it will use \ue001or debt reduction, with the balance earmarked \ue001or non-toll roads and other in\ue001rastructure. By late August, the Finance and Transport Ministries had received proposals \ue001rom 18 interested buyers. Bidders include major French construction \ue000rms such as Bouyges and Ei\ue001\ue001age, existing (all-private) French toll road owner/operator Co\ue000r- oute, and major global toll road companies such as Abertis (Spain), Autostrade (Italy), Cintra (Spain), and Macquarie (Australia).

Once the process is completed, by early 2006, France will have a totally investor-owned national toll motorway system. It would be as i\ue001 the U.S. Interstate system had become a set o\ue001 investor-owned utilities.\ue000

In Hollywood, o\ue001\ue001shore outsourcing goes by a di\ue001\ue001erent name: \u201crunaway production.\u201d State and local o\ue001\ue000cials give speeches against it and are bent on shaping policy to keep \ue000lm productions \ue001rom leaving the area. That might be quite a tough task because going o\ue001\ue001shore can save lots o\ue001 money.

Producer Albert Berger estimates that \ue001ilming \u201cCold Mountain\u201d in Romania saved him more than $20 million in labor costs. O\ue001ten \ue001or \ue000lmmakers the choice isn\u2019t between going o\ue001\ue001shore or staying home, it\u2019s between going o\ue001\ue001shore or not making a movie. Said Berger to the Los Angeles Times, \u201cWithout the savings that Romania o\ue001\ue001ered, \u2018Cold Mountain\u2019 absolutely would not have gotten made.\u201d

Films shot overseas might use local crews, extras and stage builders, but they typically also use American actors, directors, producers, editors, special e\ue001\ue001ects sta\ue001\ue001, composers, and so on. I\ue001 the choice is to make the movie or not, ask those \ue001olks what they\u2019d pre\ue001er.

And worrying over \u201crunaway production\u201d can obscure the big picture. Yes, more \ue000lms are being made in more places, but Hollywood is still making more magic than ever be\ue001ore. According to the Entertainment Industry Development Corp., the nonpro\ue000t organization that coordinates shooting in Los Angeles, local \ue000lm production reached an all-time high in 2004, up 19 percent over 2003.

Latvia has made great progress in its transition \ue001rom a Soviet satellite to market-oriented economy. Roughly 98 per- cent o\ue001 \ue001ormer state-owned enterprises have been sold and the private sector now accounts \ue001or two-thirds o\ue001 GDP.

But, as Julia Pobyarzina o\ue001 the Baltic International Center \ue001or Economic Policy Studies points out, re\ue001ormist momentum has slowed. Most o\ue001 the remaining SEs are large in\ue001rastructure companies whose sale would be politically sensitive. Writing in the Stockholm Network\u2019s State o\ue001 the Union, Pobyarzina notes, \u201cLegal terms o\ue001 privatization have been dra\ue001ted \ue001or the oil transit \ue000rm Ventspils Na\ue001ta but as long as Russia continues to block the fow o\ue001 oil \ue001rom its territory through the pipeline to the Ventspils port, the government will have di\ue001\ue000culties in attracting suitable investors.\u201d

Pobyarzina \ue001urther notes that Latvia is eager to get the re\ue001orm agenda over this latest hurdle, \ue001or the nation is looking \ue001orward to \ue000nally overtaking neighboring Lithuania in per capita GDP.

With the introduction o\ue001 a voucher system the United Kingdom\u2019s National Health Service signaled that it is warming to patient choice. O\ue001\ue000cially, the term \u201cvoucher\u201d is not used, but what the system does is more important than what it\u2019s called. Consider how \ue001ormer Health Secretary Alan Milburn \ue001ramed the issue when he \ue000rst introduced the idea:

From December 2005 \u2026 choice will be extended \ue000rom those patients waiting longest \ue000or hospital treatment to all patients. They will be o\ue000\ue000ered a choice at the point the GP re\ue000ers them to the hospital. Patients needing elective surgery will be able to select \ue000rom at least \ue000our or fve di\ue000\ue000erent hospitals, again including both NHS and private sector providers.

Even though the properties were not yet built, Aldar Prop- erties recently sold 290 villas in 45 minutes. Such a tale isn\u2019t particularly uncommon in the United States. What\u2019s notable about these properties is they were sold in Abu Dhabi.

seven monarchies that comprise the United Arab Emirates just li\ue001ted a ban on property sales by citizens and now even allows \ue001oreigners to purchase leaseholds\u2014long-term leases\u2014in certain areas. The monarchy is also cutting back a government bureaucracy that employs nearly 90 percent o\ue001 the native-born work\ue001orce, by, \ue001or example, contracting out garbage collection to a French company and privatizing portions o\ue001 its water and electricity sector.\ue000

The United Arab Emirates just li\ue001ted a ban on property sales by citizens and now even allows \ue001oreigners to purchase leaseholds.