Pension Funds and Blair’s PFI Legacy
|Mar 21st, 2012 | Filed under: Infrastructure, Institutional Investing, Posting Categories, Social investing, Today's Post | By: cfaille||
Part of the “New Labour” program of Great Britain’s former Prime Minister Tony Blair was a Private Finance Initiative. Blair explained the rationale for it in these words in 2002: “Because the government cannot afford to fix the ailing system, it wants private investors to help foot the bill.”
The “ailing system” to which Blair was making reference there was the London Underground (the “subway,” in American English), but the PFI idea is of course broader. It is a relatively new mutation for the older meme of a “public-private partnership,” incorporating many elements of what is sometimes called social infrastructure: hospitals, schools, street lighting, waste management systems, etc. Of course, these have always been constructed by private companies. Under PFI, though, other private concerns lend the money to do the building.
The private investors, unsurprisingly, expect to receive their money back with interest (or profit), so using PFI to finance, for example, a hospital will require a contract that commits the hospital or the National Health Service to specified payments over many years – in the case of the construction of the University College London hospitals, 35 years – thereafter.
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Christopher Faille is a Jamesian pragmatist. William James has taught him, for example, that "you can say of a line that it runs east, or you can say that it runs west, and the line per se accepts both descriptions without rebelling at the inconsistency."
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