Unions: No Private Money for Infrastructure

Wednesday, March 12, 2008 3:28 p.m. EDT

A roadblock is forming ahead for the repair of America’s aging infrastructure -- labor unions.
Demonstrating newfound financial and political will, the Service Employees International Union (SEIU) is forming a potentially multi-billion dollar investment pool for state pension funds to devote to U.S. infrastructure projects.

The investment fund is being created to counter the efforts of sovereign wealth funds to invest privately in highway and bridge projects, much like has happened already across the planet.

Typical of the efforts is Australia’s investment bank, Macquarie, which is eyeing the rapidly-growing infrastructure sector in America.

State pension funds -- which boast $2 trillion in assets -- could keep U.S. roads out of the hands of foreigners, who would end up charging tolls to earn back the billions they put into repair work.
Andy Stern, SEIU president, recently presented the proposal to the Democratic Governors Association. And the Democratic governors are listening: SEIU has 1.2 million members nationally.

New Jersey Gov. Jon Corzine, a former Goldman Sachs executive, embraced the proposal publicly and is having the New Jersey treasury department discuss the project with SEIU.

But investment analysts say think again. Privatization, at least of some roads, does a social good.

"Privatized roads and bridges are well-maintained,â€