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Europe Leads the Way?

In reducing the role of government in the ­economy, the U.S. is a laggard.

Oct 14, 2013, Vol. 19, No. 06 • By IKE BRANNON
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Europe also lets the private sector manage a good deal of the transportation infrastructure, something else that is well-nigh unthinkable here. A significant proportion of European airports are run by a private concessionaire, as well as most of their transportation security. And most countries use a market to allocate the takeoff and landing slots at airports and keep runway traffic manageable. Our failure to do so is the reason that every major airport in the United States becomes congested mid-mornings and late afternoons, rendering airline schedules little more than a joke. Such a sorry state of affairs is uncommon elsewhere, because market forces allocate scarce resources better than the combination of historical accident and government planning used in U.S. airports.

Countries all over the world have opened up their roads to pricing schemes and private management. Despite experiments here and there, American liberals and conservatives have by and large resisted such a move, despite the potential to greatly reduce congestion, air pollution, and the need to build more infrastructure.

The little-known uranium enrichment industry may best exemplify the difference between the European embrace of markets and America’s uneasiness with them. Nuclear power plants need to use uranium that’s been enriched so that it has a higher proportion of the lighter and more reactive uranium-235 isotopes. The U.S. market for enriched uranium has long been dominated by USEC, a company created in 1992 ostensibly to privatize uranium enrichment. But it has been hemorrhaging money and relying on government loan guarantees and Department of Energy subsidies to avoid bankruptcy. Keeping it afloat has cost the U.S. government billions, most of which gets justified by a blunt appeal to Congress to help save the well-paying jobs at the company.

Its European counterpart is Urenco, a company formed by the British, Dutch, and West German governments in the early 1970s. Unlike USEC, it has come to operate without government subsidies. Being in a heavily regulated industry with access to technology not widely available helps, of course, but with the Japanese tsunami and Angela Merkel’s pledge to end nuclear power in Germany, it’s not exactly a growing market. Despite falling demand, Urenco continues to improve its productivity and profitability, and the Dutch and U.K. governments, which have held onto their ownership stakes, recently announced their intent to sell their stakes to take advantage of this. Meanwhile, Urenco formed an American offshoot, investing a few billion dollars in an enrichment plant in New Mexico, and since then it has been eating USEC’s lunch.

For now the hopes and dreams of pro-growth policy wonks in the United States hang on achieving tax reform, but fixing the tax code will be tough: Not only are there nearly as many losers as winners for every major change, but the party lines are staked out much more clearly in the tax world than almost anywhere else.

But there’s a whole other realm where the U.S. government could​—​and should​—​cede its authority to private actors, which would improve the economy, the federal budget, and people’s satisfaction with government. Political parties of all stripes managed to make that happen in Europe. They could do the same here.

Ike Brannon is a senior fellow with the George W. Bush Institute and is president of Capital Policy Analytics, a consulting firm based in Washington.

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