The Third Airport and Rent-Seeking
The Turkish Airport's Excess Land Goes to Whom?
Turks got fed up with their “big brother” of a prime minister poking his nose into their private lives, telling them not to drink alcohol, kiss on the metro and the ferry, or have abortions -- and with his government's rent-granting. This 2013 excerpt is from the Hurriyet Daily News, June 28.
by Emre DeliveliTurks were also protesting against Recep Tayyip Erdoğan’s “crazy” projects, which are hastily proceeding without any serious impact evaluation studies, environmental, economic or otherwise. The new Istanbul airport is one of the most notable of these projects.
The construction consortium would need to raise fees by 17 euros per passenger just to break even, but that would decrease the airport’s attractiveness. The only other option would be to earn significant non-operating income on the land allocated to the airport.
That land is very large compared to Atlanta and other major airports. All the firms in the consortium are in construction, so they may be “hoping” to get some extra income from “extracurricular” rent-seeking activities such as real estate and infrastructure development around the airport.
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JJS: If the consortium’s airport income turns out to be not enough so they won’t be able to pay what they owe the government, will they still be able to keep their income from their surrounding development projects? It wouldn’t surprise me if that’s how it turns out, but it’ll be a few years before we know.
This is another good example of why it's a bad idea to let government be in the money lending business. If a new, third, airport is a good idea in Instanbul, let its proponents make their case to private investors and bond buyers, like smaller, less-well-connected builders have to do. And let the private profit come only from the structure, let the profit from the location accrue to all members of society in general, via a “rent” dividend to residents.
With these strictures in place, then we’d easily find out in advance which projects would be beneficial to society, worth proceeding with, and which are not -- so we could save our land and money for new developments that truly would benefit everyone.
Editor Jeffery J. Smith runs the Forum on Geonomics and helped prepare a course for the UN on geonomics. To take the “Land Rights” course, click here .
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