Don’t let anyone fool you: Capitalism isn’t about competition. Capitalism much prefers monopoly.
And don’t let anyone fool you about this, either: business is quite content with government interference—as long as it’s in favor of business.
Nothing brings that together better than the infamous Chicago parking meter privatization scheme that was hatched a decade-and-a-half ago and continues to haunt Chicagoans to this day. It should serve as a cautionary tale for other cities.
My coauthor and I wrote about the Chicago parking meter privatization in our book The Privatization of Everything (btw—it’s now out in affordable paperback!), and in my talks following the book’s publication, that story was the one I was most asked about. It never fails to stun people.
As we wrote in our fact sheet, The Perils of Privatizing Parking Assets:
In 2008, then-Mayor Richard M. Daley rushed a proposal through Chicago’s city council to lease out the city’s downtown parking meters for 75 years. Councilmembers (and the public) were given only a few days to examine the deal’s details. Daley made the hard sell, promising a buyer with $1.15 billion to fill Chicago’s existing budget hole if the council acted quickly. Only after the deal was done did the city learn that it leased the meters nearly $1 billion too cheaply while giving away rights to manage traffic and land use to investment giants Morgan Stanley, Abu Dhabi Investment Authority, and Allianz Capital Partners—for 75 years.
Since then, the ownership has shifted, but the profits keep pouring in and away from the city.
A 2021 lawsuit challenged the arrangement, alleging the unimaginatively named Chicago Parking Meters LLC (CPM) was a monopoly in violation of the Sherman Antitrust Act and was using its position to price-gouge and stymie public transit developments.
U.S. District judge Matthew Kennelly tossed the suit out over a year ago, not on the grounds that CPM wasn’t a monopoly, but that Chicago’s municipal government enjoyed state action antitrust immunity and had the right to turn the meters over to the private for-profit firm.
The city of Chicago acted, in essence, as a front, allowing a private company to benefit from a doctrine intended to protect the people.
Earlier this month, following an appeal, a Seventh Circuit panel of judges unanimously agreed with Kennelly’s decision but didn’t exactly enthuse about the terms of the original deal with CPM in its 28-page ruling.
“The deal itself might have been foolish, short-sighted, or worse, and if one is to believe news reports, it may have saddled Chicago with the most expensive street parking in the country… but that is not enough to state a claim for a violation of the antitrust laws,” U.S. Circuit Judge Diane Wood wrote in the opinion.
CPM has Chicago drivers coming and going, even when they’re parked.
The cost for parking has skyrocketed, steadily climbing from the pre-contract average rate of a quarter an hour. In some areas in the downtown Loop area, meter rates are as high as $7 an hour. But in some circumstances, the city pays even when there isn’t a car parked in a spot owned by the company. That’s because of something called truing up, which allows CPM to collect from the city if something—a street fair, a bike lane, a change in the streetscape—interferes with expected parking at those meters.
So even if you don’t park in the city and never used a parking meter, you’re still paying. And, of course, any changes to the streetscape that city planners might consider will have to factor in this added cost.
It certainly looks like a monopoly Chicago residents and visitors are paying for. Too bad it’s not Monopoly money they’re paying with.