http://www.forbes.com/…

Minnesota is deep in the hole financially, but the state still owns a premier golf resort, a sprawling amateur sports complex, a big airport, a major zoo and land holdings the size of the Central American country of Belize.

Valuables like these are in for a closer look as 44 states cope with deficits.

Like families pawning the silver to get through a tight spot, states such as Minnesota, New York, Massachusetts and Illinois are thinking of selling or leasing toll roads, parks, lotteries and other assets to raise desperately needed cash.

Minnesota Gov. Tim Pawlenty has hinted that his January budget proposal will include proposals to privatize some of what the state owns or does. The Republican is looking for cash to help close a $5.27 billion deficit without raising taxes.

GOP lawmakers are pushing to privatize the Minneapolis-St. Paul International Airport and the state lottery. Both steps require a higher authority – federal legislation in the case of the airport, a voter-approved constitutional amendment for the lottery. But one lawmaker estimated an airport deal could bring in at least $2.5 billion, and the lottery $500 million.

Massachusetts lawmakers are considering putting the Massachusetts Turnpike in private hands. That could bring in upfront money to help with a $1.4 billion deficit, while also saving on highway operating costs.

In New York, Democratic Gov. David Paterson appointed a commission to look into leasing state assets, including the Tappan Zee Bridge north of New York City, the lottery, golf courses, toll roads, parks and beaches. Recommendations are expected next month.

Such projects could be attractive to private investors and public pension funds looking for safe places to put their money in this scary economy, said Leonard Gilroy, a privatization expert with the market-oriented Reason Foundation in Los Angeles.

“Infrastructure is more attractive today than ever,” Gilroy said. “It’s tangible. It’s a road. It’s water. It’s an airport. It’s something that is – you know, you hear the term recession-proof.”

Unions don’t like privatization deals out of fear that worker wages and benefits will be squeezed as private operators try to boost their profit by streamlining services.

Taxpayers, too, can lose out if the arrangements don’t work – and sometimes even if they do, said Mark Price, a labor economist with the Keystone Research Center in Harrisburg, Pa. Higher tolls on privatized roads can push drivers onto state-operated roads, wearing them down faster and raising public costs over time.

“You’re privatizing some profits in this process and socializing some losses,” Price said.

This is exactly right. What is being done is not true privatization or marketization. Unfortunately since the State never legitimately owned the resource it’s difficult to release it into the market. Ideally you’d auction it off in a fully open auctioning process and use the money to lower taxes. That however will not happen. In most cases you will have a small auction which favors some cronie of someone in the legislative or executive branch. They socialize the costs and privatize the gains. Fascism, corporatism, cronie capitalism. Call it what you like. What will inevitably occur is that the system fails due to inefficiency or corruption and the statists will blame the free market just as is being done currently with the Wall Street and car manufacturer bailouts. I’d say it’s better to let the state government wallow in their inefficient and tyrannical ways then “privatizing” components. Let the public see the state fail and keep all ideas of the free market out of the picture.