What seems to be an economic innovation is also often a political innovation. If Chicago was losing money on parking, they have the obvious remedy of raising th

What seems to be an economic innovation is also often a political innovation. If Chicago was losing money on parking, they have the obvious remedy of raising the price. But they would face significant political blowback. So instead they "sell" the parking revenue to a "private" operator who then raises the price. The service provided by the metering company is not just operating the meters but also taking the blame for the cost of parking. This way the city government — i.e. the people in the city government — get to throw up their hands and point at their predecessors. http://en.wikipedia.org/wiki/Principal–agent_problem http://en.wikipedia.org/wiki/Principal–agent_problem The incentive structure affecting the politicians is the root cause.