The History of Privatization: How an Ideological and Political Attack on Government Became a Corporate Grab for Gold

[fgs]

I agree that stats would be a good thing to have. I do think that because 2 - 1 ≠ 3, the burden should be on the privatizers to show how they delivered the same result for lower cost while keeping some profits for themselves all at the same time.

[dryheat]

It may not be the biggest thing for the country, but one of my major concerns is privatization of the management of the national parks. These are resources that should be protected for posterity and managed by people who ask themselves "How will this action affect the park 50, 100, or 200 years from now?" Contractors are pressured by economic concerns to focus more on how things will play out over the much shorter term of their contracts.

[ohnene]

Yes! Agree.

[stonebits]

Great article, lots of interesting history.

I'm thinking that if you look outside the US, the thrust for privatization goes back even further to Hayek's Mont Pelerin Society in the UK (I'm getting this from reading Srnicek & Williams' Inventing the Future)

[bodie1]

Having worked for some of these companies with government contracts, I can assure you that they all look at it as an opportunity to steal. Inflated executive salaries, outrageous cost overruns, unreasonable production demands on employees who want to do a thorough job but are penalized for it, all in order to satiate Boards of Directors and stock holders.

[ljb860]

In my 45+ years in IT, the last 15 of which I swapped any number of times between COO and CTO, I had worked both sides of the privatization game. It is a money maker for business. It does not save any government and/or business one thin dime.

Example: NYS uses privatization, a state worker earns maybe $65K plus benefits, the contractor doing the exact same job earns at least $90k plus benefits, now add the businesses profit/overhead markup. The result the State pays equal to two State workers. What makes it attractive, (1) the state can downsize without getting newspaper headlines if state economy drops, (2) politicians can state they are creating jobs, (3) the state does not have the long term retirement commitment expenses.

Now add into the mix a government and/or business that not just privatizes but offshores. Yes they get much lower wages but what everyone forgets is there is now a need for more supervisors and project managers. Yes, companies and governments don't hire the necessary oversight and you can easily tell when (1) projects never get completed, (2) projects double/triple in cost, (3) citizens don't get serviced as they should. Then add into the mix that if a government, the said government is exposing their citizens private info to people who have no interest in keeping the data private.

[jcs]

Reading Paul Krugman on a regular basis as he frequently addresses this complex topic. There are many examples of countries, the Scandinavian socialist democracies, who offer an insight.

This is indeed a great topic for this venue.

[owlcroft]

Yes, the supporters of privatization have shrewdly promoted the idea that removing government workers reaps savings for taxpayers. I'm not entirely convinced of that. I would agree that replacing a city government garbage collector, who might typically receive healthcare and retirement benefits, with a private sector employee of a for-profit trash hauler might result in lower labor costs, but without seeing a complete breakdown I'm not convinced that the savings are passed on to taxpayers.

The operative theory on which—what shall we call them? Privateers?—privateers run is that government employees are lazy and unmotivated, that there is substantial featherbedding, and that private enterprise would be cheaper because (by that reasoning) much more efficient, such that even with a fair-sized profit overhead the total would be cheaper.

Whether there is any truth to that each must judge for him or herself. Nowadays at least, I suspect private enterprise is at least as sluggish and inefficient as anyone from the Cato Institute imagines goverment workers to all be.

Once upon a time, there was a tacit understanding that government work paid distinctly less than private employment, but with the compensations of job security and good benefits. Some believed that this tacit understanding also included working less hard, but that's opinion. In any event, pay scales in government work are (I am told, but an not expert) now comparable to private employment, so that old tit-for-tat is a dead letter.

[1gg]

Best book on this subject: The Shock Doctrine by Naomi Klein.
Privatize profit, socialize loss.

[careysub]

Became?!

That's what it was from the earliest planning stages. A method of enrichment for rich people. They hated the "Great Compression".

[careysub]

However it is important to realized, and emphasize, that broad studies of charters, now the three decades of data under the belt, show that they DO NOT outperform public schools!

Sure some charters may do better than public school averages, but then some public schools do that too.

[va_dawg]

I think that there is a place for charter schools.

Not when they are for-profit and depend upon tax-payer dollars. By depend, I mean, would not be able to remain in business without diverted student tuition.

I'm OK with not-for-profit charters. You remove the profit motive and the only ones that then get created are done by people dedicated to providing an alternative educational experience, not people seeking to set up segregated, mediocre private schools using public money. The evidence is pretty good now after a decade of this charade that in the aggregate, Charters do no better at all than traditional public schools at outcomes when comparing the same students.

They do provide an opportunity to discriminate against certain students and to get fat at the public trough - things the public schools can't do. The press and charter advocates are always ready to trumpet the cases of public corruption involving traditional public schools, but we almost never hear about the corruption (kickbacks) and fraud that take place with charters.

[va_dawg]

I would agree that replacing a city government garbage collector, who might typically receive healthcare and retirement benefits, with a private sector employee of a for-profit trash hauler might result in lower labor costs, but without seeing a complete breakdown I'm not convinced that the savings are passed on to taxpayers.

In fact, having lived in places where this kind of thing has happened, I can tell you for certain that not only do services decline as well as wages for workers, costs to the taxpayer go up.

[randyabraham]

Agree.

[careysub]

And in addition there are usually no cost savings to rate payers. If the labor costs are slashed, by simply paying workers less, then were does that money go?

I have seen studies of U.S. privitization, and the explanation of where that money goes should not be a surprise to anyone. It goes into extremely high salary for (typically) one person at the top of the organization (receiving up to 100 times what the public servant doing the same job was paid, e.g. $10 million vs ~$100K) and to profits of investors.

After all "private companies" make profits, and that money has to come from somewhere. "Profits" extracted from an essential public service is the "private business tax" - a fee you pay in return for nothing.

[helen27]

Privatization, like 'free trade', is no longer an accepted watchword. It has grown grotesquely, fed by corporate greed and power, into a toxic force in our democracy. The equilibrium of a healthy balance between corporate and public power has been smashed and needs to be regained.

David Cohen puts it well:

Today, privatization is weakening democratic public control over vital
public goods, expanding corporate power and increasing economic and
political inequality.

Nowhere is it more evident than in our public school systems, once the pride of this country, and the degradation of higher learning, as in 'for-profit' universities.

In case you need any further validation of the toxic effect on our standards, health and quality of life, no less a witness than the International Monetary Fund has issued the conclusion that 'privatization, monetization of public institutions is a bust.' pic.twitter.com/IOyU3Dqwii

And if there is anything to be gleaned from the unrest of this unique election year, it is that Americans are having no more of it. Thank goodness.

[aurizendarkstar]

Not when they are for-profit and depend upon tax-payer dollars. By depend, I mean, would not be able to remain in business without diverted student tuition.

Very true. The biggest reason that many charters want their hands in the money that would go to public schooling is so that they can run public schools 'out of business' by starving them completely of the monies needed to run, pay teachers, etc.

And from a lot of reading, I've noticed that many of the for-profit charters tend to either have similar or worse results as public schooling would give.

[romath]

A large section of the American capitalist class resented and resisted Progressivism and later the New Deal. Re-privatization to the degree politically possible was their revanche, taking advantage of several dynamics that converged in the early 1970s, starting with 1) the reaction which took advantage of the failure of the American left to take the anti-Vietnam War and Black Uprising anywhere, 2) the end of the American Century (~1966 peak) and recognition that international economic competition, and hence domestic finances, had and would continue to get a lot tougher with the rebuilding of Japanese and German industry at contemporary technical levels. Alongside the drive for privatization was the ideology of the Me Generation, i.e., Looking Out for #1. We still live in that era, although it's cracking on the edges.

[jlredford]

Krugman noted that privatization has a great side-effect for the politicians who advocate it - it provides a permanent stream of campaign contributions. Of course you'll contribute to the person who influences your contract. These days there are a lot of ways to hide that contribution as well, not least by contributing to the privatization organizations themselves.

[faeyin]

This is a wonderful precis/primer on the history of privatization. I can't wait to see more.