5 Ways Privatization Is Ruining America…
In Around the web on August 17, 2012 at 9:16 am
From PAUL BUCHHEIT
We spend lifetimes developing community assets, then give them away to a corporation for lifetimes to come.
A grand delusion has been planted in the minds of Americans, that privately run systems are more efficient and less costly than those in the public sector. Most of the evidence points the other way. Private initiatives generally produce mediocre or substandard results while experiencing the usual travails of unregulated capitalism — higher prices, limited services, and lower wages for all but a few ‘entrepreneurs.’
With perverse irony, the corruption and incompetence of private industry has actually furthered the cause of privatization, as the collapse of the financial markets has deprived state and local governments of necessary public funding, leading to an even greater call for private development.
As aptly expressed by a finance company chairman in 2008, “Desperate government is our best customer.”
The following are a few consequences of this pro-privatization desperation:
1. We spend lifetimes developing community assets, then give them away to a corporation for lifetimes to come.
The infrastructure in our cities has been built up over many years with the sweat and planning of farsighted citizens. Yet the dropoff in tax revenues has prompted careless decisions to balance budgets with big giveaways of public assets that should belong to our children and grandchildren.
In Chicago, the Skyway tollroad was leased to a private company for 99 years, and, in a deal growing in infamy, the management of parking meters was sold to a Morgan Stanley group for 75 years. The proceeds have largely been spent.
The parking meter selloff led to a massive rate increase, while hurting small businesses whose potential customers are unwilling to pay the parking fees. Meanwhile, it has been estimated that the business partnership will make a profit of 80 cents per dollar of revenue, a profit margin larger than that of any of the top 100 companies in the nation.
Indiana has also succumbed to the shiny lure of money up front, selling control of a toll road for 75 years. Tolls have doubled over the first five years of the contract. Indianapolis sold off its parking meters for 50 years, for the bargain up-front price of $32 million.
Atlanta’s 20-year contract with United Water Resources Inc. was canceled because of tainted water and poor service.
2. Insanity is repeating the same mistake over and over and expecting different results.
Numerous examples of failed or ineffective privatization schemes show us that hasty, unregulated initiatives simply don’t work.
A Stanford University study “reveals in unmistakable terms that, in the aggregate, charter students are not faring as well as their traditional public school counterparts.” A Department of Education study found that “On average, charter middle schools that hold lotteries are neither more nor less successful than traditional public schools in improving student achievement, behavior, and school progress.”
Our private health care system has failed us. We have by far the most expensive system in the developed world. The cost of common surgeries is anywhere from three to ten times higher in the U.S. than in Great Britain, Canada, France, or Germany.
Studies show that private prisons perform poorly in numerous ways: prevention of intra-prison violence, jail conditions, rehabilitation efforts. The U.S. Department of Justice offered this appraisal: “There is no evidence showing that private prisons will have a dramatic impact on how prisons operate. The promises of 20-percent savings in operational costs have simply not materialized.”
A 2009 analysis of water and sewer utilities by Food and Water Watch found that private companies charge up to 80 percent more for water and 100 percent more for sewer services. Various privatization abuses or failures occurred in California, Georgia, Illinois, Indiana, New Jersey, and Rhode Island.
California’s experiments with roadway privatization resulted in cost overruns, public outrage, and a bankruptcy; equally disastrous was the state’s foray into electric power privatization.
Across industries and occupations, according to the Project on Government Oversight, the federal government paid billions more on private contractors than the amounts needed to pay public employees for the same services.
3. Facts about privatization are hidden from the public.
Experience shows that under certain conditions, with sufficient monitoring and competition and regulation, privatization can be effective. But too often vital information is kept from the public. The Illinois Public Interest Research Group noted that Chicago’s parking meter debacle might have been avoided if the city had followed common-sense principles rather than rushing a no-bid contract through the city council.
Studies by both the Congressional Research Service and the Pepperdine Law Review came to the same conclusion: any attempt at privatization must ensure a means of public accountability. Too often this need is ignored.
The Arizona prison system is a prime example. For over 20 years the Department of Corrections avoided cost and quality reviews for its private prisons, then got around the problem by proposing a bill to eliminate the requirement for cost and quality reviews.
In Florida, abuses by the South Florida Preparatory Christian Academy went on for years without regulation or oversight, with hundreds of learning-disabled schoolchildren crammed into strip mall spaces where 20-something ‘teachers’ showed movies to pass the time.