Privatization: A scam and a swindle.

My local newspaper reported on two privatization scams in the last week. The state of Virginia is privatizing some of our roads and tunnels and apparently the local governments have no say in the matter. Meanwhile, several of our local cities have joined forces with private companies to study combining some city services. The private companies are kicking in some money to help pay for the study … apparently they anticipate contracts to provide some of the combined services.

Privatization scams are supported by several story-lines, including:

  •  Government is the enemy of the people
  • Corporations are more efficient than government
  • Privatization provides better service at lower cost
  • Privatization is a proven success
  • Privatization is somehow morally superior to government services

Based on these ideas we privatize schools, prisons, student loans, roads / tunnels, and many functions traditionally done by the military.

In almost every case of privatization, the results have been:

  • Costs have increased (both for users and for the governments that once provided the services)
  • Service quality has decreased, as measured by user complaints
  • Outcome measures have gotten worse
  • The companies providing the privatized service made large profits

Most of the story-lines supporting privatization are simply false.

The “government is the enemy” story-line is true to the extent that the large money interests have managed to hijack the government and use it for their own benefit … and to the detriment of the 99% of ordinary citizens. The going rate for purchasing benefits from the government seems to be about ten percent: donate a million dollars and get ten million back in subsidies, tax breaks or lucrative contracts.

There is no evidence supporting the idea that large corporations are more efficient than government. Large organizations, whether it is GM or the Pentagon, are inherently corrupt, dysfunctional and inefficient. The plain, sad truth is that we humans do not know how to maintain large organizations that avoid corruption, dysfunctional cultures, and gross inefficiency.

On the other hand, small companies are often quite efficient, but the behemoths of the corporate world are no better than our governments. And sometimes government manages to be quite effective. For instance, Medicare is both more cost-effective than private health providers and has better outcome measures. The only demographic within the US that has better health outcomes than the rest of the developed world is the seniors who are on Medicare. So it is not true that government is necessarily ineffective.

Similarly, many, many independent studies show that privatization makes matters worse, not better. Privatization is almost universally a proven failure.

Given this dismal track record, why do we continue to privatize? Where is the political pressure for privatization coming from?

The answer is simple: large corporations make huge profits from privatization. These corporations fund the so-called think-tanks that propagandize us into believing government is the enemy, is inefficient, etc.

Secondly, these same corporations have our governments in their pocket and get them to approve the privatization deals.

As citizens, we need to wake up and realize that privatization is primarily another scheme to transfer dollars from the public treasury (and your and my wallets) into the pockets of the 1%. Privatization is a scam and a swindle. We should not stand for it.