Jeremy Mohler of “In the Public Interest” has written a brilliant analysis of the disaster of privatization: bad for people, bad for the economy, bad for democracy.
He begins:
New York Rep. Alexandria Ocasio-Cortez’s suggestion to raise the top marginal tax rate to 70 percent has reignited a long overdue debate about taxation. The idea that lower taxes on corporations and the wealthy is key to a healthy economy—known as “trickle-down economics”—has been the mainstream political consensus since the 1980s.
By explaining that massively increasing taxes on the super-rich can help fund social programs like Medicare for All, tuition-free college, a jobs guarantee and a Green New Deal, Ocasio-Cortez has rightly disrupted the politics of austerity that has dominated both major political parties for decades.
Now is the time to burst a similar—and deeply related—bubble: The myth that the privatization of public goods and services “saves taxpayer money.” Much like trickle-down economics, privatization is a choice—meaning, it’s ideologically and politically motivated. And it’s pushed by the same corporate interests that profit from its implementation.
Like austerity, privatization has boomed at all levels of government since the 1980s. There were more government employees when Ronald Reagan won reelection in 1984 than when Barack Obama won reelection in 2012. It’s estimated that three-quarters of workers that serve the American public actually work for private contractors. The Pentagon alone obligates more than $300 billion to contractors each year.
This shift has been backed by the claim that the “free market” is more efficient and innovative than government. Privatizers argue that outsourcing school cafeteria workers, bus drivers or nurses at Veterans Affairs hospitals cuts costs for taxpayers. Yet they don’t mention that such cuts often come out of workers’ paychecks—if those workers are even lucky enough to keep their jobs. When privatization policies are carried out, “innovation” often simply means layoffs and decreased wages and benefits.
And when it comes to saving money, the evidence is mixed at best. In many cases, privatization turns out to be far more costly. A 2007 survey found that over half of the local governments that placed services back under public control did so because privatization didn’t cut costs. After Iowa hired insurance corporations to manage its Medicaid program in 2017, the average cost of insuring people climbed nearly three times as fast as when it was under public control. An Indiana toll-road built using private financing—known as a “public-private partnership”—launched in 2014 by then-Gov. Mike Pence turned out to be $137.3 million more expensive than if the state had used traditional public financing. Charter schools, which are publicly funded but privately operated, are costing San Diego’s school district $65.9 million a year. And then there’s healthcare, an area where the United States spends twice as much as other countries thanks to a “free market” of private doctors, nurses, hospitals and drugs.
Politically, privatization kills two birds with one stone for fiscal conservatives. It reinforces the idea that public budgets are inevitably “tight,” rather than because taxes have been cut to the bone, particularly for the wealthy. But more directly, it weakens labor unions representing teachers, sanitation workers and other public sector employees.
WONDERFUL.THANKS
Privatization is slowly contributing to lower incomes for working families while it is creating more profit for the already wealthy. It is a scheme to move money from the middle class into the pockets of Wall St. It is a slow, often initially unnoticeable, massive transfer of wealth. It contributes to greater inequality, particularly for women and people of color that often work in public service. These people are then faced with diminished incomes and benefits, loss of bargaining power and democratic input. The resulting privatized service often is no better and may actually wind up costing more. Privatization is a form of class warfare, IMHO. Income inequality and enhanced segregation are often privatization byproducts.
Great points! Thank you.
all while first world citizens are inundated with a select lineup of media personalities and political pundits crowing enthusiastically about how unprecedented and amazing the current “jobs economy” is
“trickle-down economics”—has been the mainstream political consensus since the 1980s.
What are the results of President Ray-Gun’s piss-on-the-working-class Greed is Great for the Wealthy Economics? President Reagan increased the debt by 186 percent. Reaganomics added $1.86 trillion. Reagan’s brand of supply-side economics didn’t grow the economy enough to offset the lost revenue from its tax cuts. That was partly because Reagan increased the defense budget by 35 percent.
Every GOP president has continued the Teflon President’s legacy increasing the federal national debt more than any Democratic president and that includes President Obama. That means Obama didn’t increase spending with his own projects. Instead, he inherited the economic trash heap G.W. Bush left behind.
PEW reports, “On the face of it, these should be heady times for American workers. U.S. unemployment is as low as it’s been in nearly two decades (3.9% as of July) and the nation’s private-sector employers have been adding jobs for 101 straight months – 19.5 million since the Great Recession-related cuts finally abated in early 2010, and 1.5 million just since the beginning of the year.
“But despite the strong labor market, wage growth has lagged economists’ expectations. In fact, despite some ups and downs over the past several decades, today’s real average wage (that is, the wage after accounting for inflation) has about the same purchasing power it did 40 years ago. And what wage gains there have been have mostly flowed to the highest-paid tier of workers.”
http://www.pewresearch.org/fact-tank/2018/08/07/for-most-us-workers-real-wages-have-barely-budged-for-decades/
“Military leaders agree. For example, Admiral Mike Mullen is a former Chairman of the Joint Chiefs of Staff. For years, he has called the debt the greatest threat to our national security. Defense Secretary James Mattis said the same thing in his confirmation hearing last year. He said, “I consider it abrogation of our generation’s responsibility to transfer a debt of this size to our children.” Secretary Mattis is exactly right.”
https://www.riponsociety.org/article/the-greatest-threat-to-global-security-is-our-national-debt/
The Bi-Partisan Policy Center is beneath contempt for its 9-27-2018 seminar on higher ed. sponsored by Bill Gates and John Arnold. The context for the seminar starts with the hackneyed, “we’ve got a crisis on our hands”. And, of course, who has the solutions, an alphabet soup of interests. Who isn’t on the panel- students, professors and communities. The person behind BPC’s task force on higher ed. is George Miller. (The politician on the panel was the charter-loving, AFT-funded Rep. Susan Davis.)
The one university rep. invited was from Purdue University Global. Purdue University took $2,000,000 from the Koch’s (Greenpeace) and 9 out of 10 of its board members are business executives. The 10th is a student.
How tragic that the public doesn’t stand up and say to BPC, “Look you fools, we own our public universities. They were created by citizens for the middle class and poor kids as a quality alternative to legacy admission schools. And, you’ll only take them from us over our dead bodies.”
The nation did have a crises on its hands.
Public education was under attack by a flock of greedy billionaire parasites and vultures, and few if any elected leaders were standing up to defend the public schools.
The war against public school teachers, their unions and the schools they worked in has been raging since at least 1983 and escalating. Not one president since Teflon coated Ray-Gun and his lying, manipulating “A Nation at Risk report” has stood up to support the public schools. A hundred years from now if civilization survives, Ray-Gun will get the credit he deserves for the damage he caused to the national debt and the public schools.
Most of the support the public schools get is from rank-and-file teachers (retired and/or still teaching), and some voters, parents and students.
Privatization does not drain the swamp. It enables Wall St. swamp monsters to drain the middle class dry. Sadly, too many Democrats have been enablers of hollowing out the middle class. It is almost like a “trickle up” policy.
Privatization of the public sector will turn the entire country into a failed swamp that feeds and causes a corrupting disease called greed.
I hear you Lloyd and would like to see those who sold out and are selling out the common good forced to pay a big price for it.
The one university at BPC’s event, Purdue Global, is the former Kaplan. Academe Blog (Henk Reichman, 9/28/2018) contrasts Global to a real university in 5 statements.
“And then there’s healthcare, an area where the United States spends twice as much as other countries thanks to a “free market” of private doctors, nurses, hospitals and drugs.”
I recall a doctor telling my brother how much better the private hospital was doing in Nashville than the church-sponsored ones. Got by with fewer nurses. Better outcomes. Now everything is private and the rural hospitals are struggling to stay open. Costa Rica has a better life expectancy than the US. Infant mortality is up.
Why does the privatization movement not own their failures? They admit nothing when it comes to schools. They offer no solutions when their toll roads serve only the wealthy. When will they take responsibility.
Roy, here’s my all-encompassing response to people like your brother’s doctor: The basis for free market true believers is that everything can be distilled into a supply/demand curve. I know there’s a lot of supply of disease and disability. Where’s the demand? Have yet to hear an answer of sophistry that actually acknowledges that simple argument.
One possible nexus for current, school privatization advocacy and Democrats (in the past- Bill Clinton and Obama) is Tom Daschle. He’s Board Chair at CAP and co-founded the BiPartisan Policy Center. CAP is pro-charter and, in September 2018, BPC had an event to announce a task force on higher ed. which included only one panelist representing universities (the former Kaplan, now Purdue Global). The event included no professors, no students and no community members at-large. It was sponsored by Bill Gates and John Arnold.
Donations to the campaigns of Democratic Governors should be direct, not through the Democratic Governors Association. The 2019 DGA chair is Corey Booker’s friend, Gina Raimondo.
RI Gov Raimondo’s husband was Booker’s roommate in law school.
How tragic that the public doesn’t stand up and say to BPC, “Look you fools, we own our public universities.
Many members of the public are not well informed to make decisions of the type spoken about here. They vote and trust their representatives to do right for them. The people they vote for quite often sell them out.
Ocasio speaks out on a vital issue where a number of the older politicians seem to accept the status quo as fixed in granite. Cortez is giving people hope. Bernie is one who had made proposals which drew attention also and he also attracted people. The need for what they propose is a national one and will draw attention.
‘It weakens labor unions representing teachers, sanitation workers and other public sector employees.’ This seems a predictable consequence, since profit is bigger when they pay less to their workers; but on the other hand they (privatizers) can get away with reducing human dignity. What they did to teachers is a terrible thing, until teachers could take it no more and stood up and fight, a thing which has given courage to many.
Hope is alive.
Couldn’t agree more with you melchi34. The only politician on BPC’s panel was DFER’s corporatist, Democratic Rep. Susan Davis who won her seat by 30 pts. AFT should have primaried her instead of funding her as 2nd largest contributor to the campaign. Where was Davis during the L.A. teachers strike?
If Tom Daschle and George Mitchell weren’t DINO’s, AOC or other justice Democrats would have been on BPC’s panel.
Correction- George Miller
On Sept. 27, BiPartisan Policy Center’s task force on higher education was launched by charter lovers, George Miller (D) and current lobbyist, former Rep. Buck McKeon (R). Wikipedia lists how McKeon enriched himself while in government. And, in April, Mother Jones published, “How a mysterious overseas shell company used a former GOP Congressman to lobby Trump and Congress”.
Lobbyist, Tom Daschle (D) founded BPC and he’s the CAP Board Chair. Inexplicably, the Gates/John Arnold-funded CAP, that advocates for K-12 privatization and employs former TFA’ers for education policy, is referred to by media as “liberal”,