Privatizing Nearly Everything

The US administration's mania for privatizing government functions sticks out like a red flag in the brouhaha over Blackwater, the private security firm found shooting up civilians in Baghdad and other parts of Iraq.

It is justified by conservatives as more in consonance with "free enterprise," and as harnessing the profit motive for efficiency (instead of "inefficient" government "bureaucracy"), but in many cases privatizing merely substitutes private profit for public interest, and in most cases it costs more, i.e. is less efficient by the only measure that counts. Private security contractors do not save us money. They are also accountable to no one, only theoretically to their shareholders, so they are also a danger to democracy.

It's not only security in Iraq that they've been privatizing, but it is the most egregious case, since it now appears that Bush/Cheney have used private contractors to avoid having to draft American soldiers into this interminable war; there are more contract employees (estimated at 180,000) than soldiers and marines in Iraq (166,000 at the height of the surge) and at much higher cost. Blackwater, Halliburton, Bechtel, and many other firms employ these workers, but no one controls the firms; they are almost totally unaccountable.

When I was in the army, kitchen duty and sentry duty were part of our job. Privatizing these functions means that fewer troops are needed, but the costs per day, or per function, are far higher. While Filipinos and Bangladeshis may be paid only a fraction of American soldiers pay, the corporations tack on high surcharges for their profits. Meanwhile, other civilians: Americans, Europeans, South Africans and so on, are paid twice or more what an American soldier earns. And they are outside American or Iraqi control, as the Blackwater Security incidents illustrate.

The "security contractors" do remind me of the Roman Empire's penchant for mercenaries, who not only evaded Roman control, but finally precipitated Rome's fall.

Let's make a list of other the areas in which privatization has been promoted by the Bush administration:

Privatizing has been pushed for tax collection, farming out deadbeats to collection agencies, much like the Roman Empire's tax farming even during its heyday. Tax farming was open to tremendous corruption and injustice then, and there is no insurance that the modern equivalent would be any less likely to lead to abuse. Again, no collection agency is as accountable as the IRS, but that's no coincidence: the privatizing project is in part to remove all these functions from democratic control.

Privatizing schools has been another push: vouchers, chartered schools and corporate takeovers of public schools have been another conservative dream, and Bush's NCLB has promoted these (especially in New Orleans), as well as creating a huge market for private testing of public schools "to insure accountability." Who tests the testers and the tests? No doubt conservatives would propose private consultants to study the effects of mandated testing, and to compare the performance of public versus private schools. The only accountability any of these private entities have, however, is to the "bottom line." In some egregious cases, private contracts to take over public schools, as Edison did in Philadelphia, have been shown to be unprofitable, to cost at least as much, but to deliver less as in lower test gains and lower enrollment. Again, the private firms running public schools are not accountable the way public school boards can be; privatizing schools leads to a withdrawal of democratic control.

Privatizing prisons has been tried by conservatives in many states. It is inherently questionable to allow private interests to administer public justice, but the prisons for profit have been marked by sweat-shop exploitation of prisoners, abuses of inmates and cost-cutting (the companies have to make a profit, somehow), especially of needed services, and programs designed to reintegrate inmates into civilian life. Yet almost all prisoners will return "to the streets" one day. The cost of even more prisons required will be huge, yet "recidivism" is now encouraged by this growing industry. And again, there is no accountability: try to rectify an abuse someone reports in a private prison.

Bush's massive Medicare part D has made it almost impossible for senior citizens (like me) to remain with Medicare only: to get prescriptions we must enroll in "Medicare Advantage" programs, a privatizing measure, since all are run by private health corporations, most are for profit, and all are being overpaid by the government in order to permit them to earn profits. In addition, neither they nor Medicare are allowed to negotiate prices with pharmaceutical companies that are thereby insured huge profits as well.

The costs of Social Security are extremely low (between 1-2%), compared to private retirement funds, and Bush's privatizing initiative failed in part because the overhead for "market-based" private social security funds were all estimated to be in the 15-20% range, as well as not providing guaranteed returns.

Virtually every government function you can think of has been subject to privatizing: highway construction, toll roads (now proliferating even out west and in Texas, despite their tradition of freeways); police (especially in wholly privately run gated communities), garbage collection, drug testing, and even elections.

Romans did away with elections entirely: they too often led to social unrest. In the US, conservatives have found another way to render them more predictable (controllable?), and that is by privatizing them. With the Help America Vote Act (HAVA), state election boards are required to replace their voting systems with "new and improved" electronic voting technology provided by private companies. It is not only the machines, however, that the companies provide: they also provide all the software, which is deemed "proprietary" (private and secret), which runs the machines, programs them and counts the votes. Public and private investigations of these companies and their products has revealed, in California, Maryland and other places, that the private software is easily manipulated or hacked and that there is no way to trace this. In other words, the very substance of democracy has been handed over to private control, which is accountable to no one but the corporate shareholders (theoretically) and the corporate leaders (in fact.) And many of their executives have openly identified themselves as Republican partisans.

It is still questionable whether the proposed reforms of the Holt bill will rectify these potential abuses. The reason is that the bill, which initially mandated a paper trail, elaborate checks on counting and final counts, has now been re-written (reportedly by Microsoft) to protect "proprietary software" and to prevent open-source monitoring of election machine operations.

Why do conservatives favor privatizing? There is a financial component, i.e. opportunities for them and their friends and colleagues to make much more predictable (and higher) profits than they could expect in consumer markets. It's not really a "free" market when you contract with government based on who you know, but it's a lot more certain. Once you've won a contract, your market is guaranteed. It's another way for businessmen/women to make off with everyone else's money, and taxes give them a guaranteed pool to start with.

There is also an ideological component, which is what the public hears about most: that "free enterprise" is more efficient than government, regardless of what it sets out to do, because it is disciplined by profit-seeking. Many, many economic studies have found the ideological argument to be all wet. Some functions may be more efficiently (more cheaply) provided by private companies, but all you have to do is compare the per soldier costs of "security" provided by Blackwater with that of the Marines, to conclude that private companies often do not provide either the best quality or the least expensive services. The same is true of health care, which is a much less costly and more effectively provided service in countries where it is publicly provided. Economists concluded that public garbage collection is more efficient than private, unless the latter is a monopoly, and they found that one of the most efficient suppliers of electric power was the French government monopoly.

In other words, privatizing is not justified by the formula that Private Is Always Better. In fact, in many cases, public services are much better: more efficient, more publicly accessible and more accountable: including, I submit, when a state wages war, puts people in prison, provides healthcare, education, and even, sometimes when it provides transportation, like the French and German railroads.

Privatizing war, however, is the most dangerous of all the aspects of privatization: if Democrats gain control of the government they would do well to completely eliminate the dependence on mercenaries as soon as possible. Otherwise, 476 the fall of Rome Rome to mercenaries) could repeat itself.