[Peace-discuss] 8 Ways Privatization Has Failed America

[David Johnson]

Published on 

Monday, August 05, 2013

by 

 <http://www.commondreams.org> Common Dreams

8 Ways Privatization Has Failed America

by

 <http://www.commondreams.org/author/paul-buchheit> Paul Buchheit

Description:
http://www.commondreams.org/sites/default/files/imce-images/private_sucks.jp
gSome of America's leading news analysts are beginning to recognize the
fallacy of the "free market." Said
<http://www.npr.org/2013/06/27/196282376/hopes-and-fears-for-the-future-of-t
he-world-with-ted-koppel> Ted Koppel, "We are privatizing ourselves into one
disaster after another."
<http://globalpublicsquare.blogs.cnn.com/2012/03/26/zakaria-how-to-save-amer
ican-health-care/> Fareed Zakaria admitted, "I am a big fan of the free
market...But precisely because it is so powerful, in places where it doesn't
work well, it can cause huge distortions." They're right. A little analysis
reveals that privatization doesn't seem to work in any of the areas vital to
the American public.

Health Care

Our private health care system is by far the most expensive system in the
developed world. Forty-two percent of sick Americans
<http://www.commonwealthfund.org/Newsletters/Washington-Health-Policy-in-Rev
iew/2011/Nov/November-14-2011/Sickest-Adults-in-US.aspx> skipped doctor's
visits and/or medication purchases in 2011 because of excessive costs. The
<http://www.commondreams.org/view/2012/02/01-4> price of common surgeries is
anywhere from three to ten times higher in the U.S. than in Great Britain,
Canada, France, or Germany. Some of the
<http://www.time.com/time/magazine/article/0,9171,2136864,00.html>
documented tales: a $15,000 charge for lab tests for which a Medicare
patient would have paid a few hundred dollars; an $8,000
<http://healthland.time.com/2013/02/20/bitter-pill-why-medical-bills-are-kil
ling-us/#ixzz2Lk6nOS9h> special stress test for which Medicare would have
paid $554; and a $60,000
<http://www.nytimes.com/2013/02/01/health/insurance-industry-report-faults-h
igh-fees-for-out-of-network-care.html?_r=1&> gall bladder operation, which
was covered for $2,000 under a private policy.

As the examples begin to make clear, Medicare is more cost-effective.
According to the
<http://www.cahi.org/cahi_contents/resources/pdf/CAHIMedicareTechnicalPaper.
pdf> Council for Affordable Health Insurance, Medicare administrative costs
are about one-third that of private health insurance. More importantly, our
ageing population has been staying healthy. While as a nation we have a
<http://www.nap.edu/catalog.php?record_id=13497> shorter life expectancy
than  <http://jama.jamanetwork.com/article.aspx?articleID=1710486> almost
all other
<http://sites.nationalacademies.org/xpedio/groups/dbassesite/documents/webpa
ge/dbasse_080620.pdf> developed countries, Americans covered by Medicare
<http://www.huffingtonpost.com/the-progress-report/44-years-of-medicare-succ
_b_247834.html> INCREASED their life expectancy by 3.5 years from the 1960s
to the turn of the century.

Free-market health care has been taking care of the CEOs.
<http://www.time.com/time/magazine/article/0,9171,2136864,00.html> Ronald
DePinho, president of MD Anderson Cancer Center in Texas, made $1,845,000 in
2012. That's over ten times as much as the
<http://www.thenation.com/article/168026/beyond-corporate-capitalism-not-so-
wild-dream> $170,000 made by the federal Medicare Administrator in 2010.
Stephen J. Hemsley, the CEO of United Health Group, made three hundred times
as much, with most of his
<http://www.forbes.com/lists/2012/12/ceo-compensation-12_rank.html> $48
million coming from stock gains.

Water

A Citigroup economist
<http://worldbusiness.org/privatizing-water-taxing-through-the-tap/> gushed,
"Water as an asset class will, in my view, become eventually the single most
important physical-commodity based asset class, dwarfing oil, copper,
agricultural commodities and precious metals."

A 2009 analysis of water and sewer utilities by Food and Water Watch
<http://www.alternet.org/water/154648/5_deadly_threats_to_our_precious_drink
ing_water_supply> found that private companies charge up to 80 percent more
for water and 100 percent more for sewer services. A more recent
<http://www.foodandwaterwatch.org/reports/borrowing-trouble-water-privatizat
ion-is-a-false-solution-for-municipal-budget-shortfalls/> study confirms
that privatization will generally "increase the long-term costs borne by the
public." Privatization is "shortsighted, irresponsible and costly."

Numerous  <http://www.afsc.net/PDFFiles/Food&WaterWatchonPrivatization.pdf>
examples of water privatization
<http://www.inthepublicinterest.org/sector/water-and-sewer> abuses or
failures have been documented in California, Georgia, Illinois, Indiana, New
Jersey, Texas, Massachusetts, Rhode Island -- just about anywhere it's been
tried. Meanwhile, corporations have been making outrageous profits on a
commodity that should be almost free.
<http://www.foodandwaterwatch.org/blogs/a-watered-down-education/> Nestle
buys water for about 1/100 of a penny per gallon, and sells it back for ten
dollars. Their bottled water is
<http://naturalsociety.com/bottled-water-costs-1900-times-more-than-tap/>
not much different from tap water.

Worse yet, corporations profit from the very water they pollute.
<http://grist.org/pollution/2011-06-08-what-dow-chemical-doesnt-want-you-to-
know-about-your-water/> Dioxin-dumping Dow Chemicals is
<http://www.commondreams.org/view/2013/01/19-3> investing in water
purification. Monsanto has been
<http://www.alternet.org/take-action/5-most-horrifying-things-about-monsanto
-why-you-should-join-global-movement-and-protest> accused of privatizing its
own pollution sites in order to sell filtered water back to the public.

Internet, TV, and Phone

It seems the whole world is leaving us behind on the Internet. According to
the  <http://www.oecd.org/internet/broadband/oecdbroadbandportal.htm> OECD,
South Korea has
<http://www.huffingtonpost.com/2012/09/05/internet-speed-united-states-digit
al-divide_n_1855054.html> Internet speeds up to 200 times faster than the
average speed in the U.S., at about half the cost. Customers are charged
about
<http://www.alternet.org/bill-moyers-why-us-internet-access-slow-costly-and-
unfair> $30 a month in Hong Kong or Korea or parts of Europe for much faster
service than in the U.S., while triple-play packages in other countries go
for about
<http://www.alternet.org/books/outrageous-david-cay-johnston-explains-how-bi
g-corporations-withhold-your-taxes-and-then?paging=off> half of our Comcast
or AT&T charges.

 
<http://www.bloomberg.com/news/2012-12-27/u-s-internet-users-pay-more-for-sl
ower-service.html> Bloomberg notes that deregulators in the 1990s
anticipated a market-based decline in phone and cable bills, an "invisible
hand" that would steer competing companies to lower prices for all of us.
Verizon and AT&T and Comcast and Time-Warner haven't let it
<http://itsoureconomy.us/2013/07/us-internet-access-slow-and-expensive/>
happen.

Transportation

As Republicans continue to deride public transportation as
<http://www.commondreams.org/view/2012/06/22-2> 'socialist' and
<http://www.commondreams.org/headline/2013/02/14-5> 'Soviet-style,' China
surges ahead with a plan to create the world's most advanced
<http://articles.washingtonpost.com/2011-05-16/local/35264534_1_transportati
on-major-highway-improvements-samuel-k-skinner> high-speed rail transport
network. Government-run high-speed
<http://www.commondreams.org/view/2012/05/26-0> rail systems have been
successful in numerous other countries, and
<http://www.guardian.co.uk/science/2012/mar/19/private-overhaul-roads-terrib
le-deal> England and  <http://www.commondreams.org/view/2013/06/27> Brazil
both lament industry privatization.

As a warning to wannabe Post Office privatizers,
<http://www.commondreams.org/view/2013/04/15-1> Greyhound and Trailways once
provided service to remote locations in America, but deregulation
intervened. The bus companies eliminated unprofitable routes, and cutbacks
and salary decreases, all in the name of optimal profits, resulted in
drivers working up to 100 hours a week -- a fact to consider any time each
of us ride the bus.

With privatization comes automatic rate increases.
<http://www.bloomberg.com/news/2010-08-09/morgan-stanley-group-s-11-billion-
from-chicago-meters-makes-taxpayers-cry.html> Chicago surrendered its
parking meters for 75 years and almost immediately faced a doubling of
parking rates. California's
<http://truth-out.org/news/item/9006-the-new-wall-street-racket-looting-your
-city-one-block-at-a-time> experiments with roadway privatization resulted
in cost overruns, public outrage, and a bankruptcy; equally disastrous was
the state's foray into  <http://www.commondreams.org/views01/0222-04.htm>
electric power privatization. In Pennsylvania, an analysis of school busing
by the
<http://keystoneresearch.org/sites/default/files/RunawaySpending.pdf>
Keystone Research Center concluded that "Contracting out substantially
increases state spending on transportation services."

Banking

The industry is bloated with deceit and depravity. Almost all of the big
names have taken part. Goldman Sachs designed mortgage packages
<http://www.alternet.org/corporate-accountability-and-workplace/are-big-bank
s-bunch-organized-criminal-conspiracies?paging=off> to lose money for
everyone except Goldman.
<http://www.justice.gov/opa/pr/2011/December/11-ag-1694.html> Countrywide
and  <http://www.nclc.org/images/pdf/unreported/paschal-decl-balt.pdf> Wells
Fargo targeted Blacks and Hispanics for unaffordable subprime loans. HSBC
Bank
<http://www.guardian.co.uk/business/2012/dec/11/hsbc-fine-prosecution-money-
laundering> laundered money for Mexican drug cartels.
<http://www.rollingstone.com/politics/news/the-scam-wall-street-learned-from
-the-mafia-20120620> GE Capital skimmed billions of dollars from its
customers. Dozens of
<http://www.alternet.org/corporate-accountability-and-workplace/4-secretive-
ways-wall-street-extorts-you> hedge fund managers have been guilty of
insider trading.
<http://www.rollingstone.com/politics/news/why-isnt-wall-street-in-jail-2011
0216?print=true> Bank of America and
<http://www.washingtonpost.com/business/economy/jpmorganchase-ceo-jamie-dimo
n-is-accused-of-hiding-data-about-big-losses/2013/03/14/d95d6394-8ce7-11e2-9
838-d62f083ba93f_story.html> JP Morgan Chase hid billions of dollars of
bonuses and losses and loans from investors. Banks fixed interest rates in
the
<http://www.alternet.org/time-rebel-5-ways-we-can-break-big-banks-death-grip
-economy> LIBOR scandal. They illegally foreclosed on millions of homeowners
in the
<http://www.alternet.org/corporate-accountability-and-workplace/5-scandalous
-reasons-big-finance-trying-hard-keep-low-profile> robo-signing scandal.

 
<http://www.rollingstone.com/politics/news/the-great-american-bubble-machine
-20100405> Matt Taibbi explained to us how financial malfeasance led to the
bubbles in dot-com stocks and housing and oil prices and commodities that
extract trillions of dollars away from society.

This is all the result of free-market deregulated private business. The
best-known public bank, on the other hand, is the
<http://www.alternet.org/corporate-accountability-and-workplace/why-socialis
m-doing-so-darn-well-deep-red-north-dakota?paging=off> Bank of North Dakota,
which remains profitable while
<http://www.commondreams.org/view/2013/02/01-9> serving small business and
the public at low cost relative to the financial industry.

Prisons

One would think it a worthy goal to rehabilitate prisoners and gradually
empty the jails. But business is too good. With each prisoner
<http://www.commondreams.org/view/2013/07/29> generating up to $40,000 a
year in revenue, it has apparently made economic sense to put over two
million people behind bars.

The need to fill
<http://www.huffingtonpost.com/john-w-whitehead/prison-privatization_b_14144
67.html> privatized prisons has contributed to
<http://www.bop.gov/news/quick.jsp#4> mass jailings for drug offenses, with
<http://www.hrw.org/sites/default/files/reports/us0508webwcover.pdf> African
Americans, who make up 13% of the population, accounting for 53.5 percent of
all persons who entered prison because of a drug conviction. Yet marijuana
usage rates are
<http://www.aclu.org/billions-dollars-wasted-racially-biased-arrests> about
the same for Blacks and whites.

Studies show that private prisons
<http://www.alternet.org/rights/155286/8_things_you_need_to_know_about_ameri
ca%27s_private_prison_industry/> perform poorly in numerous ways: prevention
of intra-prison violence, jail conditions, rehabilitation efforts.
Investigations in
<http://www.nationofchange.org/time-decide-concentrated-privatized-wealth-or
-shared-prosperity-and-economic-democracy-1374758622> Ohio and
<http://www.nytimes.com/2012/06/17/nyregion/in-new-jersey-halfway-houses-esc
apees-stream-out-as-a-penal-business-thrives.html> New Jersey revealed a
familiar pattern of money-saving cutbacks and worsening conditions.

Education

The notion that charter schools outperform traditional public schools is not
supported by the facts. An updated 2013
<http://credo.stanford.edu/documents/NCSS%202013%20Executive%20Summary.pdf>
Stanford University CREDO study concluded that privatized schools were
slightly better in reading and slightly worse in math, with little
difference overall. Charter results have shown an improvement since 2009.

An independent study by
<http://www.boldapproach.org/rhetoric-trumps-reality> Bold Approach found
that "reforms deliver few benefits, often harm the students they purport to
help, and divert attention from...policies with more promise to weaken the
link between poverty and low educational attainment."

Just as with prisons and hospitals, cost-saving business strategies apply to
the privatization of our children's education. Charter school teachers have
<http://www.centerforpubliceducation.org/Main-Menu/Organizing-a-school/Chart
er-schools-Finding-out-the-facts-At-a-glance> fewer years of experience and
a higher turnover rate. Non-teacher positions have
<http://www.alternet.org/school-districts-charter-schools-save-money-impover
ishing-support-staff> insufficient retirement plans and health insurance,
and much lower pay.

If big money has its way, our children may become high-tech symbols and
objects.  <http://www.commondreams.org/view/2013/05/10-9> Bill Gates
proposes quality control for the student assembly line, with video footage
from the classrooms sent to evaluators to check off teaching skills.

Consumer Protection

Warning signs about unregulated privatization are becoming clearer and more
deadly. The Texas
<http://www.aflcio.org/Blog/In-The-States/28-Year-Inspection-Gap-at-Deadly-T
exas-Fertilizer-Plant-Stunning-Indictment-of-OSHA-s-Underfunding> fertilizer
plant, where 14 people were killed in an explosion and fire, was last
inspected by the Occupational Safety and Health Administration (OSHA) over
25 years ago. The U.S. Forest Service, stunned by the Prescott, Arizona fire
that killed 19, was forced by the
<http://blog.ourfuture.org/20130701/sequester-puts-us-at-risk-of-more-wildfi
re-deaths> sequester to cut 500 firefighters. The
<http://www.commondreams.org/view/2013/07/29-3> rail disaster in
Lac-Megantic, Quebec followed deregulation of Canadian railways.

Regulation is meant to protect all of us, but anti-government activists have
worked hard to turn us against our own best interests. Among recommended
Republican  <http://www.commondreams.org/view/2012/10/30-5> cuts is the
Federal Emergency Management Agency (FEMA), which
<http://www.businessweek.com/articles/2012-11-01/fema-what-a-relief> rescued
hundreds of people after Hurricane Sandy while serving
<http://www.nytimes.com/2012/10/30/opinion/a-big-storm-requires-big-governme
nt.html> millions more with meals and water. In another ominous note for the
future, the House passed the Clean Water Cooperative Federalism
<http://blog.cleanwateraction.org/2011/06/21/the-latest-dirty-water-bill-a-t
emper-tantrum-in-writing/> Act of 2011, which would deny the Environmental
Protection Agency the right to enforce the Clean Water Act.

Deregulation not only deprives Americans of protection, but it also
endangers us with the persistent threat of corporate misconduct. As late as
2004 Monsanto had insisted that
<http://www.corpwatch.org/article.php?id=11638> Agent Orange "is not the
cause of serious long-term health effects." Dow Chemical, the
co-manufacturer of Agent Orange,
<http://www.corpwatch.org/article.php?id=11638> blamed the government.
Halliburton pleaded guilty to
<http://www.nytimes.com/2013/07/26/business/halliburton-pleads-guilty-to-des
troying-evidence-after-gulf-spill.html?src=me&_r=0> destroying evidence
after the Gulf of Mexico oil spill in 2010. Cleanups cost much more than the
fines imposed on offending companies, as government costs can run into the
<http://www.rff.org/rff/documents/RFF-BCK-Cohen-DHCosts_update.pdf>
billions, or even
<http://www.guardian.co.uk/business/2010/nov/02/bp-oil-spill-costs-40-billio
n-dollars> tens of billions, of dollars.

People vs. Profits

As summed up by
<http://www.usnews.com/opinion/blogs/susan-milligan/2012/08/28/the-lessons-o
f-isaac-and-katrina> US News, "Private industry is not going to step in and
save people from drowning, or help them rebuild their homes without a solid
profit." In order to stay afloat as a nation we need each other, not savvy
businesspeople who presume to tell us all how to be rich. We can't all be
rich. We just want to keep from drowning.

This work is licensed under a Creative Commons Attribution-Share Alike 3.0
License

 <http://www.commondreams.org/author/paul-buchheit> Description:
http://www.commondreams.org/sites/default/files/styles/cd_bio_small/public/b
uchheit.jpg?itok=6AKPIgrL

Paul Buchheit is a college teacher, an active member of US Uncut Chicago,
founder and developer of social justice and educational websites
(UsAgainstGreed.org, PayUpNow.org, RappingHistory.org), and the editor and
main author of "
<https://www.amazon.com/dp/0932863566/ref=as_li_tf_til?tag=commondreams-20&c
amp=0&creative=0&linkCode=as1&creativeASIN=0932863566&adid=1MCNFWDB21VVWVVFP
EW5&> American Wars: Illusions and Realities" (Clarity Press). He can be
reached at  <mailto:paul at UsAgainstGreed.org> paul at UsAgainstGreed.org.

 

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