The Truth About Privatization - Robert Reich

Found here. My comments in bold.

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Privatization. Privatization. Privatization. It’s all you hear from Republicans. (All we hear is privatization? I thought Republicans only talked about taking away peoples' rights???)

But what does it actually mean?

Generations ago, America built an entire national highway system, along with the largest and best public colleges and universities in the world. Also public schools and national parks, majestic bridges, dams that generated electricity for entire regions, public libraries and public research.

But around 1980, the moneyed interests began pushing to privatize much of this, giving it over to for-profit corporations. Privatization, the argument went, would boost efficiency and reduce taxes.

The reality has been that privatization too often only boosts corporate bottom lines. (That is, privatization means that a private company operates the asset, and actually intends to MAKE A PROFIT. This, apparently, is bad.)

For example, consider Trump’s proposal for infrastructure. It depends on private developers, who would make money off of both tax subsidies and private tolls. (Hasn't Dr. Reich heard of private contractors? Government contracts are routinely bid out, and have been for decades.)

So the public would get charged twice, without any guarantee that the resulting roads, bridges, or rapid transportation systems would be where they’re most needed. (Waaait. If the government builds a toll road with tax dollars, doesn't it profit twice?)

It’s true that private for-profit corporations can do certain tasks very efficiently. (He now begins to walk it back.)

And some privatization has worked. But the goal of corporations is to maximize profits for shareholders, not to serve the public interest. (The goal of corporations is to make a product that will create a profit. If it's a bad product, it won't make a profit. Corporations serve the public interest by virtue of making a profit.)


The question should be: What’s best for the public? Here are five rules of thumb for when public services should not be privatized:

1. Don’t privatize when the purpose of the service is to bring us together – reinforcing our communities, helping us connect with one another across class and race, linking up Americans who’d otherwise be isolated or marginalized.

This is why we have a public postal service that serves everyone, even small rural communities where for-profit private carriers often won’t go. This is why we value public education and need to be very careful that charter schools and other forms of so-called school choice don’t end up dividing our children and our communities rather than pulling them together. (Um, Dr. Reich. We've had private schools for centuries. In fact, schools started as private. 

Private schools don't divide people. Not any more than having two public high schools with competing football teams do. The objection is preposterous.)

2. Don’t privatize when the service is less costly when paid for through tax revenues than through prices set by for-profit corporations.

America’s hugely expensive for-profit health-insurance system, for example, is designed to sign up healthy people and avoid sick people, (Which it cannot do by law. Hasn't Dr. Reich heard of ACA's requirement to accept people with pre-existing conditions?)

while running up huge tabs for advertising and marketing, (Apparently Dr. Reich has not seen or heard all the advertising the government does for its various programs.)

and giving big rewards to shareholders and executives. (I wonder what the director of Medicare makes a year?)

Which is why the administrative costs of Medicare are a fraction of the costs of for-profit medical insurance – and why we need Medicare for all. (Medicare constitutes 15% of the federal budget, $579 billion in fiscal year 2018. 55.5 million people receive Medicare benefits. That is an astounding $10,400 per person!

This is a gem of a program: Medicare’s Hospital Insurance [HI] Trust Fund will be insolvent by 2029.) 

3. Don’t privatize when the people who are supposed to get the service have no power to complain when services are poor. (Because people never complain to Walmart and get their malfunctioning toaster replaced... 

And by the way, how much success does the average person experience complaining about a pothole in the road?)

This is why for-profit prison corporations have proven again and again to violate the constitutional rights of prisoners, (Which government never does...)

and why for-profit detention centers for refugee children at the border pose such grave risks. (???)

4. Don’t privatize when those who are getting the service have no way to know they’re receiving poor quality. (Which never happens with government...)

The marketers of for-profit colleges, for example, have every incentive to exploit young people and their parents because the value of the degrees they’re offering can’t easily be known. Which is why non-profit colleges and universities have proven far more trustworthy. (Non profit doesn't mean cost effective, education effective, or valuable. And might we remind Dr. Reich that many non profit colleges are privately owned?)

5. Finally, don’t privatize where for-profit corporations face insufficient competition to keep prices under control.

Giant for-profit defense contractors with power over how contracts are awarded generate notorious cost overruns because they’re accountable mainly to their shareholders, not to the public. (This makes absolutely no sense. How is a corporation accountable, yet generate "notorious cost overruns?" If a defense contractor generates "notorious cost overruns" doing government contracts, why does the government allow that? 

And we note for the record that government is synonymous with cost overruns. Everything it does is wasteful, fraught with fraud, and corrupt.)

In other words, for-profit corporations can do some things very well. Including, especially, maximizing shareholder returns. (What are some other things, Dr. Reich?)

But when the primary goal is to serve the public, rather than shareholders, we need to be careful not to sacrifice the public interest to private profits. (Government doesn't serve the public. It serves itself. And we serve it. It spends trillions of dollars a year on some of the most hare-brained projects. 

And might we note that the infrastructure is falling apart? Government can't even take care of what it already has.)