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Privatizing Roads, Bridges, Schools and Energy Grids? Corporatism Pervades SOTU

While the President pledged to reel in corporations, his grand plans for the U.S. proposed just the opposite.

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Public private partnerships are essentially a stepping stone to full privatization of our roads, bridges, railways, power grids and--yes--even our public schools.

The implications of this proposal are so scary that they even startled a Fox News reporter who commented, “It’s unnerving to hear the suggestion that the best way to guard against corporate excess is by crafting ever-closer public/private partnerships.”

As a concept, public-private partnerships can be considered a metaphor for any type of privatization: they sound smart in a capitalist society, but they’re never what they’re cracked up to be.

As a trio of smart economics professors, including one at Yale University, writes in a paper on using these partnerships to revamp U.S. infrastructure, “Public-private partnerships are often touted as a “best-of-both-worlds” alternative to public provision and privatization. But in practice, they have been dogged by contract design problems, waste, and unrealistic expectations. Governments sometimes opt for a public-private partnership, for example, because they mistakenly believe that it offers a way to finance infrastructure without adding to the public debt. In other cases, contract renegotiations have resulted in excessive costs for taxpayers or losses for private firms.”

A thirty-year study of public-private partnerships in the UK concludes that the experiment’s track record has “ led to an overhang of debt stretching some 30 years into the future and to constraints on the way public bodies are able to use their assets.”

On the issue of wages, which President Obama paid so much lip service to last night, one of the biggest problems with public-private partnerships is that the work will be contracted to private companies rather than performed by unionized, public workers--a reality that will deal another blow to the dwindling power of unions and the public sector. 

But an even graver problem is that pursuing public-private partnerships mirrors the financial impulse that got us into this deficit and recession mess in the first place: choosing short-term gains over long-term policies.

As a leader of the Service Employees International Union testified in a Senate Committee hearing in 2006, “We believe governments that sign long-term concession agreements for essential infrastructure assets without retaining an ongoing interest in those assets [public-private partnerships] risk being perceived as the equivalent of the Native Americans who sold Manhattan Island to Peter Minuit for the equivalent of $24 in beads and trinkets.”

The historical analogy is striking, while somewhat insensitive to the fact that European colonists would have taken Manhattan even if the Native Americans not signed the land over in exchange for beads. Then again, if the people of the United States do not soon demonstrate an actual commitment to controlling corporate power, then these multinational corporations will indeed become the world’s new colonial power, gutting the people’s land and infrastructure and carrying the profits far away from U.S. soil into off-shore bank accounts.

In this light, public-private partnerships appear to be no more than the false treaties before the real battle. Surely those same treaties shouldn’t be the President’s domestic agenda.


Laura Gottesdiener is a freelance journalist and the author of "A Dream Foreclosed: Black America and the Fight for a Place to Call Home," forthcoming from Zuccotti Park Press.

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