Privatization Nightmare: 5 Public Services That Should Never Be Handed Over to Greedy Corporations
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Who gains – and who loses – when public assets and jobs are turned over to the private sector?
The corporate right endlessly promotes “privatization” of public assets and public jobs as a cash-raising or cost-saving measure. Privatization is when the public turns over assets like airports, roads or buildings, or contracts out a public function like trash collection to a private company. Many cities contract out their trash collection. To raise cash Arizona even sold its state capital building and leased it back.
The justification for privatization is the old argument that private companies do everything better and more “efficiently” than government, and will find ways to cut costs. Over and over we hear that companies do everything for less cost than government. But it never seems to sink in that private companies don’t do things unless the people at the top can make a bundle of cash; if the CEO isn’t making millions, that CEO will move the company on to something else. When government does something they don’t have to pay millions to someone at the top.
So how do private companies save money? What costs do companies cut that government doesn’t? When you hear about “cost-cutting” here is something to consider: what if by “costs” the privatizers are talking about … us?
The Human Cost
A recent NY Times piece brought the human cost of privatization to people’s attention. In the article, A Hidden Toll as States Shift to Contract Workers, the Times’ Motoko Rich reports,
With state budgets under pressure, Michigan says it can no longer afford the relatively high wages of the public workers, which range from $15 to $20 an hour, along with health and retirement benefits. According to Salary.com, certified nursing assistants in private long-term care facilities in the area earn a median salary of just over $25,000 a year, or about $12.25 a hour.
Summary: when a public function is privatized the employees get paid less and lose benefits, but other state agencies pick up the costs that occur when people get paid less. Private managers and executives get a big chunk of the “savings” and then there are the costs to the larger economy from ever more people making less and less. From the Times article,
Economists and other academics who study outsourcing are divided about whether it usually saves a government money. Recent data from Arizona shows that privately operated prisons often cost more to operate than state-run facilities . A study by the Project on Government Oversight , a nonprofit Washington group, found that in 33 of 35 occupations, using contractors cost the federal government billions of dollars more than using government employees.
Laura Clawson at Daily Kos added to the NY Times story, in, Low-wage contract workers in Michigan veterans home come with hidden costs ,
What do you want to bet that guy gets health care, and retirement benefits, and earns more than $10 an hour? And that he's probably not the only person at J2S of whom those things are true. So while the hourly wage a nursing assistant working for J2S gets is $10, the state is paying J2S more. How much more, the New York Times does not report. But Eclectablog points out that the state pays J2S Healthcare Group $15 an hour for those $10 an hour nursing assistants.
When a public job is contracted out, usually public employees are replaced by people who are paid much, much less and receive fewer, if any benefits. Corporate propagandists complain that public employees are overpaid, receive “lavish” benefits, and are difficult to fire. But the question we all should ask is: is it in the public interest for Americans to be paid less or more, and to receive or not receive benefits? If we believe it is better to be paid more and receive benefits then We, the People should do that.