Selling Off Our States: The Pitfalls of Privatization

When it comes to the problem of privatization, we don't even know the half of it.

With all the attention currently focused on the perils of privatization at the federal level in the wake of the Blackwater debacle and the war profiteering sprees by Halliburton, Bechtel, and the like, scant if any attention has been paid to the very real problem of privatization of government services at the state level. A report released today by the Progressive States Network attempts to shine some light on the subject.

The report, entitled "Privatizing in the Dark: The Pitfalls of Privatization & Why Budget Disclosure is Needed," makes the case for a broad reevaluation of the practice of outsourcing public services such as education, transit, prisons, and health care, which are traditionally administered by state governments, to private corporations. Citing conservative claims that privatization saves money and optimizes service, the report argues that there is insufficient evidence to support such claims and that what evidence does exist actually suggests that privatization wastes tax dollars by fostering corruption, inefficient management, increased costs, and a disincentive to quality service.

What the report documents is what we all should have already known: there's no such thing as a free lunch. Despite all the talk of "public-private partnerships" as the magic bullet to save us all from the woes of bureaucratic inefficiency, the PSN report paints a broad picture of failed privatization schemes, including:

- Texas's outsourcing of social services to the Bermuda-based consulting firm Accenture, which resulted in massive infrastructure failures and 30,000 children being dropped from the state's Children's Health Insurance Program
- Massachusetts's outsourcing of the infamous "Big Dig" highway construction project to the firm Bechtel, resulting in the winnowing away of safety oversight procedures and leading to the wrongful death of motorist Milena Del Valle
- Indiana's lease of its toll highway to an Australian-Spanish consortium, resulting in the projected loss of nearly $25 billion in toll revenues over the next 75 years in exchange for a $3.8 billion up-front payment
- Ohio's outsourcing of state investment portfolios to private firms with links to Republican party fundraisers, resulting in massive corruption scandals and the theft of nearly $13 million from worker's compensation funds

There will be a conference call today open to the public to learn more about what's happening at the state level on privatization:

What: Conference Call on State Privatization
Who: State Legislators, Progressive States Network, AFSCME, Good Jobs First
When: Thursday, 1pm EST
Number: 1.800.391.1709 and enter extension code 70 94 24.

Comments

[dchavern]

You forgot private plaintiffs' lawyers making billions of dollars in non-bid side deals with state attorneys general. That is the biggest scam of all.

[drkazmd65]

This is getting scarier, and scarier to me.

A couple of years back, my old home state of Indiana leased off management rights to the Indiana Toll Road.

http://thomko.squarespace.com/journal/2006/3/8/foreign-bids-for-indiana-toll-roads.html

Companies based in Spain, China, France, Italy, and Australia have or had bids to manage (for profit of course) Toll Roads throughout America.

Add this to selling off rights to manage ports, water systems, and other utilities to foreign or corporate interests is going to bite us in the ass - we just don't know exactly when or how.

AND - since these companies are all in it for profit, we can count on either service going down, or costs going up (or both) so that they can make their corporate bottom line.

And when they are done, or they have determined that they can't make a profit off our infrastructure - we will still have to pay to clean up their messes.

Isn't this one of the things that Government is supposed to do? Build and manage public infrastructure?

[jrockbg]

Certainly privatization of any government resources requires adequate oversight. But our governments on the various levels deal with the same issues. Some would even argue their problems are more numerous. So here is the difference for me:

Let's say a company, given a government contract, makes unforgiveable mistakes in some manner. At least there is another company ready to take it's place and is motivated to step up to the plate. Plus that competition will provide some measure (not a guarantee) of keeping that company honest.

But if a government program or agency messes up, who do we go to next? Sure we can shuffle the leadership, and we frequently do. But we're still left with the same agency. Think of the many government agencies that have failed their country, state, cities and counties in many ways.

Let's not take this to extremes. You can't privatize everything. But let's not blindly accept that privatization is always, or even often, a worse option.