Private companies screw it up

The rail disaster in Lac-Megantic, Quebec where 13 cars — four carrying petroleum crude oil and nine carrying liquefied petroleum gas — came off the tracks, followed deregulation of Canadian railways.

Despite what our friends on Wall Street say, there are some things that should not be done by private companies. Public safety, education, parks, water and sewer services, emergency management and clean up – the list goes on – should stay the function of local, state or federal governments. These services just don’t work as profit making enterprises.

Here’s just some of the ammunition you’ll find in the article by AlterNet:

The profit motive moves most of the money to the top. The federal Medicare Administrator made $170,000 in 2010. Stephen J. Hemsley, the CEO of United Health Group, made almost 300 times more in one year – $48 million. Here’s what they say about public safety.

The Private Sector Has Incentive To Fail: The most obvious incentive to fail is in the private prison industry. One would think it a worthy goal to rehabilitate prisoners and gradually empty the jails. But business is too good. With each prisoner generating up to $40,000 a year in revenue, the number of prisoners in private facilities has increased from 1990 to 2009 by more than 1600%, from about 7,000 to over 125,000 inmates. Corrections Corporation of America recently offered to run the prison system in any state willing to guarantee that jails stay 90% full.

As for public safety, warning signs about unregulated privatization are becoming clearer and more deadly. The Texas 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 sequester to cut 500 firefighters. The rail disaster in Lac-Megantic, Quebec followed deregulation of Canadian railways. At the other extreme is the public sector, and the Federal Emergency Management Agency (FEMA), which rescued hundreds of people after Hurricane Sandy while serving millions more with meals and water.

Part of free-market mythology is that public employees and union workers are greedy takers, enjoying benefits that average private sector workers are denied. But the facts show that government and union workers are not overpaid. According to the Census Bureau [31], state and local government employees make up 14.5% of the U.S. workforce and receive 14.3% of the total compensation. Union members make up about 12% of the workforce, but their total pay [32]amounts to just 10% of adjusted gross income [33] as reported to the IRS.

The average private sector worker makes about the same salary as a state or local government worker. But themedian [34] salary for U.S. workers, 83% [31] of whom are in the private sector, was $18,000 less in 2009, at $26,261. Inequality is much more pervasive in the private sector.

Nor do privatizers have incentive to maintain infrastructure. David Cay Johnston [38] describes the deteriorating state of America’s structural foundation, with grids and pipelines neglected by monopolistic industries that cut costs rather than provide maintenance. Meanwhile, they achieve profit margins of over 50%, eight times the corporate average.

The lack of private incentive for human betterment is evident throughout the world. The World Hunger Education Service [43] states that “Harmful economic systems are the principal cause of poverty and hunger.” And according toNicholas Stern [44], the chief economist for the World Bank, climate change is “the greatest market failure the world has seen.”

With Public Systems, We Don’t Have to Listen To “Individual Initiative” Rantings

Back in the Reagan years, a stunning claim was made by Margaret Thatcher: “There is no such thing as society. There are individual men and women, and there are families.” More recently, Paul Ryan complained [45] that government support “drains individual initiative and personal responsibility.”

That’s easy to say for people with good jobs.

Individual initiative? Our publicly supported communications infrastructure allows the richest 10% of Americans to manipulate their 80% share of the stock market [46]. CEOs rely on roads and seaports and airports to ship their products, the FAA and TSA and Coast Guard and Department of Transportation to safeguard them, a nationwide energy grid to power their factories, and communications towers and satellites to conduct online business. Perhaps most important to business, even as it focuses on short-term profits, is the long-term basic research that is largely conducted with government money. As of 2009 universities [47] were still receiving ten times more science & engineering funding from government than from industry.

Public beats private in almost every way. Only the hype of the free-market media keeps much of America believing that “winner-take-all” is preferable to working together as a community.

Privatization Serves People with Money, the Public Sector Serves Everyone. Privatization Turns Essential Human Needs into Products

Big business would like to privatize our water. A Citigroup economist exulted [21], “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.”

They want our federal land. Attempts at privatization were made by the Reagan [22] administration in the 1980s and the Republican-controlled Congress [23] in the 1990s. In 2006, President Bush proposed auctioning off 300,000 acres [22] of national forest in 41 states. Paul Ryan’s Path to Prosperity [24] was based in part on Republican Jason Chaffetz’ “Disposal of Excess Federal Lands Act of 2011,” [25] which would unload millions of acres of land in America’s west.

They want our cities. A privatization expert told [26] the Detroit Free Press that the real money is in urban assets with a “revenue stream.” So Detroit’s most valuable resource, its Water & Sewerage Department (DWSD), is the collateral [27] for a loan of $350 million to pay off the banks handling the litigation. Bloomberg [28] estimates a cost of almost half a billion dollars, in a city where homeowners can barely afford the water services.

And they want our bodies. One-fifth of the human genome [29] is privately owned through patents. Strains of influenza and hepatitis have been claimed [30] by corporate and university labs, and because of this researchers can’t use the patented life forms to perform cancer research.

Public Systems Promote a Strong Middle Class