Privatization: It’s About the Money

Why Privatization? Here’s Why…!!

by Rodger Malcolm Mitchell, www.nofica.com

Mitchell’s laws:

• The more federal budgets are cut and taxes increased, the weaker an economy becomes.
• Austerity is the government’s method for widening the gap between rich and poor, which leads to civil disorder.
• Until the 99% understand the need for federal deficits, the upper 1% will rule.
• To survive long term, a monetarily non-sovereign government must have a positive balance of payments.
• Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
• The penalty for ignorance is slavery.
• Everything in economics devolves to motive.

In much of America, the electric company, casinos and horse tracks are privately owned, while streets, elementary schools and the lottery are publicly owned? Why?

The April 1, 2013 post, The myth of private enterprise superiority, reduced government and Ronald Reagan, said:

I believe the myth of universal private-sector superiority took hold when President Ronald Reagan included in his first inaugural address, the magical line,

“In this present crisis, government is not the solution to our problem; government is the problem.”

It became an addictive slogan, a mantra for those who would rather not suffer the agony of thought and evaluation. (though Reagan, himself a government worker, set records for increasing the size of government)

The Tea Party claim, “Government must be downsized” is made without reference to facts. It is intuitive, similar to their, “Deficit spending must end.” — also intuitive and also unburdened by fact.

The April 12 post What President Obama learned from Mayor Daley said:

“To gain repeated re-election, (the 2nd Mayor) Daley paid off the local unions by giving them whatever they wanted, and paid off the aldermen, who obediently canvassed their neighborhoods for Daley votes. The ongoing payoffs cost the city’s taxpayers megabucks.

Daley was afraid to raise taxes even more, so he began to sell Chicago. First he sold the Chicago Skyway, a heavily traveled toll road. This deprived Chicago’s taxpayers of the road’s future income. The rich, new owners promptly raised tolls, a hidden tax increase, and a boon to the wealthy class.

Then Daley sold the city’s parking meters. This also deprived Chicago’s taxpayers of future income. The rich, new owners promptly raised parking fees, another hidden tax, also a boon to the wealthy class. Then Daley wanted to sell Midway airport, the 2nd busiest airport in the Chicago area.“

Both the public and private sectors have their its crooks — their Daleys and Madoffs. Similarly, both sectors have strengths and weaknesses in customer service, productivity, creativity and efficiency.

The federal government built our highways, took us to the moon and defends our nation. Local governments provide police protection, clean water, streets and education.

The private sector feeds us, houses us and gives us medical care (though the public sector pays for much of it).

Saying the government (federal, state or local) is too big, is as stupid as saying the private sector is too big. The argument makes no sense, which probably is why the right wing supports it.

Privatization usually is a “Get out of jail, free” card for monetarily non-sovereign governments afraid to raise taxes or for Monetarily Sovereign governments falsely claiming taxes need to be raised. The result is a quick payment exchanged for long-term payments to wealthy investors — an endless tax on the middle- and lower-classes, without the word “tax” applied to it.

Privatization is a payoff to the rich private sector, exchanged for mega-dollars in campaign funds and promises of lucrative employment, later. It’s a gift from the 99.9% to the .1%.

We were reminded of this when an article appeared in the Chicago Tribune:

ComEd rate hike request would add $6 to monthly bills
By Julie Wernau, Tribune reporter, April 29, 2013

Commonwealth Edison said Monday that it will charge $6 more per month on average to deliver electricity to utility customers beginning in 2014 as a result of higher transmission costs and expenses it has incurred to modernize the electrical grid.

In a filing with the Illinois Commerce Commission Monday — its third under a new formula-based rate making system devised in 2011 — the utility requested $311 million in additional revenue from customers in 2014 for its role in delivering electricity, maintaining electrical lines and improving the electrical grid. That increase must be approved by the Illinois Commerce Commission.

It’s hard to understand why the private sector delivers our electricity, a product used and needed by every citizen — much like streets and elementary schools. In Illinois, we have the cockamamie system in which politicians approve pricing, while a private company delivers the electricity and maintains the electric lines, and having zero motivation for efficiency. ComEd managers are guaranteed their pay by the state, no matter the cost, and customers have no voice — neither via the ballot nor via patronage.

The above article was accompanied by this one:

ComEd ranks low in consumer satisfaction.
By Julie Wernau, Tribune reporter, April 18, 2013

Since 1999, ComEd has consistently ranked among the worst utilities in the Midwest for customer satisfaction in surveys conducted by The American Customer Satisfaction Index and J.D. Power and Associates. The company scored 69 on a 100-point scale.

The primary difference between public and private organizations is the profit motive, which can be a blessing or a curse. In a competitive business the profit motive more often is a blessing (one notable exception being the airlines, which never should have been deregulated). In a monopoly business, the profit motive is a curse (as witness the gasoline/oil business).

Governments have divided responses: To customers via elections, and to rich donors. Private companies also have divided responses — to officers, to shareholders and to customers. In the case of the privately-owned monopoly, ComEd, customers seem to come last.

Because ComEd cannot be trusted to set equitable rates, government bureaucrats set them. But the rates merely are based on what the private company says its costs are. So, in effect, the private company sets the rates. The profit motive doesn’t work, here.

Bottom-line thoughts:

1. The federal government neither is too big nor too small (nor just right). The concept is meaningless as are arguments about it. The right wing, Tea Party goal of small government is foolish at best and criminal at worst.
2. Large monopolies, whose product/service is needed by the majority of citizens, usually do better for the public with government ownership. The model is elementary education, in which public schools are government owned, but often compete with private schools.

Governments should own the providers of electricity, water, natural gas, sewage disposal, trash disposal, streets and street repair, police/army/espionage protection, education and the regulation of private business. “Own” can include government funding of private enterprises for specific tasks, but the overall project, including pricing and operational direction, should be wholly government controlled.

Turkey plans giant privatization campaign

Turkey has sold several state-owned assets worth nearly $41 billion in recent years, and the head of the country’s privatization agency said Thursday the government planned to launch an even more robust period of privatization in 2011.

Why Privatization? You have only to ask, “Who is getting rich from this?”