Today's Must Read: The Perils of Privatization

I started thinking about privatization of public facilities after reading this article at Crooks and Liars:

A controversial bill signed into law this afternoon by Gov. Chris Christie would allow for fast-tracking the privatization of many public water systems in New Jersey.

The Water Infrastructure Protection Act removes the public vote requirement to sell water systems throughout the state under emergency conditions that many systems currently meet.

Hmm -- "removes the public vote requirement." How very democratic of them -- will of the people, and all that.

Then I ran across this one at Baloon Juice, which focuses on my home town:

Looting the public treasury for private benefit — it’s bipartisan! At In These Times, Rick Perlstein (The Invisible Bridge, Nixonland, Before the Storm) introduces us to “Rahm Emanuel’s Chicago, the privatized metropolis of the future“:

… For over a decade now, Chicago has been the epicenter of the fashionable trend of “privatization”—the transfer of the ownership or operation of resources that belong to all of us, like schools, roads and government services, to companies that use them to turn a profit. Chicago’s privatization mania began during Mayor Richard M. Daley’s administration, which ran from 1989 to 2011. Under his successor, Rahm Emanuel, the trend has continued apace. For Rahm’s investment banker buddies, the trend has been a boon. For citizens? Not so much.

He goes on about the supposed benefits:

That is the promise of privatization in a nutshell: that the profit motive can serve not just those making the profits, but society as a whole, by bypassing inefficient government bureaucracies that thrive whether they deliver services effectively or not, and empower grubby, corrupt politicians and their pals to dip their hands in the pie of guaranteed government money…

What no one seems to want to talk about -- at least, no one who is touting privatization as the remedy for our tottering infrastructure, not to mention the perennial manufactured "crises" in Social Security and Medicare -- is that you're inserted another layer of potential abuse into the system: suddenly, someone has to make a profit off of something that has been functioning without having to make a profit.

However, the rush to outsource responsibility for housing the poor became a textbook example of one peril of privatization: Companies frequently get paid whether they deliver the goods or not (one of the reasons investors like privatization deals). For example, in 2004, city inspectors found more than 1,800 code violations at Lawndale Restoration, the largest privately owned, publicly subsidized apartment project in Chicago. Guaranteed a steady revenue stream whether they did right by the tenants or not—from 1997 to 2003, the project generated $4.4 million in management fees and $14.6 million in salaries and wages—the developers were apparently satisfied to just let the place rot…

The head-scratcher here is that the taxpayer is going to have to pay for this, ultimately, by reimbursing the new owners for the purchase price (often inflated) and by paying for any maintenance the owners care to do. Higher rates for everyone, coupled with a decrease in service. Something else that no one wants to talk about.

I'm not going to point fingers at Republicans or Democrats on this one -- it's a bipartisan effort.

And from the standpoint of value for the dollar, it's really, really stupid.

Some things really should not be subject to the profit motive. Like just about anything that we, as taxpayers, are footing the bill for.