Why Privatization of the Public Sector is a Very Bad Thing

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For years I have been arguing against the private sector becoming involved in the public areas, where turning a profit would come before the public good. This is an absolutely shocking example of why doing the government's business for profit is a mistake:

I can't begin to describe how mad this makes me. The people who run these private centers, along with the judges, should be horsewhipped.



http://www.msnbc.msn.com/id/29142654/

 

Yep, thats pretty sleazy. You gotta admit though that judge conahan has a brass set to close down the county-run juvenile facility to create a need for the private company.
Thats just pure arrogance there.

 

Sure, that is a bad example, but I wouldn't throw the baby out with the bathwater. Since governments do not have a profit motive, they are far more likely to be wasteful as nobody has a vested interest. Here in Massachusetts (possibly the patronage capital of the world) the newspapers are always discovering people with "no show" jobs or people that are making a ton of money for menial jobs. In order to be a "toll collector" on the highway you have to know somebody to get that job as it is a well paid job.

In my local town, luckily our selectmen have seen the wisdom of privatization. We have hired a private company to run our trash and recycling programs (which has saved us a fortune).

While I agree that outsourcing the courts seems like something from a bad science fiction movie, there is a lot of good and cost savings that can be done by getting the government out of the equation and letting someone with a "profit motive" take over. We are a capitalist society, profit isn't evil.

 

Private enterprises have no business participating in acts of governance. I believe it's awful when any competence remotely associated with acta de iure imperii (acts of governance relying on public authority and ultimately deriving from statehood) is given to private individuals. Even when it's "services" (healthcare, transport etc.), private enterprises should not be allowed the public "dictate", i.e. the gross unilateral powers that are fine for an authority but inadmissible between individuals.

Feudalism was despised for mixing the private with the public - why do it again now, not on the basis of land but on the basis of money? It'd be a different face of the same thing. And I would much rather have a hereditary nobility with a chivalric ethos than a system in which profit drives everything and money can buy you most things, including authority over other people. We're coming back to the lease of offices, which was a hated feature of the ancien regime French government.

If we don't stop, I don't know where it will go. I don't want to spread defeatist lamentations, but we've already had governments delegating public powers to companies - the British India company or the Dutch company that handled their colonies.

As for judges, a couple of disproportionate sentences should be enough to have them removed. When they blatantly disregard the procedure is also much different from when they fall short of proper application of substantive laws. Ignoring procedure is something you do not because of your particular driving sense of justice but because you think you're better than the justice system or because you're doing your own thing in the public court. Or you're a vigilante that should be sitting there in a robe. The downside to making judges more accountable would be allowing more political influence on their decisions, which would be bad. However, there are ways to deal with it and I think when the problem is not that a judge applied a law in a way he saw fit but others didn't, but that he did not apply the law at all through choice or gross ignorance, then it should be easier to remove the judge.

 

@Chev,

Are you implying that a local community is better at running a community bus service, then a private bus company hired by the community to do the same thing?

 

Holy crap! Wilkes-Barre, PA is my hometown! I think this is the first time we've made national news since the Cabbage Patch Kid Riot in the early 80s (and no, that's not a joke, there actually was a riot caused by Cabbage Patch Kid Dolls).

In all seriousness though, that's disgusting, although I have to admit that the government in that area was always considered to be corrupt, operating on the good ol' boy system.

 

I agree with everything that Snook wrote in his first post, and since I have nothing to add, I have no real reason to post other than to increase my post count.

 

For once, I agree. With Snook - not with Splunge not posting.

 

I can see both sides of the argument. I think there is benefit in both, but one would need to be 'very' careful which sections to privatize. For example, the NHS should never be private, as I wouldn't want corners to be cut for the profit if I'd hurt my nuts! I don't see why transportation should be public though, for example.

 

Healthcare, education and of course any kind of law enforcement or where power is being used in one of it's cruder forms should become subject to the bottom line.

In theory privatization sounds nice on other things but my experience and what I think the western world is experiencing is that private enterprises is just, if not more, as wasteful as publicly owned ones and that the consumer often end up paying more. A shining example would be the power and telecom privatization that has taken place in large parts of the world. Did it get cheaper? At least not around here. Instead of a publicly owned company we got private companies who divided the market and each had their own little monopoly and seeing as we all need prices and telephones we had to pay.

My bottom line is that the market is at least as corrupt and wasteful as the public and at least if it is publically owned I have some kind of influence.

 

Great, now I have to rethink my position.

 

Have you ever worked for a large corporation, TGS?

 

Yes, I work for one of the largest accounting firms right now. However, that doesn't really matter. If a corporation wastes its money and is inefficient who get hurt? The answer is the shareholders, and they have voting rights to change management, etc. to fix things. If a government wastes money who gets hurt? In this case it is the citizens. I for one would much rather shareholders suffer then citizens.

Never forget, governments don't have any money. It is our money that they have.

 

If community officials can't get away with hiring a son-in-law for director but they need to run a contest or a similar scrutinised procedure, akin to what is used to hire public officials who dictate policies (including economical ones), then it is perfectly possible that the publicly owned busses will do a better job. You see, a private company has more of a profit motivation and is likely at least a bit more capable of achieving it, while a public servant has more of a service motivation and he is more likely to think from the perspective of the community. Amenities like busses aren't meant for bringing profit to the community - they are for providing necessary services. Obviously, outsourcing has its own benefits. You know, specialised companies, fewer costs, and so on. Therefore, I don't say a decent public procurement procedure couldn't bring better results than a publicly owned transport. However, companies' profit motivations have both good and bad sides and there are some considerable bad results of public officials mingling with businessmen.

One good thing about publicly owned transport could be that people could compete for directorships and management positions more easily than whole companies and they could still be paid proportionally to merit if the city so wanted. Outsourcing of public amenities only works well if there are sufficient guarantees that the company 1) won't go down easily, 2) won't be able to demand extortionate prices from citizens, 3) won't be able to get silent deals and any other preferential treatment from friendlies in the executive.

However, if we're talking about ideal situations, they need to be ideal both ways, i.e. an ideal public ownership and an ideal private ownership. So if we give the privates the benefit of doubt that they won't shortchange the community, we similarly need to give the publics the benefit of doubt that their qualifications are true. And if we have an efficient management in a publicly owned company, what's the advantage in hiring a private one, again? Other than outsourcing? That, say, we promote private business? If we run a public company, we don't promote private business, but we create job openings for people form the community. That's equally good, maybe even better.

Again, from our bitter experiences we know that few things work well in communism, where everything remotely associated with the public sector is publicly owned. On the other hand, we see examples of privatisation gone wrong. My proposed solution is:

1. Police, prisons and the rest: public. Nothing against hiring professionals for jobs that require skills in economy and paperwork. But the policies should be in public hands, as well as any exercise of public authority.

2. Supervision, audits, permits etc: nothing wrong hiring external auditors. In fact, it's probably better to hire Ernst & Young or someone like that. Supervisory duties are generally better exercised by those who know what they're doing, i.e. economists and not politicians. Economists doesn't need to mean active businessmen, although the latter have the benefit of realism (economy professors don't always work out). However, private bodies shouldn't be issuing permits, dictating policies and verifying compliance in a binding fashion. Their role should be experts and just that.

3. Amenities: public or private, I don't really care, as long as the management is efficient and extortionate profiteering is efficaciously prevented and respect for private citizens is assured.

In my experience from Poland, private healthcare is more efficient than public and public healthcare administrative workers tend to have a sense of entitlement, while those in private healthcare tend to have a sense of courtesy. This may be true of other things and other businesses as well. The problem with private healthcare starts when a difficult case arises, whereby everything is done to make the patient a public responsibility.

As for municipal transport (which is city-based, not nation-wide, I didn't like the public version, but I'm not a big fan of what happened when they were making it into a company-like thing. Stupid spending, stupid routes, big prices going up, arrogant executives saying prices are like that in more developed countries but without comparing the quality of the service provided. It seems to be improving, though. Privatisation of nation-wide transport, such as railway, has turned out really bad. Prices higher than planes, especially when abroad, delays, stupid routes, arrogant management, bad client service.

In situations like that, I suppose it's good that a minister can rock the boat and squeeze some effort out of subordinate executives in public business. But when it's a private company hiding behind a wall of lawyers and PR reps, it's not that simple.

Imagine a certain gaming publisher gets to supply software for the govt. Come on, I would really prefer ministerial techies.

Agreed.

Could be the same when the govt is picking the privates to do the same jobs. And if clear procedures are able to be imposed on that process, then clear operation of a public enterprise can be imposed as well.

 

I'm kinda torn, as i think a lot of things run as well(or better) when privatised as when gov't run.
Take as an example(at least here in the states) city trash pickup. Here in NC it is a gov't run thing, in the city. If you happen to reside outside the city-limits, even if only by 10' you are SOL. This has lead to the creation of private companies that provide this service in the county, outside of the city limits. All benefit.

I really don't have a problem with private police, within limits.
Here in NC, we have what are called private police companies. These are companies whose employees are sworn by the state just like a normal police officer(&have the exact same powers) with the only difference being that they are empowered to use these powers only on properties that there company is contracted to protect.
I.E. A city officer has powers within the city limits but not in the county, county officers anywhere in the county(but usually let the city police handle anything in the city limits) but not statewide & state police anywhere statewide(but again usuall lets city officials handle things inside city limits).
Now special police have standard police powers on all the property of whoever has hired them. So if the company has 200 properties statewide they can act as police in all those locations.

So i don't really know how i feel about this situation, EXCEPT that i think an individual should not be able to decide on a situation that they are going to be involved in.

 

Heck, I have a problem with private security companies. It is a certain kind of people who are drawn to those kind of jobs and the chance to wear a uniform. The police in public hand is kept in somewhat check and the worst fascists are weeded out but it is still a shady collection of people. Letting profit control the use of force in society scares the crap out of me.

The police is the steelgauntleted fist of society and it needs to be kept in tight control. They need to be as close to above reproach as possible and I do not think that is possible if it is privately run.

 

You must have very bad police over there in sweden. Most police over here aren't anywere that bad.
I would say that 60% of them are just earning a paycheck, 35% actual believe in what they are doing & at most, about 5% are dirty or corrupt.

 

It is not that bad, I am under the illusion that they are better than most. There are still plenty of pigs around and as soon as you give em some riot gear the uniform is only thing that separates them from the rioteers but I am convinced that is the case pretty much anywhere. I am sure less than 5% are corrupt and dirty but there are plenty who have inappropriate attitudes if you are a representative of the law. If you who I think has worked in law enforcement say that 5% are dirty then that scares me. I was more talking about people who had a tendency to use a bit extra force, who were fast with their nightsticks and who use their job to vent some of their more violent tendencies in general.

 

No i said at most 5% but that includes also all of those that take advantage of the community. I.E. free food, free car washes, large discounts on all kinds of purchases etc.
I have nothing against a free drink or a small discount(like 10%) but more than that feels to much like a bribe.

 

Anyone living in the Uk should be able to see the mitakes in privatization, british rail, british airways, royal mail, british gas - all screwed up by profit.