8 Ways Privatization Has Failed America

By Paul Buchheit, Common Dreams*

August 5, 2013--Some of America's leading news analysts are beginning to recognize the fallacy of the "free market."

Said Ted Koppel, "We are privatizing ourselves into one disaster after another."

Fareed Zakaria admitted, "I am a big fan of the free market...But precisely because it is so powerful, in places where it doesn't work well, it can cause huge distortions."

They're right. A little analysis reveals that privatization doesn't seem to work in any of the areas vital to the American public.

Health Care

Our private health care system is by far the most expensive system in the developed world.

Forty-two percent of sick Americans skipped doctor's visits and/or medication purchases in 2011 because of excessive costs.

The price of common surgeries is anywhere from three to ten times higher in the U.S. than in Great Britain, Canada, France, or Germany.

Some of the documented tales: a $15,000 charge for lab tests for which a Medicare patient would have paid a few hundred dollars; an $8,000 special stress test for which Medicare would have paid $554; and a $60,000 gall bladder operation, which was covered for $2,000 under a private policy.

As the examples begin to make clear, Medicare is more cost-effective.

According to the Council for Affordable Health Insurance, Medicare administrative costs are about one-third that of private health insurance.

More importantly, our aging population has been staying healthy.

While as a nation we have a shorter life expectancy than almost all other developed countries.

Americans covered by Medicare increased their life expectancy by 3.5 years from the 1960s to the turn of the century.

Free-market health care has been taking care of the CEOs; the president of MD Anderson Cancer Center in Texas, made $1,845,000 in 2012.

That's over ten times as much as the $170,000 made by the federal Medicare Administrator in 2010.

Stephen J. Hemsley, the CEO of United Health Group, made three hundred times as much, with most of his $48 million coming from stock gains.

Water

A Citigroup economist gushed, "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."

A 2009 analysis of water and sewer utilities by Food and Water Watch found that private companies charge up to 80 percent more for water and 100 percent more for sewer services.

A more recent study confirms that privatization will generally "increase the long-term costs borne by the public." Privatization is "shortsighted, irresponsible and costly."

Numerous examples of water privatization abuses or failures have been documented in California, Georgia, Illinois, Indiana, New Jersey, Texas, Massachusetts, Rhode Island--just about anywhere it's been tried.

Meanwhile, corporations have been making outrageous profits on a commodity that should be almost free. Nestle buys water for about 1/100 of a penny per gallon, and sells it back for ten dollars. Their bottled water is not much different from tap water.

Worse yet, corporations profit from the very water they pollute. Dioxin-dumping Dow Chemicals is investing in water purification. Monsanto has been accused of privatizing its own pollution sites in order to sell filtered water back to the public.

Internet, TV, and Phone

It seems the whole world is leaving us behind on the Internet. According to the OECD, South Korea has Internet speeds up to 200 times faster than the average speed in the U.S., at about half the cost.

Customers are charged about $30 a month in Hong Kong or Korea or parts of Europe for much faster service than in the U.S., while triple-play packages in other countries go for about half of our Comcast or AT&T charges.

Bloomberg notes that deregulators in the 1990s anticipated a market-based decline in phone and cable bills, an "invisible hand" that would steer competing companies to lower prices for all of us.

Verizon and AT&T and Comcast and Time-Warner haven't let it happen.

Transportation

As Republicans continue to deride public transportation as 'socialist' and 'Sovet-style,' China surges ahead with a plan to create the world's most advanced high-speed rail transport network.

Government-run high-speed rail systems have been successful in numerous other countries, and England and Brazil both lament industry privatization.

As a warning to wannabe Post Officer privatizers, Greyhound and Trailways once provided service to remote locations in America, but deregulation intervened.

The bus companies eliminated unprofitable routes, and cutbacks and salary decreases, all in the name of optimal profits, resulted in drivers working up to 100 hours a week--a fact to consider any time each of us ride the bus.

With privatization comes automatic rate increases. Chicago surrendered its parking meters for 75 years and almost immediately faced a doubling of parking rates.

California's experiments with roadway privatization resulted in cost overruns, public outrage, and a bankruptcy; equally disastrous was the state's foray into electric power privatization.

In Pennsylvania, an analysis of school busing by the Keystone Research Center concluded that "Contracting out substantially increases state spending on transportation services."

Banking

The industry is bloated with deceit and depravity.

Almost all of the big names have taken part.

Goldman Sachs designed mortgage packages to lose money for everyone except Goldman. Countrywide and Wells Fargo targeted Blacks and Hispanics for unaffordable subprime loans.

HSBC Bank laundered money for Mexican drug cartels. GE Capital skimmed billions of dollars from its customers. Dozens of hedge fund managers have been guilty of insider trading.

Bank of America and JP Morgan Chase hid billions of dollars of bonuses and losses and loans from investors. Banks fixed interest rates in the LIBOR scandal.

They illegally foreclosed on millions of homeowners in the robo-signing scandal.

Matt Taibbi explained to us how financial malfeasance led to the bubbles in dot-com stocks and housing and oil prices and commodities that extract trillions of dollars away from society.

This is all the result of free-market deregulated private business.

The best-known public bank, on the other hand, is the Bank of North Dakota, which remains profitable while seving small business and the public at low cost relative to the financial industry.

Prisons

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, it has apparently made economic sense to put over two million people behind bars.

The need to fill privatized prisons has contributed to mass jailings for drug offenses, with African Americans, who make up 13% of the population, accounting for 53.5 percent of all persons who entered prison because of a drug conviction.

Yet marijuana usage rates are about the same for Blacks and whites.

Studies show that private prisons perform poorly in numerous ways: prevention of intra-prison violence, jail conditions, rehabilitation efforts. Investigations in Ohio and New Jersey revealed a familiar pattern of money-saving cutbacks and worsening conditions.

Education

The notion that charter schools outperform traditional public schools is not supported by the facts.

An updated 2013 Stanford University CREDO study concluded that privatized schools were slightly better in reading and slightly worse in math, with little difference overall.

Charter results have shown an improvement since 2009.

An independent study by Bold Approach found that "reforms deliver few benefits, often harm the students they purport to help, and divert attention from...policies with more promise to weaken the link between poverty and low educational attainment."

Just as with prisons and hospitals, cost-saving business strategies apply to the privatization of our children's education.

Charter school teachers have fewer years of experience and a higher turnover rate.

Non-teacher positions have insufficient retirement plans and health insurance, and much lower pay.

If big money has its way, our children may become high-tech symbols and objects.

Bill Gates proposes quality control for the student assembly line, with video footage from the classrooms sent to evaluators to check off teaching skills.

Consumer Protection

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.

Regulation is meant to protect all of us, but anti-government activists have worked hard to turn us against our own best interests.

Among recommended Republican cuts is the Federal Emergency Management Agency (FEMA), which rescued hundreds of people after Hurricane Sandy while serving millions more with meals and water.

In another ominous note for the future, the House passed the Clean Water Cooperative Federalism Act of 2011, which would deny the Environmental Protection Agency the right to enforce the Clean Water Act.

Deregulation not only deprives Americans of protection, but it also endangers us with the persistent threat of corporate misconduct.

As late as 2004 Monsanto had insisted that Agent Orange "is not the blame cause of serious long-term health effects."

Dow Chemical, the co-manufacturer of Agent Orange, blamed the government. Halliburton pleaded guilty to destroying evidence after the Gulf of Mexico oil spill in 2010.

Cleanups cost much more than the fines imposed on offending companies, as government costs can run into the billions, or even tens of billions of dollars.

People vs. Profits

As summed up by US News, "Private industry is not going to step in and save people from drowning, or help them rebuild their homes without a solid profit."

In order to stay afloat as a nation we need each other, not savvy businesspeople who presume to tell us all how to be rich.

We can't all be rich.

We just want to keep from drowning.

This work is licensed under a Creative Commons Attribution-Share Alike 3.0 License

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Paul Buchheit

is a college teacher, an active member of US Uncut Chicago, founder and developer of social justice and educational websites (UsAgainstGreed.org, PayUpNow.org, RappingHistory.org), and the editor and main author of "American Wars: Illusions and Realities" (Clarity Press).

The Supreme Court Eviscerates the Voting Rights Act in Texas Voter-ID Decision

By Ari Berman

October 22, 2014--In 1963, only 156 of 15,000 eligible black voters in Selma, Alabama, were registered to vote.

The federal government filed four lawsuits against the county registrars between 1963 and 1965, but the number of black registered voters only increased from 156 to 383 during that time.

The law couldn’t keep up with the pace and intensity of voter suppression.

The Voting Rights Act ended the blight of voting discrimination in places like Selma by eliminating the literacy tests and poll taxes that prevented so many people from voting.

The Selma of yesteryear is reminiscent of the current situation in Texas, where a voter ID law blocked by the federal courts as a discriminatory poll tax on two different occasions—under two different sections of the VRA—remains on the books.

The law was first blocked in 2012 under Section 5 of the VRA.

“A law that forces poorer citizens to choose between their wages and their franchise unquestionably denies or abridges their right to vote,” wrote Judge David Tatel.

“The same is true when a law imposes an implicit fee for the privilege of casting a ballot.”

Then the Supreme Court gutted the VRA—ignoring the striking evidence of contemporary voting discrimination in places like Texas—which allowed the voter ID law to immediately go into effect.

“Eric Holder can no longer deny #VoterID in #Texas after today’s #SCOTUS decision,” Texas Attorney General Greg Abbott tweeted minutes after the Shelby County v. Holder decision.

States like Texas, with the worst history of voting abuses, no longer had to approve their voting changes with the federal government.

Texas had lost more Section 5 lawsuits than any other state.

The law was challenged again by the Justice Department and civil rights groups.

After a lengthy trial, it was struck down, again, on October 9, in a searing opinion by Judge Nelva Gonzales Ramos, who called the law “an unconstitutional poll tax.”

Ramos found that 600,000 registered voters in Texas—4.5 percent of the electorate—lacked a government-issued ID, but the state had issued only 279 new voter IDs by the start of the trial.

African-Americans were three times as likely as whites to not have a voter ID and Hispanics twice as likely.

The law was passed by the Texas legislature, “because of and not merely in spite of the voter ID law’s detrimental effects on the African-American and Hispanic electorate,” Ramos wrote.

But five days later, the US Court of Appeals for the Fifth Circuit—one of the most conservative courts in the country—overruled Ramos, arguing that striking the voter ID law “substantially disturbs the election process of the State of Texas just nine days before early voting begins.”

The appeals court curiously believed that blocking the voter ID before the election would do more harm to voters than preserving a law that could disenfranchise 600,000 voters in the state.

The Supreme Court upheld the Appeals Court decision on October 18.

It was the first time since 1982 that the Court approved a voting law deemed intentionally discriminatory by a trial court. Justice Ginsburg dissented, joined by Justices Sotomayor and Kagan.

“The greatest threat to public confidence in elections in this case is the prospect of enforcing a purposefully discriminatory law, one that likely imposes an unconstitutional poll tax and risks denying the right to vote to hundreds of thousands of eligible voters,” Ginsburg wrote.

Four major voting rights cases have come before the Supreme Court in the past month—from Ohio, North Carolina, Wisconsin and Texas—and in three instances the court has ruled to restrict voting rights.

The Roberts Court has set a trap for voters. First it paralyzed Section 5 of the VRA, taking away the federal government’s most potent weapon for stopping voting discrimination.

Instead, it urged the Justice Department and civil rights groups to challenge discriminatory voting changes under Section 2 of the VRA, even though Justice Kennedy admitted in 2009 that “Section 2 cases are very expensive.

They are very long. They are very inefficient.”

Then, when a slew of lawsuits are filed under Section 2, the Supreme Court largely sides with those restricting voting rights.

It seems like the Court’s conservative majority is planning to eviscerate every important part of the VRA.

The recent decisions show that Section 2 of the VRA is no replacement for Section 5.

Earlier this year, members of Congress introduced a legislative fix for the VRA to resurrect Section 5 in states with five voting rights violations in the past 15 years.

One of the states covered by the new law would be Texas.

This post first appeared at The Nation.