A key part of the corporate right-wing campaign for world dominance over the last several decades has been a concerted attack on the public sector. So we hear (and sometimes contribute to) a constant repetition of the clichés of the ills of government – “wasteful”, “inefficient”, “heavy-handed bureaucracy”, “overpaid and underworked civil servants”.
According to the corporate propaganda, there is just about nothing the government does (except give money to corporations) that could not be done better, more efficiently and more cheaply by the private sector, with a bracing dose of market competition.
Over the last few decades, we have seen right-wing (and even not-so-right-wing) governments in Canada and around the world not only selling off or giving away public services, but also backing away from undertaking public investments or regulatory activities that make obvious sense. While former British Prime Minister Margaret Thatcher was the highest profile privatizer, there have few countries and governments immune to the privatization disease.
In Canada, the privatization push has been strong at federal, provincial and municipal levels. We have seen the sale of publicly-owned airlines, railways, and utilities. If not privatized, many essential public functions (like transportation security) are turned over quasi-private agencies unaccountable to the public, and acting like private corporations. Key functions are contracted-out. Regulations that ensure safety or other standards (sneered at as “the heavy hand of bureaucracy”) are removed or weakened, destroying systems of oversight and public accountability.
Even in areas like public education and health care, we are seeing a growth of the private, for-profit parts of the system. Bigger and bigger pieces (curricula, school testing, medical testing, cleaning and even hospital administration) are peddled to politicians’ corporate friends and backers.
Privatization has a double benefit for the corporate elite. It weakens democratic governments, the only possible counterweight to their power. It also provides wonderful opportunities to become rich (or richer) as the result of sweetheart deals.
To entrench and enforce the privatization campaign globally, the corporate elite has inserted “investor protection” provisions in NAFTA and other trade agreements that make it difficult or impossible to maintain, let alone expand, public programs. In addition, the corporate cadres at the International Monetary Fund and the World Bank have been forcing vulnerable countries to bow down before the magic of the market, and “reform” their systems by privatizing pensions, water supply and a range of other activities, with results ranging from negative to disastrous, particularly for the poorest segments of the population.
Yet, even as their own studies clearly show the major problems created by the privatization of public services, the international agencies continue to promote it.
If the privatization label becomes politically problematic, the privatizers become creative, inventing new models and names: “alternative service delivery”, “public-private partnerships (P3s)”. Instead of public facilities being sold, they are given to the private investors through long-term leases, with guaranteed profits and few controls. Regardless of the name of the program, huge fees and guaranteed profits provide big payoffs for the well-connected.
The McGuinty government in Ontario, which was elected running against the Tories P3’s, have since introduced a $30 billion privately-run infrastructure program which is indistinguishable from the Tory scheme, except they don’t call them p3’s.
The two common arguments made to justify privatization are that shifting work to the private sector increases efficiency as the result of competitive pressure (generally by lowering wages), or that the government can’t afford to make the necessary investments. In almost every case, these arguments are demonstratively false.
Even the World Bank now admits that private water schemes are generally no more efficient than public schemes, and they undermine services to the poorest people who are most in need. The evidence from many countries is clear that private pension systems are far less efficient than public schemes. As for health care, we have only to compare the heavily-private and least efficient U.S. system with the health care system in virtually all other industrialized countries to see that public systems deliver better results at far lower costs.
As for the “affordability” argument, which is being used across Canada to promote the private building and running of “infrastructure” – roads, bridges, hospitals, schools – it is clearly nonsense.
The cost of capital is a major part of the cost of any infrastructure investment. Any private group pays a significantly higher price for capital (look at the interest rates in the business pages - the interest rates on government bonds are much lower than rates paid by even blue-chip private corporations), so that public-financed projects start out with a huge cost advantage. When you add on the guaranteed profits that private investors demand, plus the huge fees that the lawyers and fixers take, private projects typically cost 30-40% more than public investments. No market-driven efficiencies (even squeezing workers wages) are going to cover those extra costs, so we end up either paying a lot more (the 407 toll highway north of Toronto is an obvious glaring example), or we get poorer services, or both. And there is no public accountability.
So, if they are such bad deals, why are governments still pushing these terrible privatization initiatives? Well, partly because they can hide them. The deals can get buried in “off-the-books” Enron-style accounting, so that the price only becomes clear down the road, when the “responsible” politicians are usually long-gone. The people who set these things up get very rich from their fees, and they are very actively influencing politicians.
Ironically, the managers of some of the big public sector pension funds, whose own members are directly shafted by privatizations, are big promoters of these schemes, because they seem to provide high returns at low risk. The risks may be greater than they appear, because these deals may be so bad that they ultimately collapse, leaving pension funds holding the bag. The old saw still holds: “If it looks to good to be true, it probably is.”
While some people get rich, the rest of us that pay, but we usually don’t even know it is happening. The details of contracts are rarely made public, and even when they are, it is usually too late to change them. Of course, if the facts do come out, we are told that it’s just another example of government inefficiency that proves we need to privatize even more.
It is very important to bring all privatization initiatives into the daylight, where they can be exposed as the boondoggles, bad deals and disasters they are. In Canada, it is a multi-pronged fight at all levels of government. Health care, education, infrastructure, public utilities, even our public pension system, are all under persistent assault by the corporate privatizers. The deals are too rich for them to give up easily, so we need to be ready for a long struggle.
But it is a struggle that is essential, not only for ourselves, but for our children, and their children.
