by Paul Buchheit / Common Dreams
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.
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 thedocumented 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 theCouncil for Affordable Health Insurance, Medicare administrative costs are about one-third that of private health insurance. More importantly, our ageing population has been staying healthy. While as a nation we have a shorter life expectancy than almost all other developedcountries, 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. Ronald DePinho, 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.
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.
As Republicans continue to deride public transportation as ‘socialist’ and ‘Soviet-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 Office 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’sexperiments 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.”
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 serving small business and the public at low cost relative to the financial industry.
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, withAfrican 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 areabout 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.
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 Gatesproposes quality control for the student assembly line, with video footage from the classrooms sent to evaluators to check off teaching skills.
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 thesequester 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 cause of serious long-term health effects.” Dow Chemical, the co-manufacturer of Agent Orange, blamed the government. Halliburton pleaded guilty todestroying 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
Paul Buchheit is a college teacher, an active member of US Uncut. Originally Posted at Common Dreams
Tom Hunter says
Privatization of San Diego government (managed competition) is designed to side step the unions and crush the wages. The selling (sellout) point is that it will save “Taxpayers” money. Well some of those taxpayers (City employees) earn a decent living and pay plenty of taxes. But who really benefits? The corporations who dream of living off the public tit in San Diego. Like all contractors that work with governments they can under bid and later claim over payments. (Their lawyers will beat the far out of the City Attorney’s office).
bob dorn says
It does seem that money has been sucked out of people’s hands so
efficiently and for so long that a market economy no longer truly exists.
How many people are staying alive by bringing their vegetables to the
once-weekly neighborhood farmers markets? To do that, one has to
have land, and access to an affordable water supply, and natural
fertilizers. Not many people do.
You have to be a large-scale user of capital. There are many things an
individual could try to do to make a buck, but large pots of money oppose
the doing of it. Try to sell your jarred home-made foodstuffs at a farmer’s
market and soon enough someone will report you to the county for not
having an inspected kitchen.
Then, too, you can’t try to use your car as a cab; the local government
won’t allow you to compete with established corporations.
All of these government regulations originated for the right reasons; they
made life safer for the consumer. Now they more frequently make life
safer for the largest producers and difficult for the smaller ones, and the
Wouldn’t it be nice if surplus troop carriers were used to form a public
airline? If Obamacare were replaced by a national health plan? If public
water projects made factory farmers pay on their profits, so that small
farmers could get some land grants?
Zander Wilde says
I’m sorry, but, I found this article incredibly inaccurate.
In reference to Transportation companies…. National regulations prevent a coach driver from working more than 72 hours a week… And thats if a company even pushed a driver that far. Most companies have an interest to keep those hours down and the drivers happy.
Also, high speed rail is INCREDIBLY expensive. You make it seem like a great idea, but, at current day over 75% of amtrak’s routes are already being subsidized by the taxpayer because they are unprofitable! Rail is a wonderful idea but the economics of it just don’t make sense in most cases.
As a commentator I don’t feel its my responsibility to give too much proof. But, as the author you should be ashamed for making such bold accusations without any references.
I think the point is that “HIGH SPEED” rail as opposed to standard rail has in fact been profitable in other countries and likely would be here over the current form we have now i.e. Amtrak. The fact that Amtrak in its current state is not profitable is not in dispute in this article. As to whether or not it will be remains to be seen, if it ever happens at all.
On another note you say as a commentator it’s not your responsibility to show proof. Well if you really feel the author is wrong and you’re going to take the time to dispute him on here and trump how it’s not “your responsibility” to show proof and say he should be ashamed of himself you kind of make yourself come off as a bit of fool. If he is matter of factly wrong then why not show proof or links that dispute it? Also this is not a newspaper; it’s a blog site and this article as actually from another blog site.