Wednesday, June 4, 2014

Privatization: The Race to the Bottom

MSNBC has a must read report about the devastating effects of privatization.  In their report, they site a number of examples of how privatization screws workers over and harms the economy, including one of Milwaukee County's housekeepers who was illegally laid off by Scott Walker.

The key part is this:
“The false promises of privatization are triggering a race to the bottom,” Donald Cohen, executive director of In the Public Interest, said in the conference call.

Much of the “efficiency” realized by privatization lies in reducing former middle-class workers to poverty wages. Jared Bernstein of the Center on Budget and Policy Priorities, a Washington nonprofit, argued in the conference call that even from an efficiency point of view, privatizing low-end government jobs was self-defeating. “You get what you pay for,” Bernstein said. Lower wages for public services, he said, translate into “higher turnover and a decline in the quality of work.” It also means an uptick in welfare expenses. In California, contract school cafeteria workers collect $1,743 annually in public assistance because their private employers underpay them. In effect, the state is putting its own employees on the dole.
Tell me again about how Scott Walker and Chris Abele are "fiscal conservatives."

They are just greedy oligarchs and plutocrats that are the cause of the problem, not the solution.


  1. Privatization is a “get something for nothing” myth. The mythology is based on the false claim that government can’t do anything better than business, while forgetting how screwed up most businesses are. Privatization creates a profit, while expecting to save taxpayer money. Something has to give. What gives are the paychecks of those doing the work and the quality of work. The report notes that paychecks are often cut so much that many former government workers who are now employed by private companies become eligible for welfare.

    Quality of work suffers. Privatization usually cuts the number of workers doing the same amount of work. One example of the results is that privatized prisons have more prisoner assaults on guards and other inmates, more escapes and more drugs.

    Low pay also lowers worker morale. Turnover increases, which is bad for any organization. Recruiting and training costs become higher, except businesses receiving privatization contracts often skip training.

    Taxpayers, the workers and those receiving the services are all losers under privatization. The only winners are those who own the businesses receiving the contracts.

    And as we all know, Scott Walker’s campaign coffers are Open for Business. What government services will Walker privatize next? Bidding is now open. Contact Friends of Scott Walker for details.

    1. For more on the feeding frenzy of the oligarchs that is privatization, one needs to read Naomi Klien's The Shock Docterine. in fact one will only react and never truly understand walker and his bosses unless one understands Friedmanesque political, social and economic theory (as well as the military and torture theories that sprung from the chicago school boys). Put into context, you can better understand Act Ten as it relates to the hunting season on sandhill cranes and all sorts of other odd things that otherwise seem random. the ultimate goal of the oligarchs is to steal everything from a docile and mentally broken populace.

  2. Capper, thanks.

    "Race to the bottom," is exactly right. Good government needs well trained workers and you don't get that without fair compensation. That's the claim CEO's make to defend their compensation.

    1. Next up?

      Selling the state's prisons. Wisconsin's school-to-prison pipeline (thanks public schools) will make that the most profitable move.

      He has to wait until after they steal another election, but the law will let him do it -- this is something walker promoted for years.

  3. Excellent work here and a case in point is the Wackenhut security debacle in Milw. County. It's time to privatize Walker.

  4. I've seen privatization of custodial services first hand in school buildings. It's a disaster as there is no investment by the workers in the building or the people who work in the building. The old joke about custodians was: "THEY THIINK THEY OWN THIS BUILDING!". Exactly, they did take care of it as if it was their own and that's what you lose with privatization along with the comrade with staff and students. With privatization what you hear is: "Not my job!"

  5. Taxpayers need to know that they will pay one way or another. With public workers, the amount they will have to pay is clear and not affected by profits or other motives than getting the job done.

    With privatization, the initial cost may be lower but it is almost raised within a short period of time (after the bid is accepted, of course). There are high costs associated with increased turnover, labor unrest, public welfare for undercompensated workers, loss of public worker dollars in the local economy and mismanagement. A new wall goes up between the services and the public which pays for them in that it is much more difficult to know exactly how the work is getting done without all the open records you would have with a public workforce.

    And private workers will be much less likely to blow the whistle on shady practices lest they lose their jobs. Public workers with civil service regulations to protect them, are an important source of information on how government is working.

  6. Always a bad deal, always. For one thing, most privatization contracts guarantee a minimal profit, often 10% or more, over and above costs. What private business has a guaranteed profit? A ll the examples above apply to how they realize their "savings". Even when the contract "requires" them to do so, they rarely invest in capital improvements.
    The private prison industry is especially pernicious. The contracts for GEO and CCA (Corrections Corp. of America) often require things like a guaranteed 95% occupancy rate for the facilities (which they don't pay for or build). Prisoners aren't there for reform, confinement from society, or punishment -- they're Revenue Units. If it was in their power to lobby it, they'd eliminate probation, parole, etc. and maybe entertain ideas like making Jay-walking a mandatory life sentence. First they'd have to pass a "Job Creator Nuisance Law Exemption Act" for anyone making over 100k a year, but they'd do it.

  7. Kent, thanks, appreciate the detail.