The Privatization Scam: 5 Horror Stories of Gov't Outsourcing to Greedy Private Companies

[xchrom]

http://www.alternet.org/economy/privatization-scam-5-horror-stories-govt-outsourcing-greedy-private-companies



***SNIP


1. Chicago Parking Meters

The mother of all privatization horror stories is what happened with Chicago’s parking meters. In 2008 the city “financialized” its parking meter revenue stream. It leased the rights to collect from parking meters to a consortium led by Wall Street bank Morgan Stanley. The lease is for 75 years.

Right away parking-meter rates went up fourfold and meters stopped working. The city’s residents were unhappy, but there was nothing they could do about it.

***SNIP

2. Toll Roads

Some states are considering privatizing their roads with “public-private partnerships.” The deal is that private companies maintain the roads and in exchange can charge a toll and make a profit. How is this working out?

***SNIP

3. Prisons for Profit

Imagine a system where someone makes a profit if more and more people are put in prison. This is known as a “perverse incentive.” Really, can you think of anything worse than getting a profit to get people put in jail? What you think could go wrong is exactly what does go wrong. These companies want profits, so rehabilitation becomes a “cost.”

***SNIP


4. Cost Overruns

Cost overruns are a common scam when governments outsource to private companies.

[Theyletmeeatcake2]

1. This is just theft,pure and simple!!!

[liberal N proud]

2. +1

[malaise]

3. Privatization is about one thing

Looting the government so that local and foreign cronies can enrich themselves at the expense of tax paying citizens.

[egold2604]

4. Gov Corbutt tried to privatize the PA lottery and was stopped

What do you do when you have the most efficient and profitable lottery in the country? You try to outsource its operations to a British company. Fortunately, Gov Corbutt was stopped in his tracks

http://www.washingtonpost.com/blogs/govbeat/wp/2014/01/02/pennsylvanias-corbett-will-drop-lottery-privatization-plan/

[Enthusiast]

5. Could we get some focus on this fucking article? K&R a million times.

Jesus Christ.

Do you believe in idiocracy? That is where we are headed with this privatization.

The worst was the Iraq War profiteering. And not one of Bush's cronies was even slapped on the wrist for that. The Obama justice department really could have done something about the war profiteering but they decided to look forward on that too.

Let's get this bullshit straightened out.

It's corruption from sea to shining sea.

[mountain grammy]

6. K & R

From the article above:

Daphne Greenwood of the University of Colorado did a study of privatization titled, The Decision to Contract Out: Understanding the Full Economic and Social Impacts. The study found that the resulting wage and benefit cuts hurt the community at large, including declining retail sales, greater reliance on public assistance and a larger share of at-risk children in low-income families. On a recent phone call discussing the study Greenwood said that when governments outsource, “the availability of middle-class jobs is affected, even upward mobility.” She said, “Contracting to private corps usually means big reductions in worker benefits and benefits,” and “lower wages often mean a shift to less experienced employees.”

In addition, she said, “There are more workers and retirees who end up on public assistance, which means more children in poverty so local schools are dealing with more problems.”

Well, gee, duh.. but those at the top do extremely well.

[Theyletmeeatcake2]

7. Australia has gone down that path and has suffered ....

Melbourne airport sold off and now one of the most expensive places on earth to park your car....all the while the former state government turned a paid for road into a toll road and one of the conditions is no rail connection to the airport or compensation to be paid....whilst contracts are kept secret under the guise of commercial and in confidence....check out the share prices of these thieves which will indicate what a free for all it is....so profitable but still requiring the government to underwrite the deal....good articles by a chap called Kenneth Davidson explaining the foolishness in all these deals???no one listens to him but his figures are never refuted by the authorities... Also look 1) desalination plants all over the country that lie idle
2) East west link an $8billion plus tunnel that won't solve much traffic congestion for not so many years
And many others
Meanwhile the merchant banks are becoming fatter and fatter. Enough said

[Hotler]

8. My conspiracy theory about articles from the left.

This AlterNet article, first sentence, 2nd paragraph, it reads "So how has wave of privatization this worked out?" What? It should read, "So how has this wave of privatization worked out?" I see stuff like this a lot in articles that talk shit about the PTB from writers on the left and I wonder if the articles are written correctly and someone at the NSA or agent Mike is going in and messing with the wording to make the article look sloppy and unprofessional. When I print stuff out to hand to my friends and they read it I get rollie eyes.

[starroute]

9. This is why they push the idea that government bureaucrats are lazy and incompetant

It can be a lever for cutting pay and pensions -- but the real heart of it is an attempt to justify the claim that privatization will save money.

After all, a competently-run government operation can't possibly be more efficient than one that has to extract profits for its owners. So their only way of making that counter-intuitive argument is to claim that government payrolls are bloated, operations are clogged with red tape, and anything else they can come up with to paint the private sector as lean and mean by contrast.

[phantom power]

10. I bet there's at least a decade worth of investigative reporting stories in privatization

You know, if reporters did investigative reporting anymore. And if stories involving a "government good, business bad" narrative were considered acceptable discourse anymore.

[nashville_brook]

11. k and r

[johnnyreb]

12. K&R

Good article, thanks.

[snot]

13. K&R'd & bookmarked.

[central scrutinizer]

14. Isn't this how H. Ross Perot became a billionaire?

He founded EDS and got a contract for processing Medicare claims - charging $15/claim for something that actually cost about $.50

[GoneFishin]

15. A handful of politicians selling shit that does not belong to them for personal gain.

With decades of failures to study no one can genuinely believe this is fiscally good for the public.

[Jake2413]

16. What did they think would happen

more profits for their friends, along with insider trading info. And private companies can't do it better and cheaper. Its true when companies outsource and when governments outsource.

[Major Nikon]

17. 2. Toll Roads

The Turner Turnpike in Oklahoma is one of the cheapest toll roads in the nation per mile (if not the cheapest). It's 88 miles long and it costs $4 to drive the full length.

The average highway MPG for passenger vehicles in the US is 21.4. So it takes 4.1 gallons for the average passenger vehicle to drive it. Federal gas taxes are 18.4 cents per gallon times 4.1 = 75.4 cents. Even if you went with the full combined state and federal gas tax in Oklahoma of 35.4 cents, it's still just $1.45.

So if the road were free it would cost you $0.75 in federal taxes to drive it (which it costs you anyway) and the Turnpike Authority charges you $4. Only a dipshit would think this is a good deal.

Keep in mind this turnpike has been in operation since 1953, so there's no initial construction costs to finance. There's very few bridges or even curves and no significant terrain to cross. It's about as cheap to maintain as a highway gets.