"Privatization Is Bad," says British writer

Privatization Is Bad

"One of Britain’s largest government contractors, Carillion, announced bankruptcy on Tuesday, leaving its 20,000 UK employees unsure of their future and causing layoffs at its subcontractor. The company was £1.5 billion in debt. Whoops! The company is woven into basically every part of the public sector in Britain, from school meals and hospital cleaning to housing for the military."

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This article explains how the era of privatization brought about government dependency on private contractors, so that if and when a major contractor fails, government doesn't have the staff or the expertise to take over from the contractor. I see the same problem in the US. What happens when cities take a cash payment for a major public asset, such as a bridge or highway, and then the new owner or lessee goes bankrupt? That can also be a strategic bankruptcy, where the corporation doesn't want to put money into an asset to rehab it and decides instead to move their money elsewhere and liquidate the entity that owns or leases the asset. Or when the city happily lays off a lot of employees because they contracted out the public school food service, or he janitorial service, or the teaching, if the contractors don't get the job done? Or if they don't turn enough of a profit and just go out of business? The problem is that before privatization we could be sure that government would continue doing these things, and it doesn't matter whether those activities are profitable or not. After privatization, we don't know that. On the contrary, we know that private corporations do things only as long as they are making a profit. This is where all this nonsense about making government operate like a business comes back to bite us. Governments do things that, by definition, don't turn a profit. When we turn those things over to private corporations, we run the risk that the corporations will bail out on us, and then government has lost the ability to pick up the function without a lot of lost time and extra expense.

And, as this article notes, that profit-seeking creates other problems. Bizarrely, governments end up paying private vendors extra money because of guarantees that are written into their contracts. This has been a huge problem with the Chicago parking meter privatization fiasco. It happened in the UK, too: "This is what happens when you outsource what should be government services, and particularly when you outsource so much to one company: you introduce the likelihood of a whole new kind of total fucking disaster, where the terrible, risky, profit-driven practices that characterize the private sector get mixed in with services that absolutely should not be subjected to that kind of risk, like schools and hospitals. Introducing a profit element to public services can only end in corner-cutting, under-providing and over-charging, and spending more than you would if the government just did it themselves. You end up with a ridiculous situation, where, for instance, Britain’s public health service, which is already underfunded, pays an £82 million settlement to a private company who sued because they didn’t win a contract."

Money man: U.S. billionaire Robert Mercer helped Trump win the presidency — but what does he really want?

Money man: U.S. billionaire Robert Mercer helped Trump win the presidency — but what does he really want?: "“The ultra-wealthy of today differ from the ultra-wealthy in past eras in that they have, a lot of them, no stake in the infrastructure of society,” Magerman said. He’s seen that their wealth does not depend on the health and stability of the country. In fact, they get rich on volatility and instability."

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This is one of the main arguments I made in my first book on the rise of private communities. The rich now have their own parallel state of private institutions, and that's where they live, and many of them are like Mercer--they believe that they don't need public government, and everybody who isn't rich is a parasite. They believe that government is just a way for the parasitic many to steal from the productive few. The notion that ordinary people are working their butts off to generate surplus value for the Mercers of the world is lost on them.

Gated communities stepping up security after violent trail of crime alleged on Spring murder suspects | abc13.com

Gated communities stepping up security after violent trail of crime alleged on Spring murder suspects | abc13.com

SPRING, Texas (KTRK) -- Gated communities are increasing security after two violent home invasions and one that ended in the murders of a beloved Spring couple. Jenny and Bao Lam, both 61, were ambushed in their garage in the Northgate Forest subdivision last week. The three suspects - Khari Kendrick, Aakiel Kendrick and Erick Peralta - then robbed, tortured and shot them to death, according to Harris County Sheriff's investigators. All three have been charged with capital murder. Two days earlier, authorities believe they were in the Champion Lakes Estates community near Tomball...One suspect got into the neighborhood, despite the front gate, on foot. He then looked for an open garage door and caught the male victim off guard. Once inside, he forced the victim to give him the gate code to get his alleged accomplices and their car inside."

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Horrible story. It shows how little security is provided in many gated communities. Gates along don't do much to protect residents from people who are determined to get in.

Amazon shortlists 20 cities for second headquarters | Technology | The Guardian

Amazon shortlists 20 cities for second headquarters | Technology | The Guardian:

Chicago is on the short list. But it is embarrassing to see how some of these cities prostrated themselves before the great God Amazon: "Amazon has claimed its new $5bn headquarters will create 50,000 new jobs and the prospect of securing its favour set off an aggressive charm offensive with cities offering huge tax breaks and even sending gifts, including a giant cactus, to attract the company’s attention. Calgary in Canada offered to change its name to Calmazon or Amagary if it won and a local business group offered to fight a bear to win Amazon’s approval. It did not make the list."

The Privatization Agenda Goes Bust

The Privatization Agenda Goes Bust: "The collapse of Carillion, the mammoth UK government contractor that went bankrupt Monday, was wholly made in Britain, although it has negative consequences internationally.

The reason for Carillion’s bankruptcy, which puts vital public services and thousands of jobs at risk, is that the firm and its component companies grew fat during the first phase of neoliberal economic policy and could not cope with the more recent phase, austerity."

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The record of privatization, after close to 40 years of evaluation, is mixed at best, but it has been profitable for contractors. However, most of those studies are from the pre-2008 era. This article suggests that in the post-2008 environment, austerity policies have put government on a starvation diet. If government doesn't have the money to pay for construction and repair of infrastructure and provision of services, then firms that want to perform those tasks on a privatized contractual basis are in trouble. 

San Rafael condo owners hit with $145,000 special assessment

San Rafael condo owners hit with $145,000 special assessment

"Members of the 36-unit Pinnacle Condominium Association in San Rafael have approved a special assessment that will result in each condo owner having to pay $145,000 to fund a $5.22 million exterior repair project. “That is a major special assessment for a building this size,” said Marjorie Murray, president of the Center for California Homeowner Association Law in Oakland, a clearinghouse for consumer education and referral services for the estimated 9 million California homeowners who now live in a common interest development."

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This is a long and detailed article about a terrible situation in an old development, built in 1980, that now needs new siding and roof decks. The assessment received 18 "yes" votes. The problem here is that no condo development, no HOA, should ever find itself in the situation of needing a massive special assessment to fund repairs for major building components that have just worn out over time. Boards are supposed to make sure that monthly assessments over decades include enough of a contribution to reserve funds that, when the time comes for a new roof or siding or decks, it is affordable without a six-figure special assessment. As Marjorie Murray, president of the Center for California Homeowner Association Law, put it, “Homeowner associations are required by law to do reserve studies every three years to determine how much they should be saving for capital items like roofs and building infrastructure,” Murray said. “The idea is that boards should plan ahead and save in reserves so that special assessments aren’t necessary.”

And there are reserves, to the tune of $800,000. That won't fund a $5 million repair, but Marjorie also questions why the association has decided to use only $300,000 of their reserves.

There are other questions raised in the article, such as whether this repair plan is the only way to go, and whether the association should get more opinions and try to reduce the cost. But it still comes down to the fact that the reserves are too low to pay for repairs to an old building, and the unwillingness of today's owners to reserve enough money now to pay for future repairs that will benefit future owners. Attorney Tyler Berding has been talking about this problem forever. I have been saying for years that condominium housing demands more from the financial and social resources of owners than many, even most, of them are prepared to deliver. Here you have Exhibit A. In order for this form of housing to function in the long term, and to avoid catastrophic special assessments that drive people into debt or out of their homes, there needs to be government financial oversight of all condominium associations. Stricter reserve study requirements, agency oversight, and mandatory public disclosure of reserve funding levels need to be considered.

Rent or own? The affordability conundrum

Rent or own? The affordability conundrum: "ATTOM Data Solutions reports that 64 percent of Americans now live in places — mostly big metro areas on the East and West coasts — where it is more affordable to rent than own. That means the monthly cost of a mortgage, mortgage interest, insurance and property taxes on a median-priced home in the area will eat up a larger percentage of the average monthly wage there than paying rent on a typical three-bedroom apartment."

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It isn't just the the cities on both coasts. The same is true of Chicago, as well as Las Vegas, Salt Lake City, Phoenix, Denver, and Austin. The reason is that in all these places, housing prices have inflated.

The Rise of the Backyard 'Granny Flat' - CityLab

The Rise of the Backyard 'Granny Flat' - CityLab

Yet another good idea that HOAs probably won't allow.

Can Government Officials Have You Arrested for Speaking to Them? - The Atlantic

Can Government Officials Have You Arrested for Speaking to Them? - The Atlantic

The US Supreme Court has this issue before them.  HOA and condo board members aren't government officials, but it will be interesting to watch this case.

It's Becoming Increasingly Hard For California Homeowners To Get Insurance : NPR

It's Becoming Increasingly Hard For California Homeowners To Get Insurance : NPR

"Insurance companies are increasingly dropping homeowners in California because of wildfire risk. There's concern the problem will grow worse after this year's destructive fire season."

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Insurance companies have freaked out about property insurance risks in California in years past. Fires, floods, 100-year storms, landslides earthquakes--these events are hard to build into their premium calculations. But homeowners need property insurance, so we shall see what the state legislature has to say about this.

Trump's Infrastructure Plan Is Actually Pence's—And It's All About Privatization

Trump's Infrastructure Plan Is Actually Pence's—And It's All About Privatization

"Pence and his allies like to boast about how Indiana sold control of major roads to private firms, claiming the move prompted corporations to invest money in infrastructure that would otherwise have been funded by taxpayers. But opponents say Indiana made some bad deals that offer a cautionary tale of get-rich-quick scheming, secrecy and cronyism that led the state to sell off valuable assets that were then wildly mismanaged."

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This "plan" probably will not lead to construction or maintenance of essential public infrastructure. It is more likely to foster a series of boondoggles in which state and local governments sell off valuable public assets--highways, bridges, etc.--to corporations that will strip them of their value for quick profits

Affordable housing bills signed by Gov. Jerry Brown | The Sacramento Bee

Affordable housing bills signed by Gov. Jerry Brown | The Sacramento Bee

"Gov. Jerry Brown on Friday signed a robust package of housing legislation aimed at addressing California’s unprecedented affordability crisis."

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This article is from a few months ago, but I think these bills just went into effect. Across much if not most of California, housing is absurdly expensive. In major cities, San Francisco being the most dramatic example, middle class families can't afford to buy a home, and rents are absurdly high. The term "gentrification" doesn't even begin to describe it, because even people who would be considered gentrifiers in Chicago or Atlanta can't buy a home in San Francisco. Similar but somewhat less serious problems exist elsewhere. Median home prices in California are approaching $550,000. There are other problems that spin off from this, such as homelessness, traffic congestion and air pollution resulting from long commutes to work, and segregation by income and wealth. California is beginning to address their affordability crisis, but I think it will be a long and difficult process. Of course, condominium and HOA-run housing were intended to make housing more affordable by increasing density. But now CIDs are so ubiquitous that probably that solution has exhausted itself. Virtually all new housing in California is in CIDs already, and prices are still sky-high.  Here's an article from last June,  where they note that the average condo in San Francisco now sells for $1.2 million, and "For even more perspective, down in Los Angeles—hardly a cheap place to live in its own right—the California Association of Realtors estimates that the average home (house or condo) cost around $480,000 in April. In Orange County it was $775,000. In Santa Cruz, $815,000. But in San Francisco: $1.4 million for a house or condo, very close to Paragon’s own figure and nearly double some of the record highs everywhere else."