"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."