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Beware the Invisible Hand of Privatization

In California, the state government currently spends more than $34 billion a year paying private contractors to do jobs that civil servants can perform for half the cost. Another $900 million of taxpayer funds is wasted annually propping up the state’s failed enterprise zone program. Common sense dictates that any proposal to balance the state budget begin here.

Instead, what is being implemented in state capitals across the country are plans to eradicate traditional retirement and health care benefits for civil servants and, in some cases, to return civil servants to 19th century working conditions by eliminating their First Amendment right to assemble, organize, and bargain collectively as free citizens.

These developments are part and parcel of an ongoing strategy to steal our taxpayer dollars by redirecting them from public services and democratic institutions and into the pockets of private companies and individuals through wasteful subsidy programs and corrupt private contracting practices in government.

Case in point, the Little Hoover Commission recently recommended that retirement benefits for new and current public employees be essentially eliminated and replaced with 401(k)-style plans in order to save taxpayers money.

What the Little Hoover Commission left out of their report and avoided saying in testimony before the state legislature was that no one with a 401(k) has ever been able to afford to retire with one.

They also failed to mention that 401(k) plans are about three times more expensive to maintain than traditional, defined benefit retirement plans due to the fees that Wall Street investors charge to manage a 401(k).

It’s akin to the way technology consultants have repeatedly taken advantage of Sacramento’s lack of computer know-how by promising quick fixes for low prices on projects that routinely turn out to be more complicated and expensive.

Clearly, the move to eliminate traditional retirement benefits for civil servants is simply another attempt by Wall Street and their business associates to redirect our hard-earned tax dollars into their pockets.


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As if bringing on the Great Recession through a national housing crisis and financial meltdown wasn’t enough, these same vultures now want Main Street to pay for cleaning up their economic mess.

In light of the billions of taxpayer dollars given to bail out the financial institutions responsible for our current economic crisis, the public is right to be concerned over how our tax dollars are being spent.

That’s why we need to eliminate the more than $34 billion worth of private contracting in state government along with wasteful tax subsidy programs that routinely funnel billions every year to private companies with no oversight.

With regard to Wisconsin Governor Scott Walker’s bid to end people's First Amendment right to assemble, organize, and bargain collectively as free citizens, New York Times columnist Paul Krugman has astutely pointed out that this move masks a darker, more lucrative purpose.

Krugman writes that Walker’s budget bill is designed not only to eliminate collective bargaining rights for civil servants, but to facilitate the sale of taxpayer-owned heating, cooling, and electricity plants to private companies “with or without solicitation of bids, for any amount that the department determines to be in the best interest of the state.”

In fact, “no approval or certification of the public service commission is necessary” for the sale of taxpayer-owned plants or for the contracting out of the operation of these state institutions.

Here again, we find the market’s so-called invisible hand preparing to pilfer our hard earned tax dollars out of our collective pocket.

Instead of eliminating traditional retirement and health care benefits for grandma and other dedicated civil servants, we need to institute a surcharge on financial service transactions like stock trades to make sure that Wall Street cleans up this mess that the rest of us in California, the United States, and the rest of the world are suffering through.

Willie Pelote, Sr.

Willie L. Pelote, Sr. is an Assistant Director of the American Federation of State, County and Municipal Employees (AFSCME), AFL-CIO. AFSCME’s 1.6 million members provide the vital services that make America happen. With members in hundreds of different occupations — from nurses to corrections officers, child care providers to sanitation workers — AFSCME advocates for fairness in the workplace, excellence in public services and prosperity and opportunity for all working families. He can be contacted using the following information: /

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