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Taxation by Another Name: Our Devotion to Privatization Will Cost Us

In the end, Trump’s infrastructure plan is simply another in the long line of policies designed to benefit the private sector, and keep the public sector sufficiently small and ineffective that it can be controlled and contained by plutocrats.

In Florida, investors get guaranteed payments for privatized highways while taxpayers get stuck with the bill if revenue falls short. (Photograph: Smith Aerial)

Trump used the State of the Union address last week to ballyhoo his infrastructure initiative, and folks jumped all over it, and rightly so.

What the critics are missing is that all the problems they identify with the infrastructure plan, are just specific examples of what’s wrong with the small-government/market-friendly policies embraced by both major parties.

Ever since St. Ronnie Reagan declared that government was the problem not the solution, Republicans have been gutting government like it was a fresh-caught fish. But the DLC Democrats – now the neoliberal elitists – essentially embraced the same general philosophy, even if they didn’t carry it to the same lunatic extremes as Republicans.  Remember, it was Clinton who declared the end of the era of big government, deregulated Wall Street and the big banks, cut welfare, forged corporate-friendly trade agreements, and turned the media over to the likes of Fox and Clear channel by neutering the FCC.

The justification for all this was that business could and would perform functions more cheaply and more efficiently than government, and that unshackling it from regulations was the engine of economic growth.

It’s worth taking a look at the specifics of how Trump’s infrastructure plan would fail to deliver to see how and why this whole approach is symptomatic of what’s wrong with the neoliberal/conservative assumptions underlying our perceptions on the role of government in society.

The big idea in Trump’s plan—one championed by Democrats in other contexts—is to use a small amount of federal money to attract other capital, mostly from the private sector.  For example, Trump claims his plan would use $200 billion in federal money to put some $1.5 trillion into new infrastructure projects.

There are three big problems with the scheme.

First, private interests will only invest in the kinds of infrastructure which provide a profitable return.  That’s why toll highways, parking meter administration, private prisons and such are so popular with the private sector.

Second, we pay for their profits.  Government may “save” money, but you and I won’t. For example, tolls doubled on the Indiana Toll Road the day after government subsidies ended and the concessionaire began “extracting the full cost from travelers” as the Chicago Tribune put it.  As a result, too often, services which had been available to all when funded with tax dollars, become available only to those with enough money to pay out of pocket. 

It turns out that privatizing public functions, over time, almost always costs more on net.  In a study examining the costs of privatizing government functions, the Project on Government Oversight (POGO) found that it cost more to contract out functions in thirty-three out of the thirty-five job classifications they examined than it would to keep them in government. On net, POGO found that contracting out services to the private sector cost twice as much as doing the function in-house with government workers.

In short, you can pay relatively less taxes to have a function done or managed by government—an entity that is answerable to you at every election; or more to have it overseen and performed by a private entity who is likely to do a poorer job, one that isn’t answerable to you. You’re paying “taxes” either way.  Government taxes are simply more transparent, less costly, and more accountable than the “taxes” you pay to private entities.

Finally, the private sector will determine which projects get funded, and which don’t. That means the most profitable venture is likely to be the one to get done, not the most needed.  It also skews public policy from ventures which don’t offer a clear opportunity for profit, or investments that are inherently less profitable—things like storm drains, flood control projects, or bridges on less travelled roads.

This last issue is a big deal.  We the people won’t get to set the public agenda.  In essence, we will be accepting a measure of corporate tyranny in exchange for … well … not much.  Certainly, no net savings, and certainly not a better infrastructure.  In fact, we may end up paying more for the wrong infrastructure investments.

Again, Chicago’s experience with privatizing the administration of parking meters provides an example.  As the Huffington Post noted, a report found that the agreement with the private entity running the parking meters completely compromised the city’s ability to do comprehensive transportation planning.  Virtually anything which might decrease traffic was essentially off the table for planners trying to manage traffic and congestion.

But none of this is unique to infrastructure. As POGO found, most services are performed better by public entities than private ones; most private interests don’t do an effective job at representing public interests.

Remember, Medicare and Medicaid—with administrative costs of approximately 2%—provide better health outcomes and higher customer satisfaction rates than private insurance does with administrative costs that average more than 7 times as much.

Countries that tried to privatize Social Security-like functions such as Chile, found that overhead costs were more than four times as high, and customer satisfaction was low. In fact, the system collapsed.

So when the Republicans try to privatize these functions, hold onto your wallet.  Your taxes might go down a tad, but your net out-of-pocket expenses will skyrocket, as once again, the private sector extorts more money for less service.

"There’s a link between why we have an idiot in the White House, and the fact that both parties have given up on government and embraced the private sector."

In the end, Trump’s infrastructure plan is simply another in the long line of policies designed to benefit the private sector, and keep the public sector sufficiently small and ineffective that it can be controlled and contained by plutocrats.

Now, there’s a link between why we have an idiot in the White House, and the fact that both parties have given up on government and embraced the private sector.  People understand at a very basic level that we need an effective government, and that many roles are performed best by government.  They know that corporations and the rich have taken over government and used that power to feather their own nests.

They also know that neither party is willing to stand up to the Oligarchs and Plutocrats that control government today.  The Republican’s enslavement to corporations and the uber rich is on full display—obvious enough that only a little over 27 percent of eligible voters backed Trump.

But the Democrat’s embrace of the Oligarchy is a little less transparent.  For example, in 2016 Hillary Clinton claimed to take climate science seriously—which would mean leaving 80% of the fossil fuels we’ve already found in the ground to have a ghost of a chance at avoiding catastrophe—but she backed industry fracking initiatives, backed the XL pipeline, and advocated oil exploration for new fossil fuels on federal lands.

This kind of duplicity is emblematic of neoliberal Democrats, and it’s this kind of chicanery made enough voters choose to stay home or simply not to vote for the Democratic candidate that Trump was able to win with about 27 per cent of the rabid, angry and deluded.  A study of voting in 33 states  found that 1.7 million voters  who did turn out, voted for down ballot candidates but  simply refused to vote for President.

And that is why the 27 percent of the voters who are passionately ignorant could put an ignoramus in the White House.

If Democrats want to win, they will have to embrace a new New Deal. One rooted in progressive values and a willingness to divorce themselves from the Oligarchy and embrace the power of the government to do good.  In Virginia—a southern state—where Democrats ran a slate of candidates whose progressivism went beyond rhetoric, Democrats kicked butt. 

It’s time to put this worship of and enslavement to the private sector to rest. It’s not only a bad idea for infrastructure, it is: a bad way to govern; causing us to pollute ourselves to near death; making us fight endless wars with no real rational; and shredding the principals our Constitution was founded upon.

Oh yeah, it will also cost us a lot of money.

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John Atcheson

John Atcheson

screen_shot_2017-07-26_at_9.09.47_pm.pngJohn Atcheson is author of the novel, A Being Darkly Wise, and he has just completed a book on the 2016 elections titled, WTF, America? How the US Went Off the Rails and How to Get It Back On Track, available from Amazon. Follow him on Twitter @john_atcheson

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