Privatization

Fear and Loathing

On the 17 July 2020, episode of Counterspin, Fair’s Janine Jackson interviewed True North Research’s Lisa Graves about attacks on the US Postal Service. ‘A Combination of Forces Puts Our Postal Service at Grave Risk‘ Jackson leads off talking about the recent appointment of Louis DeJoy, a big Trump donor, to be the new head of the US Postal Service. Upon being appointed, DeJoy promptly issued a series of memos calling for operational changes that many felt were intended to slow down mail delivery. Other recent Trump actions appear to also be intended to sabotage the US Postal Service. In that Trump has made Vote by Mail a big issue, some fear that he might try to nullify his losing the election by claiming that a slow vote count equals an indication of fraud, etc.

Graves’ research into attempts to sabotage the US Postal Service disclosed that for more than 50 years none other than Charles Koch has been funding efforts, at first to abolish, later to privatize, the US Postal Service. In addition to Koch, DeJoy, and Trump; Ronald Reagan, Reagan Administration official James C. Miller, Senators Susan Collins of Maine and Mitch McConnell of Kentucky, and George W. Bush have all taken a hand at this sabotaging and/or privatizing of the US Postal Service. Former Reagan Administration official, former American Enterprise scholar, James Miller, was later appointed to the Postal Board of Governors by George W. Bush with significant help from Senators Collins and McConnell. In 2005, Senators Collins and McConnell both helped push through the prepaid benefits requirement meant to sabotage the Postal Service. To date, some powerful actors have expended a lot of money, time, and effort attempting to abolish, privatize, or sabotage the US Postal Service.

What it means to want to abolish or sabotage something seems clear enough. The wanting doth bespeak an animus. Did these people hate the US Postal Service so much? Or, did they fear that it might succeed?

Herein, privatization refers to the conversion of publicly owned entities to private ownership.

Upon coming to power in the 1930s, Adolf Hitler’s Nazi Party privatized a lot of Germany’s industries. This privatization was, no doubt, much about making alliances with Germany’s social elite, and others considered to be politically and economically powerful; gaining leverage over the banks, steel industry, etc. in anticipation of waging war. Though they used the expression re-privatize, the Nazi privatization could be seen as the origin of the modern concept of privatization as it applies to the converting of publicly owned entities to private ownership.

In 1955, Milton Friedman proposed privatizing public schools; saying that he wanted to bring ‘market forces’ to bear. At that time, he couldn’t quite go there yet on US Social Security, but, in 1981, he did convince Chile’s Augusto Pinochet to give privatization of Social Security a go in Chile.

With Charles Koch, it seems to have been an animus toward any and all public services; one perhaps handed down from his father. In this animus toward public ownership, Koch is allied with the powerful Heritage Foundation and Cato Institute, various political action networks and PACs, and several Koch Brothers endowed Chairs at Major Universities. If publicly-owned services are indeed so bad, why the animus? Surely they will fail on their own or be rejected by the people?

In the 1990s, publicly owned industries in the former USSR were privatized consequent its breakup. Ever since, Americans and the whole world have been witness to the rise of the $billionaire oligarchs, oligarchy, and autocracy in Russia.

Today, sixty-five years after Friedman’s 1955 proposal, powerful actors in the United States are still trying to privatize the US Postal Service, Public Schools, and Social Security.

Why privatize? What’s the impetus? It seems the reasons given for privatization vary from wanting to form strategic alliances to animus toward public ownership; from a belief in the magic of market forces to corruption, graft, and avarice. Even less seemly, the reasons may: include a claim by business to an inherent right to skim, reflect a business first ideology, be seen as a means to better keep labor in its place, involve classism, be intended to serve as a means of preserving capitalism, allow for more control of government services by the private sector, …

If Charles Koch had been successful in abolishing the US Postal Service in 1970, there would have perforce been some form of a replacement postal service. If the US Postal Service had been replaced by Koch Enterprises Postal Service (KEPS), safe to assume that KEPS would have been structured either as a for-profit corporation or as a for-profit Government Contractor. Either way, most people could not have afforded it. Rural Free Delivery would have been replaced by something akin to UPS, meaning that letter delivery would have cost a few dollars each — several dollars per week. Or, the rural customer could pick up their mail the next time they were in town, or ask someone else to pick up their mail and bring it out to them. Still, in town, there would have been a charge at pick up. KEPS may have been able to make a profit delivering to mail to large department/condominium complexes at pre-privatization rates, but most urban and suburban residential mail delivery, too, would have cost patrons a few dollars a week. Delivery to businesses above a certain size would probably have been profitable. To get equivalent service, most postal patrons were going to have to pay more. In 1970, before the internet, almost all billing to, and payment from, residences was by mail. The billing entities might have been willing to pay KEPS for delivery and collection, but they would have added the cost of doing so to their billing. And, there is the matter of personal letters, etc. We would have had either a grossly inadequate postal service, or a too expensive for most, yet inadequate, postal service when a postal service that provided the service needed is what was needed. Like better roads, mail delivery helped move the country forward; too, was an essential service.

If KEPS had contracted with the US Government to provide service akin to that existent in 1970, it would have, no doubt, sought to improve efficiency by way of automation; automation that replaced workers. It almost certainly would have tried to pay less to the employees either by pay cuts, fewer benefits, or by subcontracting out the labor to subcontractors who would pay less, and provide fewer benefits. Markets are, after all, profit-driven. Some services are a necessity. Their delivery should be efficient, but the essential service provided should be the driver. Essential government services will never be made profitable without factoring in the value of the service provided.

While a Postal Service provides the service of delivering mail to all; Public Schools are charged with delivering the service of providing K-12 education to all children. It’s not like that we only give education to those who can afford it; since 1918, all American children are entitled to, indeed required to go to school. How would market forces being brought to bear, education being bought and sold in an open market, improve public schools? A group of teachers could form a business and offer their services for a fixed fee. Those services could be quantified as a promise that a child would graduate from a grade or from high school, etc. Being professionals, the teachers could insist on being paid whether or not the student graduates. Their proffer could be to teach certain subject matter in a manner that most students would be able to assimilate. I doubt that Friedman had a business model owned by teachers in mind. More likely, he envisioned a capitalist start-up, for-profit, private school, hiring teachers and staff at market value and charging local government agencies, school districts, so much per student per year. No doubt, the school district, in turn, would insist that the private school teach all the kids in the district. Friedman must have thought that there was a lot of fat in public schools. In order to make a profit, the private school owner(s) would try to control cost by: paying lower salaries and wages, demanding that each teacher teach more students, subbing out the janitorial services, … there weren’t many other options in 1955.

Today, we have Donald Trump and Betsy DeVos leading the efforts to replace Public Schools with Private Schools. Using sabotage, whatever it takes, they seek to rid us of Public Schools. To rid is to abolish. Very kind of them, but who asked?

The main impetus for privatizing US Social Security seems to have been the hope that to do so would provide significant stimulus to the stock market; again, avarice. It is an awful lot of money.

One thing missing in these calls for privatization is the distinction between goods and services. While it may well be that such goods as shirts and shoes, fruits and vegetables, hats and gloves, telephones and computers, and cars and trucks can be efficiently produced and distributed by market forces; it does not follow that such essential services as the education of the nation’s children, mail delivery, healthcare, and internet services can be efficiently provided and distributed by market forces. Distinctions and differences are important. Goods and services are distinctly different things. The word essential in essential services means that these services are just that, a basic human need, right. Being efficient includes getting the desired results. The only way market forces can be brought to bear on the provision of essential services is if these essential services were put out to bid under the tightest of performance specifications. Those performance specifications would include minimum wage and benefit requirements, and meaningful penalties for failure to meet performance criteria; they must create a level playing field. A government demands a lot from its people; sometimes the risking of their lives. There are some things, such as education, mail delivery, internet services, health care, and a minimum standard of living that a government owes its people. That is what it says in the preamble of the US Constitution, “.. provide for the common defense, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, …”

In FDR’s Second Bill of Rights, circa 1944:

  • The right to a useful and remunerative job in the industries or shops or farms or mines of the nation;
  • The right to earn enough to provide adequate food and clothing and recreation;
  • The right of every farmer to raise and sell his products at a return which will give him and his family a        decent living;
  • The right of every businessman, large and small, to trade in an atmosphere of freedom from unfair competition and domination by monopolies at home or abroad;
  • The right of every family to a decent home;
  • The right to adequate medical care and the opportunity to achieve and enjoy good health;
  • The right to adequate protection from the economic fears of old age, sickness, accident and unemployment;
  • The right to a good education.

Those words were spoken, in the 20th Century, 76 years ago. The US Constitution was ratified, in the 18th Century, 231 years ago. We are now more than 20 years into the 21st Century. Any model wherein: if someone loses their job they lose healthcare; a child is denied an education; millions of people are homeless; and seniors cannot afford housing, medicines, and food is antiquated, immoral, and disgraceful. Ideology and dogma can be no excuse for not providing these essentials; must not be allowed to be used as a means of rationalizing away these obligations.

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