The Truth About Privatization | Robert Reich

Robert Reich explains why using the private sector for government services can have negative consequences.

[greidel]

There should not be private prisons. There should never be a profit motive for denying someone their freedom. How can there be justice when there is money to be made in finding people guilty?

[BrandoB]

Privatization can be compared to micro-transactions in video games. It's a lot more palatable when limited to cosmetic BS, but not so much when everything becomes pay-to-win. They say vote with your wallet, but all that means is that when your wallet is empty you have no voice.

[joevignoloru]

Privately owned, for profit "fire companies" used to do all the fire fighting. It was a disaster. When a fire would start several companies could show up at once looking for the job to extinguish the fire and an argument would start over who got the work. Many of these private fire companies were poorly equipped and trained to put out fires. Public fire departments aren't perfect, but they do a job better than private fire companies.

[kevinslater]

Privatization wrecked the British railroad system.

[Irisheddy]

Prisons should never be privatize, we should not have any "private contractors" in war zones. All military personnel should be directly accountable to the chain of command no matter how non-com their duty is.
The children separation was that for security reasons or to make a few private contractors rich?

[heronimousbrapson]

Anything that forms a natural monopoly, such as utilities., should be either heavily regulated or owned by the government on behalf of the electorate. In many ways, government ownership is a form of regulation.

[DanielMiskowiec]

DO NOT PRIVATIZE;

- Healthcare
- Defense
- Education
- Justice
- Infrastructure (Road, Water, Waste)
- Telecom

Any industry where economies of scale lower cost to deliver the service while your target audience is (choice, geographically, financially) captive, or their mortality is at risk.

[ruftime]

Yes, we have toll roads here in SoCal that were built by private companies who “went bankrupt”, forcing the state to bail them out! Just like the US auto industry!

[arjenbootsma]

I work for a municipal water and wastewater services provider. The general consensus in the industry is that private water and wastewater providers generate their (short-term) profits at the expense of reducing maintenance and reducing (or even eliminating!) investment in longer term capital projects.
Therefore, keep essential community services such as water and wastewater under the control and ownership of the community, i.e. the city, the county.

[nonegiven]

Which should be privatised? Luxury products.

Which should be public? All necessities of life.

[bartonpaullevenson]

Very good presentation. I'm a recovering privatization-enthusiast who learned better from experience.

[GlueFactoryBJJ]

Number 6: Don't privatize when the service/infrastructure has been paid for by public funds (e.g. tax dollars, publicly funded loans, etc.). Too often, state governments are selling/leasing/contracting public infrastructure (e.g. roads) to private firms who get paid for little to nothing more than what the government was already providing, and usually at a lower cost.

The reason for this is usually "revenue sharing". For example, with toll roads, the private company charges a toll and, in exchange, is supposed to maintain those roads and share some of the revenue with the local government. This ends up only being tax shifting. It "covers" politicians by allowing them to complain that they have cut taxes/reduced government spending, while shifting the actual costs (plus a NEW profit margin for the company) to tolls (a new name for a tax levied by a private company), which are typically paid by those who benefit less from the roads themselves (i.e. workers/consumers, rather than businesses).

And the private companies can either give up their contract or "go bankrupt" when high costs come up. After all, according to Pres. Trump, doing so after sucking all the money out of the company, "is smart business"... leaving the taxpayer holding the bill, again. Businesses have become particularly good at "privatizing the profits and socializing the losses".

Just to be clear, the idea that PRIVATIZATION is "lower cost" is a myth. Government services do not have a profit motive. While there may be some waste (due to incompetence/corruption), there is only ONE way for a private company to provide a service for less. By reducing its costs.

How do you "reduce costs"? Here are a few ways:

1. Employ fewer people. And, usually, by doing this, it means by providing a lower level of service.

2. Pay the people you employ less. Again, this has consequences. These consequences include, but are not limited to: Lower skilled employees, reduced spending in the community (by those employed), worse services, fewer benefits for those employed, etc.

3. Cutting the level/number of services. We end up getting less per dollar.

There are things that business provide well. However, public services are not those things. They are called PUBLIC SERVICES because SOCIETY (i.e. we, the people), as a whole, benefits from them. All government is not bad and all business is not good. We need to keep that in mind.

There are things in life that we need to keep in mind are not negotiable. Staying alive, for one. Most ambulance services are now privatized. When you need an ambulance to go to the hospital because you believe you (or a loved one) is in dire need of medical attention, do you ask for what the ride will cost? No. You call 911 and get the transport. Even in a local market, the difference in cost (that you pay for) for an ambulance ride can be tremendous.

Anyway, my $.02...

[richdouglas]

I worked in private prisons for three years (two different facilities) as a training manager, training correctional officers. The experience convinced me that running prisons should be an inherently public matter. This was for two reasons. First, the corporation (the largest in the industry, then and now) looked to cut corners (expenses) wherever possible. If the customer (local, state, or federal government) didn't anticipate something in the contract, they didn't get it. Second, the inmate's status (minimum security, medium security, etc.) was often affected by his/her disciplinary record. This, in turn, affected their release dates. (Minimum security inmates earn more time off for good behavior. Changing an inmate's status from minimum to medium could add months to their incarceration.) But who determined disciplinary infractions? The private company running the prison. I'm not saying the company encouraged punishing inmates and keeping them incarcerated longer. Far from it; the hassles of running the prison were much too great to be dabbling like that. But it gave the APPEARANCE it could happen, which is horrible.

Private prisons, by the way, exist not to incarcerate inmates--although the companies do run prisons. No. Instead, they exist to FINANCE AND BUILD prisons. See, getting a bond passed to pay for the construction of a new prison is difficult politically. But signing a contract with a private prison company to build and operate the prison--stretched out over a 20-year period--is much easier. Simply put, private prison companies are not in the business of RUNNING prisons. They're in the business of BUILDING prisons. That's why the one I worked at transformed itself into a REIT.

Personally, I don't think privatization adds value to education, incarceration, or health care.

[anthonynorton]

I remember a case where two detainees in a privately run jail where handed over to foreign authorities for extradition without an extradition hearing, i.e. due process. That's just one example of many why incarceration should not be run with the same management model as a fast food franchise.

[adonisfernandez]

Even in small countries like the Dominican Republic, the best insurance provider is run by the State. There are plenty of private insurance companies and none of them gives you anything close to what you get on the public one for less.

Just watch the documentary about Enron to understand how off the rails privatization can be.

[alimfuzzy]

Here they love to privitise roads with high tolls. Unfortunately the government shuts down roads to make a bottleneck forcing people to use them. When people still refused to use them. The government bailed them out, gave them tax cuts and paid for enhancements to their roads. Essentially we paid three times (through our taxes) so that we could drive on roads that were once free and they also get tax cuts. Most of our privatized roads are owned by one major investment group.

[jaymethysell]

It's simple: Public services should never be privatized.

[mrmrmaples]

Credit card companies are privatizing the monetary system.

[stewartsimon]

Good work Robert Reich, Take that Devos !