Photo Credit: Shutterstock.com/alexmillos
August 4, 2013
Some of America's leading news analysts are beginning to recognize the fallacy of the "free market." Said Ted Koppel
, "We are privatizing ourselves into one disaster after another." Fareed Zakaria
"I am a big fan of the free market...But precisely because it is so
powerful, in places where it doesn't work well, it can cause huge
distortions." They're right. A little analysis reveals that
privatization doesn't seem to work in any of the areas vital to the
Our private health care system is by far the most expensive system in the developed world. Forty-two percent of sick Americansskipped
doctor's visits and/or medication purchases in 2011 because of excessive costs. The price of common surgeries
is anywhere from three to ten times higher in the U.S. than in Great Britain, Canada, France, or Germany. Some of the documented
tales: a $15,000 charge for lab tests for which a Medicare patient would have paid a few hundred dollars; an $8,000 special stress test
for which Medicare would have paid $554; and a $60,000 gall bladder operation
, which was covered for $2,000 under a private policy.
As the examples begin to make clear, Medicare is more cost-effective. According to the Council for Affordable Health Insurance
Medicare administrative costs are about one-third that of private
health insurance. More importantly, our ageing population has been
staying healthy. While as a nation we have a shorter life expectancy
all other developed
countries, Americans covered by Medicare INCREASED their life expectancy
by 3.5 years from the 1960s to the turn of the century.
Free-market health care has been taking care of the CEOs. Ronald DePinho
, president of MD Anderson Cancer Center in Texas, made $1,845,000 in 2012. That's over ten times as much as the $170,000
by the federal Medicare Administrator in 2010. Stephen J. Hemsley, the
CEO of United Health Group, made three hundred times as much, with most
of his $48 million
coming from stock gains.
A Citigroup economist gushed
"Water as an asset class will, in my view, become eventually the single
most important physical-commodity based asset class, dwarfing oil,
copper, agricultural commodities and precious metals."
A 2009 analysis of water and sewer utilities by Food and Water Watch found
that private companies charge up to 80 percent more for water and 100 percent more for sewer services. A more recent study
that privatization will generally "increase the long-term costs borne
by the public." Privatization is "shortsighted, irresponsible and
of water privatization abuses or failures
been documented in California, Georgia, Illinois, Indiana, New Jersey,
Texas, Massachusetts, Rhode Island -- just about anywhere it's been
tried. Meanwhile, corporations have been making outrageous profits on a
commodity that should be almost free. Nestle
buys water for about 1/100 of a penny per gallon, and sells it back for ten dollars. Their bottled water is not much different
from tap water.
Worse yet, corporations profit from the very water they pollute. Dioxin-dumping
Dow Chemicals is investing
in water purification. Monsanto has been accused
of privatizing its own pollution sites in order to sell filtered water back to the public.
Internet, TV, and Phone
It seems the whole world is leaving us behind on the Internet. According to the OECD
, South Korea has Internet speeds
up to 200 times faster than the average speed in the U.S., at about half the cost. Customers are charged about $30 a month
Hong Kong or Korea or parts of Europe for much faster service than in
the U.S., while triple-play packages in other countries go for about half
of our Comcast or AT&T charges.
that deregulators in the 1990s anticipated a market-based decline in
phone and cable bills, an "invisible hand" that would steer competing
companies to lower prices for all of us. Verizon and AT&T and
Comcast and Time-Warner haven't let it happen
As Republicans continue to deride public transportation as 'socialist'
China surges ahead with a plan to create the world's most advanced high-speed rail
transport network. Government-run high-speed rail
systems have been successful in numerous other countries, and England
both lament industry privatization.
As a warning to wannabe Post Office privatizers, Greyhound
Trailways once provided service to remote locations in America, but
deregulation intervened. The bus companies eliminated unprofitable
routes, and cutbacks and salary decreases, all in the name of optimal
profits, resulted in drivers working up to 100 hours a week -- a fact to
consider any time each of us ride the bus.
With privatization comes automatic rate increases. Chicago
surrendered its parking meters for 75 years and almost immediately faced a doubling of parking rates. California's experiments
roadway privatization resulted in cost overruns, public outrage, and a
bankruptcy; equally disastrous was the state's foray into electric power privatization
. In Pennsylvania, an analysis of school busing by the Keystone Research Center
concluded that "Contracting out substantially increases state spending on transportation services."
industry is bloated with deceit and depravity. Almost all of the big
names have taken part. Goldman Sachs designed mortgage packages to lose money
for everyone except Goldman. Countrywide
and Wells Fargo
targeted Blacks and Hispanics for unaffordable subprime loans. HSBC Bank laundered money
for Mexican drug cartels. GE Capital
skimmed billions of dollars from its customers. Dozens of hedge fund managers
have been guilty of insider trading. Bank of America
and JP Morgan Chase
hid billions of dollars of bonuses and losses and loans from investors. Banks fixed interest rates in the LIBOR scandal
. They illegally foreclosed on millions of homeowners in the robo-signing
to us how financial malfeasance led to the bubbles in dot-com stocks
and housing and oil prices and commodities that extract trillions of
dollars away from society.
This is all the result of free-market deregulated private business. The best-known public bank, on the other hand, is the Bank of North Dakota
, which remains profitable while serving
small business and the public at low cost relative to the financial industry.
would think it a worthy goal to rehabilitate prisoners and gradually
empty the jails. But business is too good. With each prisonergenerating
up to $40,000 a year in revenue, it has apparently made economic sense to put over two million people behind bars.
The need to fill privatized prisons
has contributed to mass jailings
for drug offenses, with African Americans
who make up 13% of the population, accounting for 53.5 percent of all
persons who entered prison because of a drug conviction. Yet marijuana
usage rates areabout the same
for Blacks and whites.
Studies show that private prisons perform poorly
in numerous ways: prevention of intra-prison violence, jail conditions, rehabilitation efforts. Investigations in Ohio
and New Jersey
revealed a familiar pattern of money-saving cutbacks and worsening conditions.
The notion that charter schools outperform traditional public schools is not supported by the facts. An updated 2013 Stanford University CREDO study
that privatized schools were slightly better in reading and slightly
worse in math, with little difference overall. Charter results have
shown an improvement since 2009.
An independent study by Bold Approach
that "reforms deliver few benefits, often harm the students they
purport to help, and divert attention from...policies with more promise
to weaken the link between poverty and low educational attainment."
as with prisons and hospitals, cost-saving business strategies apply to
the privatization of our children's education. Charter school teachers
have fewer years of experience
and a higher turnover rate. Non-teacher positions have insufficient
retirement plans and health insurance, and much lower pay.
If big money has its way, our children may become high-tech symbols and objects. Bill Gates
quality control for the student assembly line, with video footage from
the classrooms sent to evaluators to check off teaching skills.
Warning signs about unregulated privatization are becoming clearer and more deadly. The Texas fertilizer plant
where 14 people were killed in an explosion and fire, was last
inspected by the Occupational Safety and Health Administration (OSHA)
over 25 years ago. The U.S. Forest Service, stunned by the Prescott,
Arizona fire that killed 19, was forced by the sequester
to cut 500 firefighters. Therail disaster
in Lac-Megantic, Quebec followed deregulation of Canadian railways.
is meant to protect all of us, but anti-government activists have
worked hard to turn us against our own best interests. Among recommended
is the Federal Emergency Management Agency (FEMA), which rescued
hundreds of people after Hurricane Sandy while serving millions
more with meals and water. In another ominous note for the future, the House passed the Clean Water Cooperative Federalism Act
of 2011, which would deny the Environmental Protection Agency the right to enforce the Clean Water Act.
not only deprives Americans of protection, but it also endangers us
with the persistent threat of corporate misconduct. As late as 2004
Monsanto had insisted that Agent Orange
"is not the cause of serious long-term health effects." Dow Chemical, the co-manufacturer of Agent Orange, blamed
the government. Halliburton pleaded guilty to destroying evidence
the Gulf of Mexico oil spill in 2010. Cleanups cost much more than the
fines imposed on offending companies, as government costs can run into
, or even tens of billions
, of dollars.
People vs. Profits
As summed up by US News
"Private industry is not going to step in and save people from
drowning, or help them rebuild their homes without a solid profit." In
order to stay afloat as a nation we need each other, not savvy
businesspeople who presume to tell us all how to be rich. We can't all
be rich. We just want to keep from drowning.
Paul Buchheit is a professor
with City Colleges of Chicago, founder of fightingpoverty.org and
co-founder of Global Initiative Chicago. He is the editor and main
contributor to the forthcoming book, "American Wars: Illusions and
Realities" (Clarity Press).
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