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It takes only two things to keep people in chains: The ignorance of the oppressed and the treachery of their leaders..
We repeatedly have written about government privatization, one of the great legal scams:
- I smell the meat a’cookin’. The new privatization scam.I smell the meat a’cookin’. The new privatization scam.
- TSA and the great privatization scam: Part II;
- Why Privatization? Here’s why;
- PRIVATIZATION: The Road to Perdition in the United States of Koch; Presenting!!
- The Great Privatization Scam!
In this context, “privatization” does not involve a government buying products or services from a supplier. Privatization does not mean buying tanks and guns from the armaments industry.
Instead, “privatization” means turning over to a private company, a business normally owned and operated by the government.
Examples would be privately owned and operated toll roads, parking meters, and schools, grades K-12.
The excuses for privatization are the government’s need for money (never the case with the Monetarily Sovereign federal government) and the belief that a private operator will “do a better job.”
I am a businessman, now retired. I’ve owned and managed several companies and brought at least three of them out of serious financial difficulty into financial success. And I cannot imagine why anyone would believe that private industry will “do a better job.”
And when I say “better job,” I mean a better job for the public. After all, it’s the public that is supposed to benefit from privatization.
There can be certain businesses, so specialized, that only a private company has the experience necessary to run them, but even in most of these cases, the private company can be hired as an advisor, not as an investor.
Other than that, people are people; the private sector has no monopoly on brains. It all boils down to the motivation of the leaders, and in the private sector, the motive is profits. Service is provided only when it will produce profits.
In previous posts, we discussed how Chicago’s Mayor Daley sold the city’s parking meters at a small fraction of their value, thereby cheating Chicagoans out of 99 years worth of income. The new owners promptly raised parking prices, cheating Chicagoans further.
We also discussed Mayor Daley’s sale of a toll road. Same thing happened: Worse service and higher prices.
And, we have discussed privatized prisons, where inmates are treated worse and fed less because the owners skimped on salaries and food.
And now we come to new examples of privatization:
Chicago Shows How Charter School Profiteering Bleeds Public Schools With No Performance Improvement and Higher Segregation
Chicago’s public school system has become a showcase for the negative effects of K-12 privatization, according to a new report that tracks how the city replaced struggling local schools with dozens of charters that didn’t perform better, yet deprived traditional schools of funds, students, and public accountability.
The report, “Closed by Choice: The Spatial Relationship between Charter School Expansion, School Closures and Fiscal Stress in Chicago Public Schools,” tracks 108 charter schools that opened between 2000 and 2015, a period when Chicago Public Schools (CPS) was shutting struggling schools, cutting district funding and reducing staff.
It details and confirms what many charter critics have long said, that lobbying from pro-privatization forces swayed the city’ political leaders to impose top-down reforms that riled neighborhoods, undermined traditional K-12 schools, increased segregation and did not lead to schools with better academic results.
In Chicago, and perhaps in your area, “lobbying” is a synonym for bribery. Charter schools are a big, profitable business, and convincing the pols to vote for them is a matter of dollars exchanging hands.
Perhaps most insidiously, the report describes in great detail how the CPS system aggressively shut down struggling schools in neighborhoods where student numbers were dwindling, while allowing better-funded charters to open up nearby, taking a greater share of taxpayer funds that might have been used to rescue struggling schools.
Being privately owned does not magically create a motive for providing better education. The real motive is profits, and the drive for profits does not create better teachers, better curricula, or better facilities. Quite the opposite.
Here is an outline from the article:
1. CPS charters are privately run. Charters do not have to abide to the same accountability and transparency standards that public schools are expected to follow. Charters are largely autonomous from the Chicago Board of Education, CPS central office mandates, elected Local School Councils, and public accountability standards regulating traditional public schools.”
2. The city shut under-used schools. The Chicago Board of Education (CBOE) closed schools with fewer students than might otherwise be optimal, and then situated new charters in those same neighborhoods.
3. The mayor sided with billionaire privateers. The report describes how the city’s political elite fell under the spell of the charter industry’s billionaire sponsors.
4. Many charter impacts, starting with more segregation. The report found what is often the case in communities with charters; that they lead to more segregated schools, as low-income parents seeking the best for their kids respond to industry marketing efforts. The schools, in turn, cherry-pick students, which means they are frequently rejecting special needs children, whether those with disabilities or whose primary language is not English.
5. Charter academics no better than public schools. While there have been charter success stories, the industry as a whole has not met its over-hyped results. In the aggregate, Chicago’s charter and neighborhood public schools have similar levels of student test performance.”
6. Charters seriously disrupt neighborhoods. This finding is the one that most often gets overlooked. Instead of taking steps to improve struggling schools, the city imposed a heavy-handed solution that in many cases did not even include serving the neighborhood’s children.
7. Charters undermining surrounding K-12 schools. This pattern is not unique to Chicago, but it’s happening on a large scale there. Because the city placed its charters in neighborhoods with shrinking student populations, they are drawing some students away from nearby traditional schools. That, in turn, undermines programs in those traditional schools by virtue of diverted per-pupil taxpayer funding.
To no one’s surprise, the GOP has placed a charter school advocate, billionaire Republican donor Betsy DeVos to serve as Secretary of Education. Donald Trump’s rich friends must be pleased.
We also have discussed the disgraceful student loan situation, in which middle and lower income families are doomed to endless servitude by their desire to give their children the same educational advantages the rich kids receive.
For a Monetarily Sovereign government, a government that never can run short of its sovereign currency, the dollar, there never is a need to lend dollars to its citizens, when it can and should give those dollars.
But, the federal government’s lending of its sovereign currency is not the worst of the student loan debacle:
Trump to offer exclusive contract to service U.S. student loans
By Lisa Lambert
WASHINGTON (Reuters) – President Donald Trump’s administration will soon offer an exclusive contract that will give one company the right to service billions of dollars of outstanding federal student loans now handled by four companies, officials said on Friday.
Under President Obama, much of the $1.3 trillion business of student lending was moved from banks and other companies to the federal government.
Four companies still handle servicing the loans. The Consumer Financial Protection Bureau, a consumer financial watchdog agency, is fighting one debt servicer in court over allegations the company deceived borrowers about repayment options and their rights.
DeVos wrote the Obama administration’s servicing requirements created a “chaotic system” that generated numerous consumer complaints and was not sustainable. She added the single servicer will establish a user platform and a standardized process for handling customer calls.
But Natalia Abrams, executive director of the advocacy group Student Debt Crisis, said, “With zero competition, we are concerned about a ‘too big to fail’ student loan company that has zero incentive to work for students, borrowers, and their families,” she said.
Trump recently lifted limits on fees debt collectors can charge some defaulted borrowers. The Washington Post has reported he eliminated a program that erases student debt for public-sector workers after 10 years of payments.
“The changes will certainly increase profits for the industry, but will do nothing to tame the high levels of default in the program,” said Rohit Chopra, senior fellow at the Consumer Federation of America and former CFPB assistant director.
The CFPB says 1.2 million student-loan borrowers have defaulted in the past year and 90 percent of the highest-risk borrowers are not enrolled in affordable repayment plans, even though student-loan companies are supposed to inform borrowers about them.
Let’s put it all together:
- Rather that provide free education, the government provides loans, thus indebting lower-income students and their families and discouraging college attendance by the poor.
- Most student loans, unlike most loans, cannot be discharged in bankruptcy, which hurts the lower income groups.
- The Republicans want one private company to have a monopoly on servicing the loans. The rich love monopolies.
- The Consumer Financial Protection Bureau (CFPB) is fighting a private company that is alleged to have deceived borrowers about their rights.
- President Trump wishes to restrict the power of the CFPB, an important defender of lower-income people.
- President Trump also lifted limits on fees debt collectors can charge, forcing the lower incomes to pay more.
- President Trump eliminated a program that erases student debt for public-sector workers after 10 years of payments.
- Most of the highest-risk borrowers are not enrolled in affordable repayment plans, even though student-loan companies are supposed to inform borrowers about them.
If you were a politician who wishes to afford every possible advantage to the rich, and every possible disadvantage to the poor, you couldn’t come up with a better program than the one described here.
Student loans is privatization on steroids.
The entire, GOP’s historical push for “small government” is based on taking wealth from the middle and poor, and giving wealth to the wealthy. (Example: GOP President G.W. Bush’s attempt to privatize Social Security.)
Unless you’re in the upper .1% income/wealth/power group, do not fall for the Tea Party/Libertarian/Republican small-government, privatization line. Small government and privatization always benefit the rich and punish the rest.
When you hear a pol talk about small government and privatization, ask yourself just one question: Who is bribing this guy?
Rodger Malcolm Mitchell
The single most important problems in economics involve the excessive income/wealth/power Gaps between the have-mores and the have-less.
Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics.
Implementation of The Ten Steps To Prosperity can narrow the Gaps:
Ten Steps To Prosperity:
1. ELIMINATE FICA (Ten Reasons to Eliminate FICA )
Although the article lists 10 reasons to eliminate FICA, there are two fundamental reasons:
*FICA is the most regressive tax in American history, widening the Gap by punishing the low and middle-income groups, while leaving the rich untouched, and
*The federal government, being Monetarily Sovereign, neither needs nor uses FICA to support Social Security and Medicare.
2. FEDERALLY FUNDED MEDICARE — PARTS A, B & D, PLUS LONG TERM CARE — FOR EVERYONE (H.R. 676, Medicare for All )
This article addresses the questions:
*Does the economy benefit when the rich can afford better health care than can the rest of Americans?
*Aside from improved health care, what are the other economic effects of “Medicare for everyone?”
*How much would it cost taxpayers?
*Who opposes it?”
3. PROVIDE A MONTHLY ECONOMIC BONUS TO EVERY MAN, WOMAN AND CHILD IN AMERICA (similar to Social Security for All) (The JG (Jobs Guarantee) vs the GI (Guaranteed Income) vs the EB (Economic Bonus)) Or institute a reverse income tax.
This article is the fifth in a series about direct financial assistance to Americans:
Why Modern Monetary Theory’s Employer of Last Resort is a bad idea. Sunday, Jan 1 2012
MMT’s Job Guarantee (JG) — “Another crazy, rightwing, Austrian nutjob?” Thursday, Jan 12 2012
Why Modern Monetary Theory’s Jobs Guarantee is like the EU’s euro: A beloved solution to the wrong problem. Tuesday, May 29 2012
“You can’t fire me. I’m on JG” Saturday, Jun 2 2012
Economic growth should include the “bottom” 99.9%, not just the .1%, the only question being, how best to accomplish that. Modern Monetary Theory (MMT) favors giving everyone a job. Monetary Sovereignty (MS) favors giving everyone money. The five articles describe the pros and cons of each approach.
4. FREE EDUCATION (INCLUDING POST-GRAD) FOR EVERYONE Five reasons why we should eliminate school loans
Monetarily non-sovereign State and local governments, despite their limited finances, support grades K-12. That level of education may have been sufficient for a largely agrarian economy, but not for our currently more technical economy that demands greater numbers of highly educated workers.
Because state and local funding is so limited, grades K-12 receive short shrift, especially those schools whose populations come from the lowest economic groups. And college is too costly for most families.
An educated populace benefits a nation, and benefitting the nation is the purpose of the federal government, which has the unlimited ability to pay for K-16 and beyond.
5. SALARY FOR ATTENDING SCHOOL
Even were schooling to be completely free, many young people cannot attend, because they and their families cannot afford to support non-workers. In a foundering boat, everyone needs to bail, and no one can take time off for study.
If a young person’s “job” is to learn and be productive, he/she should be paid to do that job, especially since that job is one of America’s most important.
6. ELIMINATE FEDERAL TAXES ON BUSINESS
Businesses are dollar-transferring machines. They transfer dollars from customers to employees, suppliers, shareholders and the federal government (the later having no use for those dollars). Any tax on businesses reduces the amount going to employees, suppliers and shareholders, which diminishes the economy. Ultimately, all business taxes reduce your personal income.
7. INCREASE THE STANDARD INCOME TAX DEDUCTION, ANNUALLY. (Refer to this.) Federal taxes punish taxpayers and harm the economy. The federal government has no need for those punishing and harmful tax dollars. There are several ways to reduce taxes, and we should evaluate and choose the most progressive approaches.
Cutting FICA and business taxes would be a good early step, as both dramatically affect the 99%. Annual increases in the standard income tax deduction, and a reverse income tax also would provide benefits from the bottom up. Both would narrow the Gap.
8. TAX THE VERY RICH (THE “.1%) MORE, WITH HIGHER PROGRESSIVE TAX RATES ON ALL FORMS OF INCOME. (TROPHIC CASCADE)
There was a time when I argued against increasing anyone’s federal taxes. After all, the federal government has no need for tax dollars, and all taxes reduce Gross Domestic Product, thereby negatively affecting the entire economy, including the 99.9%.
But I have come to realize that narrowing the Gap requires trimming the top. It simply would not be possible to provide the 99.9% with enough benefits to narrow the Gap in any meaningful way. Bill Gates reportedly owns $70 billion. To get to that level, he must have been earning $10 billion a year. Pick any acceptable Gap (1000 to 1?), and the lowest paid American would have to receive $10 million a year. Unreasonable.
9. FEDERAL OWNERSHIP OF ALL BANKS (Click The end of private banking and How should America decide “who-gets-money”?)
Banks have created all the dollars that exist. Even dollars created at the direction of the federal government, actually come into being when banks increase the numbers in checking accounts. This gives the banks enormous financial power, and as we all know, power corrupts — especially when multiplied by a profit motive.
Although the federal government also is powerful and corrupted, it does not suffer from a profit motive, the world’s most corrupting influence.
10. INCREASE FEDERAL SPENDING ON THE MYRIAD INITIATIVES THAT BENEFIT AMERICA’S 99.9% (Federal agencies)Browse the agencies. See how many agencies benefit the lower- and middle-income/wealth/ power groups, by adding dollars to the economy and/or by actions more beneficial to the 99.9% than to the .1%.
Save this reference as your primer to current economics. Sadly, much of the material is not being taught in American schools, which is all the more reason for you to use it.
The Ten Steps will grow the economy, and narrow the income/wealth/power Gap between the rich and you.
12 thoughts on “Privatization: Legally stealing your money”
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This sort of rort is happening here in Australia as well and no doubt everywhere neo-liberal ideals are dominant. It just doesn’t make sense that a profit motive will give better outcome for the public. But you can’t convince those who see personal largesse gained from not seeing the facts.
BTW, I believe your point 2) above [student loans] is about to change so one can go bankrupt. At least it’s being considered.
Sad, isn’t it, when the ability to go bankrupt is considered a perk in U.S. educational law.
This is parasitism and clearly discussed in this talk by Michael Hudson. He shows why the parties of the left are as pro Neo-liberal policies as the right;
Poorly thought out and poorly written on so many fronts. Privatization almost always produces better results than government. Schools are a great example. Private schools do better across the board than public schools do. Take a look through history at governments or countries that tried to nationalize industries. It doesn’t work for a very simple reason; When you can’t make money doing it, you won’t do it. The government is a horribly inefficient way to get things done.
It’s just like a job. No one shows up to cut my lawn every week because they won’t make money doing it. But the moment someone can make money from me for it, I will have people standing in line to do it. Profit motives are what cause people to innovate (“build a better mousetrap”).
BTW, if you enable student loan to be discharged through bankruptcy, look for a rash of 22 and 23 year olds declaring bankruptcy to get their college paid for by you the tax payer and then starting fresh. That will be the first step towards a free college education.
You may be right. Why not provide some examples of how privatization has “produced better results.”
By the way, private schools are not examples of privatization.
Private schools do well because they can be selective. Public schools don’t have that liberty.
Nationalization also is not an example of privatization. It is not even an example of the reverse. I do not advocate nationalization, nor do I advocate privatization.
As far as government being a horribly inefficient way to get things done, I don’t know what you mean by “efficient,” but the government invented atomic energy and took us to the moon, built the Hoover dam, runs our military, built the interstate highway system and created Medicare.
The federal government is not constrained by the profit motive. It can dare to do things that are not profitable, but still valuable to the populace. I would hate to see the Coast Guard and the police privatized. Privatized jails have been a disaster because of the profits motive.
Your statement, “paid by you the tax payer,” indicates you do not understand Monetary Sovereignty. Federal taxes do not fund federal spending, though state and local taxes do fund state and local spending.
To learn why, you might wish to read this .
Just about everything that is privatized and put in the free market outside of government control has improved things. That’s not really disputable. It’s a simple fact. Sometimes it takes a bit, but it typically works better for a lot of reasons. And it gives people freedom.
Private schools are, by definition, privatization. To suggest that something “private” is not “privatized” is absurd. And part of their success may be selectivity, but the greater part of their success is necessity to provide a good product to stay in business. The failure of public education is related to two primary things: (1) The breakdown of the family structure (due in large part to the welfare state and the breakdown in culture) which is the most important piece of education and (2) the lack of necessity to improve because they get money anyway. If public schools could be selective, it is likely you would see a great deal of increase in parental involvement.
Stake holders always do better.
You ask about government inefficiency and then list Medicare. Medicare is a a great example of inefficiency. It is Exhibit 1 in why you don’t want the government running healthcare. The military, roads, and police are, to some degree, necessary for government. But just about everything they touch, they screw up. Because it has no profit motive, it has no reason to do things better or more efficiently. It simply doesn’t have to care.
Your approach is simply to print money. The government can do that but that doesn’t make it a good thing to do. And yes, federal taxes do pay for federal spending. Money is printed for different reasons and often causes inflation.
It seems like you are in need of some basic facts and economic understanding.
Clearly, you do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do you? But you have decided to declare yourself an expert on a Monetary Sovereignty site. Pitiful.
Privatization has not worked for Chicago’s parking meters, Chicago’s toll roads, prisons and charter schools. The breakdown of the family structure is due lack of money, not to what you call the “welfare state” (i.e. aid to the poor is bad; aid to the rich is good).
And NO, FEDERAL TAXES DO NOT FUND FEDERAL SPENDING. You seem to be saying that if the federal government didn’t collect taxes, it couldn’t pay its bills — and then you complain about the government “printing money.” So which is it? Taxes pay for spending or the government prints money? The two are opposite.
At least read the link I sent you. And as for “basic facts and economic understanding, you aren’t an economist,” so why the pretense? Learn first, write after.
Factually wrong comment of the day: “Just about everything that is privatized has . . . improved things.”
That belief sure doesn’t apply to schools. See this.
For some mysterious event my post didn’t get posted. Try again;
Privatisation is largely concerned with profit. The government does not run a profit. So a private insurer will seek to insure only those who are the least burdensome on their books. The government will insure everyone, since profit is not a motive. So your argument fails. The private sector is vastly better at screwing up the economy. Just look at the financial economy mess. They drain all real economy’s wealth by ramping up asset inflation and creaming off the interest. That is largely why we are in deflation now.
“the welfare state” is another of those right wing conspiracies they demonise. The government spends zero “taxpayer dollars” [another demon] on welfare. It has no need for its “revenue”. Tax has other uses.
Spending grows the economy, taxes shrink it. So taxing more than spending [“budget surplus”] also shrinks the economy. Therefore welfare expenses also grow the economy as money is spent into the economy by recipients. It’s a contribution, not a burden.
Your economic understanding is abysmal [you have a heap of company] Let’s hope you start learning here. Your rants are typical of the ignorant. The government cannot “simply print money” [except banknotes] It only can buy what is for sale. This protects the economy from overindulging in money creation, along with the threat of runaway inflation. We have an “Output Gap” in the $Trillions, so plenty of room there for useful spending.