Here we go again: More privatization scam

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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 have discussed the privatization scam many times before. It is the scam in which traditionally government-owned-and-operated functions are turned over to rich guys in the private sector.

One excuse for privatization is the religion that the private sector always is more efficient, honest, and responsive to the public, than is the federal government. No evidence for this exists, but it is widely believed by people who don’t understand one simple reality:

While the motive of a federal government agency is to provide a service to the public, the motive of a business is to provide a profit to the owners.  

It is true that there are many efficient, honest, responsive businesses, and many that are not (Hello banks and other businesses that created the Great Recession). The same is true of government agencies –neither more nor less true.Image result for thumb on the scale

However, the thumb on the scale is the profit motive, which inexorably tilts the private effort toward cutting quality and service, while increasing costs.

Let’s face it: If private businesses were so efficient, honest, and responsive, we wouldn’t see so many bankruptcies and so many businessmen being fined for their misdeeds.

(Does multiple bankruptcies and being fined for misdeeds sound like any businessman you know?)

Another excuse for privatization is the private sector’s willingness to take on projects a government can’t afford. This, however, applies only to monetarily non-sovereign state and local governments, not to the Monetarily Sovereign federal government, which never can run short of its own sovereign currency and can afford anything.

And, if a state or local government can’t afford a project, the result of privatization either is greater efficiency (which rarely happens) or a combination of service reductions and price increases (which almost always happens).

Thus, privatization of state and local government projects generally is a fast road to the public paying more to receive less.

By contrast, privatization of federal projects is the fast road to large profits for the already rich “in-crowd” of campaign contributors.

Here are some excerpts from an article that appeared in the 6/5/17 LA Times:

President Trump announces plan embracing privatization of air traffic control system

President Trump will push for the separation of air traffic control operations from the Federal Aviation Administration.

“We’re really moving into the modern decade of technology in air traffic control. It’s a system where everyone benefits from this,” White House economic adviser Gary Cohn said in a conference call with reporters.

There are about 50,000 airline and other aircraft flights a day in the United States. Both sides of the privatization debate say the system is one of the most complex and safest in the world.

You may wonder, “Why privatize a system that is one of the most complex and safest in the world.”

U.S. airlines have been campaigning for more than two decades to separate air traffic control operations from the FAA.

That effort picked up steam last year when the union that represents air traffic controllers agreed to support a proposal to spin off air traffic operations into a private, nonprofit corporation in exchange for guarantees that controllers would retain their benefits, salaries and union representation.

The federal government could give those guarantees without privatizing the system.

Airlines have been lobbying vigorously for the change, saying the FAA’s NextGen program to modernize the air traffic system is taking too long and has produced too few benefits.

The changes would involve moving from the current system based on radar and voice communications to one based on satellite navigation and digital communications.

The federal government could pay for those changes far more easily than any private operator could.

Airlines and the controllers union say that the FAA’s effort to modernize the air traffic system has been slowed down by the agency’s dependence on inconsistent funding from Congress and occasional government shutdowns and controller furloughs.

As a result, the FAA has had difficulty making long-term commitments with contractors.

We have a military, funded by the federal government. The military continuously upgrades its systems. The military makes long-term commitments with contractors. Why can’t the FAA do what the military does?

Privatization would not solve the funding problem.

Union officials have complained that the FAA has been unable to resolve chronic controller understaffing at some of the nation’s busiest facilities and pointed to the modernization effort’s slow progress.

What would a private company do to “resolve chronic understaffing.” Same situation as above. Privatization would not solve the real problem: Funding.

But FAA Administrator Michael Huerta has said the agency has made progress during the past decade in updating its computers and other equipment in order to move from a radar-based to a satellite-based control system.

Huh? If the agency has “made progress,” why hasn’t it made more progress? Funding?

Democrats have largely opposed the changes, warning that the proposed board overseeing the estimated 300 air traffic facilities and about 30,000 employees would be dominated by airline interests.

Hmmm . . . a board dominated by the businesses it oversees. What could possibly go wrong with that? It would be akin to having a bunch of anti-regulation people run the SEC, the Treasury Department, and the EPA.

Oops, President Trump already did that. Anti-regulation is a Trump pattern, as you can see by examining his cabinet appointments.

The oft-bankrupt creator of the notorious Trump University con and the Trump Foundation scam has good reason to despise business regulation. Allowing the airlines to dominate the FAA would be in line with his policies.

They have also pointed to the unprecedented safety under the current system and noted repeated computer system failures in recent years by U.S. airlines, questioning whether they are ready to handle complex technology modernizations.

No wonder the airlines oppose regulation. They themselves can’t handle the change. If they dominate the board, they wouldn’t have to spend so much on “complex technology modernizations.”

Business aircraft operators, private pilots and nonhub airports have also expressed concerns they may need to pay more and get less service under a private corporation even though airlines have promised that won’t happen.

Would you trust the airlines’ promises, especially if they are the ones who will run the FAA?

In general, the privatizing scam works like this:

  1. Skim money from a federal agency.
  2. Act “shocked, shocked” that the agency can’t do its job.
  3. Determine that the “solution” is to privatize.
  4. Turn over the operation to a company owned by a big political donor.
  5. Watch as the cost goes up, the service goes down, and the donor gets rich.

Consider a parallel situation, airport security:

The TSA said it has found no difference in performance between federal workers and private contractors.

What would really help long lines is if Congress stopped siphoning off money from the TSA, said Christopher Bidwell, vice president of security for Airports Council International North America, an advocacy group for airports.

Sounds familiar? Congress underfunds, then says the solution is not money but privatization.

Because TSA is underfunded, basically,” Bidwell said, “the void has been filled on a voluntary and temporary basis by airports and airlines as well.”

Every passenger pays an $11.20 round-trip security fee. Bidwell said since 2014, Congress has been redirecting a third of that money, which adds up to over a billion dollars a year. And since 2013, TSA has laid off around 10 percent of its staff.

Bidwell said there just aren’t enough workers, public or private. Until that changes he said, many long lines await.

Congress has no financial need to take dollars from TSA. The federal government never can run short of its own sovereign currency.

Congress underfunds in an attempt to make TSA fail, then blame the failure on government — and then privatize as a phony solution to the underfunding.

This is the same privatization scam Trump wishes to perpetrate.

Unfortunately, we also must deal with the Libertarians (aka the Anarchists) who believe any government is bad government, so will go along with any plan, no matter how inept, that eliminates government.

For instance:

Should Progressives Call for Privatizing Parts of Government?
By Rob Kall

We need to privatize government to protect ourselves from Trump-appointed foxes in the henhouse.

There’s the irony — the belief that privatization — i.e. appointing rich private donors to get paid for government work somehow protects us against the henhouse foxes.

That’s usually something that conservative and corporations want, but now, we have a government that has been taken over by, despoiled by and infected by a psychopathic narcissist who allows decisions to be made by an extreme right wing bigot, Steve Bannon.

So instead, we are to be taken over by an extreme right-wing corporate bigot?

So the way that Americans need to protect themselves is to take a bottom up approach to privatizing government. Not privatize it so it is run by big corporations, as Republicans and corporatist Democrats routinely do, but privatize it so it is run by groups of responsible, respected individuals who are accountable to people.

They could even be elected in privately held but open elections.

Hmmm . . . now let me think: “Elect responsible individuals accountable to the people.” Isn’t this what’s called “government“?

We need to replace the EPA since it is no longer a trusted organization/institution. We need to replace health care organizations. We need to replace the Justice Department.

Hmmm, again. Is this something like the notorious “Repeal and Replace” idiocy promoted by the Republicans, who had great plans for “Repeal,” but after seven years, still have no idea how to “Replace”?

I wouldn’t be surprised, if these efforts take root, that the government agencies that we are defending ourselves us by privatizing, would go after the new privatized entities, accusing them of horrific crimes.

I’m not sure how that works, Mr. Kall. When the government decides to privatize an agency, they no longer exist.

So who exactly would “go after the new, privatized entities,” the government that made the decision to privatize, or the agency that no longer exists?

Bottom line: Federal privatization is a scam when done at the behest of a crooked President, or an exercise in ignorance if done by the Libertarians.

Either way, it’s a bad idea.

Rodger Malcolm Mitchell
Monetary Sovereignty


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.
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.
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.
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.
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.


11 thoughts on “Here we go again: More privatization scam

  1. Privatization is one of the greatest scams perpetrated by governments all across the [at least Western] world. So your blog is very timely.
    It’s running riot here in Australia.


  2. And now for another “Repeal and Replace” Trump fiasco:

    Trump opens ‘infrastructure week’ without a plan

    Yet the documents Trump signed amid all the pomp were not new laws or even an executive order. They were routine letters to Congress, relaying support for a minimally detailed plan in Trump’s budget to transfer control of the nation’s air traffic control system to a private nonprofit group.

    This was the ceremonial opening to Trump’s full week of infrastructure promotion, which is scheduled to include a speech along the Ohio River on Wednesday and a White House meeting with mayors and governors on Thursday.

    But it was also the latest example of a pattern of the administration claiming to have sent Congress fully constructed policies when it has provided only facades — creating the appearance of substantive heft and legislative action even in cases where there is next to none.

    Incompetence + Ignorance = The Trump Administration

    Liked by 1 person

  3. You may remember how Trump chastized “crooked Hillary” for the Clinton Foundation, while it actually was the Trump Foundation that was fined for paying Trump’s personal bills.

    Well, nothing has changed:

    Report: The Trumps funneled thousands in donations to a kids-cancer charity into the Trump Organization

    Trump has been crooked his entire life, and now that he is in the White House, with all that easy new money floating in front of his and his kids’ eyes, does anyone really think he has reformed?


  4. Does anyone think we can have a just economic system as long as the scam called “capitalism” holds sway in people’s minds? Is basic income equality for an entire society impossible? Why? Let me offer an answer to that: Rich people will never let that happen.


    1. The majority of capital gains don’t come from capital. They come from land and private monopolization of locations. Capitalism can be non-regressive as long as the government decreases the private purchasing power of landholders through a land value tax in proportion to the increase in land values it creates via public spending on territorial goods such as infrastructure. If it just spends without taxing landholders then it subsidies landholders at the cost of renters, as the primary beneficiaries of government spending on public goods are those with private monopolies on the locations improved by infrastructure, rather than workers who must pay private rent to access the locations.


  5. The beginning of your post lays out reasons against for-profit privatization. Yet the air-traffic control privatization appears to put it in the hands of a non-profit. Canada, the UK, Australia, New Zealand, Germany, Italy, Switzerland, Spain all appear to use non-profit corporations to provide air traffic control.

    It might be wise to distinguish between for-profit privatization and non-profit privatization, where the NGO is chartered by the federal government for a limited and specific purpose rather than for general profit-seeking.

    Liked by 1 person

  6. As a resident of Cook County, IL, I can tell you that taxes on land and improvements are among the most crooked of all.

    That said, land is an obsolete subject for taxes. We no longer are a land-based economy. Example: How much land does Facebook occupy compared with its wealth? Microsoft? The advent of computers and Artificial Intelligence makes land even less needed.

    While the federal government has no need for taxes, there are two uses for federal taxation: Control over “sin” products, and narrowing the gap between the rich and the rest.

    Something akin to a wealth tax on the very rich would be appropriate.


    1. 1. To kill public sector unions & force lower wages.
      2. Because non-profits can claim they have “very little money,” rank and employees are paid a pittance with virtually no bargaining power.
      3. Allows the fox to directly guard the hen house via self-regulation .
      4. More public dollars flow into the hands of you know who.

      Yeah, it’s just another privatization scam.


  7. Here is a short, well-written article advocating the establishment of a nonprofit corporation to control air traffic: Time to Get U.S. Air Traffic Control Out of the 1960s

    It claims a nonprofit corporation will bring American air traffic control “up to date.”

    Read the article and let me know if you have any insight into these questions:

    1. Who would own the “nonprofit air traffic corporation?”
    2. How would the owners be compensated?
    3. Who would run the “nonprofit air traffic corporation?”
    4. What makes them “nonprofit”?
    5. Who determines how much money the corporation receives from “aircraft operators”?
    6. Who would regulate the “nonprofit air traffic corporation”??
    7. What would motivate the nonprofit corporation to spend money on air traffic control improvements?


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