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Evening Focus: BPI Faculty Debate – Privatization, Part 2

March 9, 2011

Our Evening Focus

Evening Focus: BPI Faculty Debate – Privatization, Part 2

Does privatizing government services spur economic growth? How do we ensure oversight? And how far is too far? (More)

Last night in Evening Focus we began our faculty debate on privatizing government services. Tonight we conclude that debate. We rejoin our moderator, the BPI Squirrel:

Squirrel@BPI: Good evening, and welcome back to the second part of our faculty debate on privatization here at Blogistan Polytechnic Institute. Once again, our panelists are: Roby NJ, Norbrook, addisnana, DWG, winterbanyan, JimW, and RevGerry.

We found all of the sponge golf balls after last night’s debate, so once again each panelist has one. Again, these are to entertain Pootie the Precious, and while we’re sure they won’t cause any physical injury – does he look injured to you? – please don’t hurl them when you disagree with someone.

We’ll follow the same format tonight: I will ask three questions, and for each I’ll select one panelist for a Response and another panelist for a Rebuttal. The panelists for each response and rebuttal were selected at random. However the list was hung on a clothesline near the hot tub faculty lounge overnight, rather than returned to the bottom of Pootie the Precious’ litter box. I hope you all are as grateful for that as I am.

Our first question tonight:

With such high government deficits, won’t privatization save taxpayers money and spur economic growth?

The Pro-Public Response goes to winterbanyan:

winterbanyan: Mr. Squirrel, I love those ear tufts. Do you have any idea how old a human has to get to compete with you on ear tufts?

Squirrel@BPI: Thank you. I noticed that older humans also have ear tufts. Do you also grow fluffy tails?

winterbanyan: Um, no, but we often feel like we chase them. On the question, privatization may initially seem to save taxpayers money as the lowest bidder wins the contract. Unfortunately, the lowest bidder also performs about as you would expect: since private business needs to make money, if they can’t make it off the contract, they make it by cutting corners. But an even bigger danger comes later: once important tasks have been turned over to private business, the government is no longer able to perform them, through loss of skills and/or equipment. The private business no longer faces competition because the start-up costs would become too great. So then we have the government contracting out services to monopolies who can charge more. Competitive bidding is forgotten and the public fisc becomes a private trough for a handful of businesses.

Thank you for that Response, winterbanyan. And the Rebuttal goes to Roby NJ.

Roby NJ: Is this because of the hat? It’s not a Smug Corporatist Hat anymore. I sold billboard space on it for “Firewalker Adventure Tours.” See, I underlined “Fire walker” and crossed off “Adventure Tours.” It’s now a Wisconsin CheeseHead Progressive Protest Hat! Doesn’t that count for anything?

Squirrel@BPI: You sold ad space on your hat? This is progressive … how?

Roby NJ: Good point. OK. Save taxpayers money and spur economic growth…. Perhaps this is the time to distinguish between good and bad privatization. I can’t defend privatization that’s done for bad reasons, or where flawed assumptions lead to services being contracted out to inept privateers, with little or no oversight. We know there is an awful extreme, but we shouldn’t fall for slippery slope fallacies and assume that privatization can’t be done well. It can also include the sale of government assets and/or auctioning off rights to use a public good for commercial purposes. Governments gain an immediate budget windfall, and are also then off the hook for a money-losing operation. The resulting private operation generates profits, pays income taxes, and has natural market incentives to improve, grow, and expand, generating even more positive economic activity and taxable revenues.

Squirrel@BPI: Thank you for that Rebuttal, Roby. Again, please don’t hurl the sponge golf balls, even if it can’t possibly hurt him, not even the tiniest little bit. We’d like to keep this civil.

Our second question is:

How can we ensure oversight of public services when corporations claim “proprietary secrets” in bidding for and performing government contracts?

For the Pro-Privatization Response, we turn to Roby NJ:

Roby NJ: I’m sorry, were you talking to me? ‘Cause I’m busy making a protest sign. How do you spell Squirrel = Mubarek = Walker?

Squirrel@BPI: It’s spelled I-A-M-A-C-O-R-P-O-R-A-T-E-T-O-O-L.

Roby NJ: T-O-O-L. Got it. Thanks. The question is about transparency and oversight, right? Okay. This may be more of a philosophical argument on ethical reasoning models. Those who insist on explicit transparency into the inner operations of private, competitive businesses are deontologists: formalists who believe that ethics are expressed in the intentions, process, and actions. Businesses are by nature consequentialists: they measure virtue by the final utility. It’s an argument over whether the ends justifies the means – if in the end a business has accomplished the greatest good for the greatest number – or if business operations have to be scrutinized to ensure that no end is accomplished through improper means. Businesses have to comply with all laws, and should operate with high ethical and moral standards, but they also want to protect their unique operational competitive advantages.

Squirrel@BPI: Thank you for that Response, Roby. The Rebuttal goes to JimW, and by the way, does your barber trim those ear tufts? Humans should respect badges of age.

JimW: Thank you, Squirrel, I think. As to transparency in contracting, Congress is considering this issue right now. As Jeannette Franzel of the GAO testified, “DOD accounts for approximately 70 percent of the federal government’s annual contract spending – $367 billion in fiscal year 2010 – and other federal agencies accounted for $168 billion in contract spending. With hundreds of billions in taxpayer dollars spent on government contracts, strong contract oversight is essential.” Other testimony showed unjustified contracting costs as high as 15% of the contract budget. That is ample reason to doubt that respecting corporations claim of “proprietary secrets” in bidding for and performing government contracts would result in anything other than further rewards to contractors at the taxpayers’ expense. When you are talking $33.9 billion (with a B) dollars you are talking real money.

Squirrel@BPI: Thank you for that Rebuttal, JimW. Our final question of the night is:

With so federal, state, and local contracts already in place for private schools (charter firms), regulators (consulting firms), police (security firms), and even prisons, how can we roll back the tide?

The Pro-Public Response goes to RevGerry:

RevGerry: Squirrel, thanks for inviting me to this party. Most excellent guests, and you yourself are very cute with your adorable ear tufts and fluffy tail. But I am so tempted to throw this sponge ball; it looks like all the macadamia nuts are gone.

On the question, the people have been deceived into choosing guardians whose loyalties lie elsewhere. Say we need acorns to live and our government guards and manages our means of survival. If big-money campaigns deceive voters into believing that the best and cheapest acorns come from candy factories, they vote for people loyal to candymakers. Tree farmers become unpopular. Private oak forests become worthless. Officials sell off public forests to candymakers at two cents on the dollar, and create a national candy diet – sweet but not nourishing. To reverse this, the public must come to see the truth. We must grow a United Citizenry to take money out of elections and fire false guardians. We must re-establish honest debate and a fair and honest economic playing field. And we must never again turn over our basic common survival to businesses, whose legal mission can never be to guard our good.

Squirrel@BPI: Thank you for that Response, RevGerry. The final Rebuttal goes to … Roby NJ:

Roby NJ: You know, fine. I get it. I’m sorry about the fur hat thing. My ears were cold. So I have to spend two days defending corporatism and privatization, and get pelted with sponge golf balls and stray nuts. It’s OK. I can take it. Life is good. It’s not like I live in a state where the governor wants to undermine unions and make school teachers the enemy of the public…. Oh wait, I do.


Roll back the tide of privatization? Good luck with that. Maybe the good RevGerry is right, and many privatization decisions are made for political reasons, following an ideology, not an economic logic. Thing is, you can get as political as you want to try to undo it, but winning a couple of elections won’t be enough. You’re going to need facts and a lot of power. And the facts that matter are costs and efficiency. What’s it going to cost to switch back? Show how bringing a public service back into government will be more efficient. Enough more efficient to overcome inertia and costs of changing. And pick your battles. Look at the political climate and be realistic. If a public service has become an entrenched private sector business, government should make and enforce rules to keep it honest and accountable. I’d change your goal from “roll back the tide” to “draw a line and allow privatization only when it’s provably in the public interest.”

Squirrel@BPI: Thank you for that Rebuttal, Roby. And that’s the last word for now, as we’re out of sponge golf balls and out of questions. I’d like to thank all of our panelists for participating in this debate. Please give them a big round of applause.

Thank you all for joining us. Please talk amongst yourselves. I’ll be in the kitchen looking for macadamias.

Good night and good nuts.

  • Lake Toba

    Great discussion!

  • glendaw271

    You know, as much as I’ve always been fond of the squirrel, I’m beginning to think that maybe he’s being a little hard on poor RobyNJ, especially since Roby has to put up with Christie as his governor. 🙁

    Anyway, thanks to all of you who took part in the discussion. It has been enjoyable and I’m still feeling conflicted on this issue. Having worked as a contractor, I know that the work that is contracted out can be done well. (Why no, I didn’t break my arm while I was patting myself on the back. Why do you ask?) But, of course, now that I work directly for the government (at a lower wage but at least with a pension plan for now), I realize how hard the government workers have it as well. All-in-all, I guess I come down to this — the work should be done directly by the government as long as the expertize is theirs. I think that the oversight of the contractors makes it more difficult to make sure that the work is done efficiently by privatization.

    Just my $.02

    • NCrissieB

      This is increasingly a problem, Glenda:

      [T]he work should be done directly by the government as long as the expertise is theirs.

      When services get privatized, contractors often hire the experts who used to do the same jobs for government. The expertise follows those experts out the door. That makes meaningful oversight more difficult, as the government has no one in-house to challenge private experts’ claims of “This is as good as it can be done.”

    • Jim W

      On most Government Contracts the Defense Management Agency provides oversight. Some individuals would like to contract oversight as well as performance. I think this is called “Fox guarding the hen house.”

      • NCrissieB

        That’s true for DOD federal contracts, Jim. There are also non-DOD federal service contracts, and state and municipal service contracts as well. In some agencies, contract oversight has been contracted out. And yes, that’s very much a case of “Fox guarding the hen house.”

  • Great news! Chef ordered in extra macadamias for tonight. I filled a giant bowl – plenty for everyone – but it’s too heavy for me to carry from the kitchen. Would anyone like to help?

    • glendaw271

      I can carry some of those for you, but do you think you could maybe not throw any more at Roby?

      I’d hate to carry them from the kitchen just to have them become more ammunition. Especially because nuts are one of the items that are still on my low-fat diet list of good things to eat.

      • For the record, I never threw any macadamias at Roby. That would be a waste of perfectly good macadamias. Other people threw sponge golf balls, despite my telling them not to, even if those sponge golf balls couldn’t possibly have injured him.

        • glendaw271

          Sorry. 😳

          • It’s okay. And thanks for helping carry that huge bowl. Now we can sit and eat macadamias together.

            • Roby NJ

              Squirrel, you’re a peach.

    • I am so happy! Last night I had to resort to asking Lake Toba to leave some p-nut M&M’s from that big M&M bag for guests who might come expecting refreshments because we couldn’t find any nuts… and happily, that happened. But Southwest Blogistan is pretty far to travel from, maybe someone else could help carry them?

  • Good evening, sports fans, may some of the golf balls actually approach the little hole thingies in the ground… are you sure this isn’t ping-pong?

    Roby, I am wondering about this…

    It can also include the sale of government assets and/or auctioning off rights to use a public good for commercial purposes.

    Since we here drink water from the Colorado River, the fact that (foreign, yup) companies have rights to mine uranium in the Grand canyon is truly disturbing.

    What is the mechanism by which anybody has the authority to sell these mineral rights?

    How do the people retain control over such matters?

    • NCrissieB

      winterbanyan discussed this at length yesterday and today in Morning Feature, Gerry.

      • 😳

        have been busy during the daytime day, sorry. I’ll go read them now.

      • OMG, winter, before I was concerned, now I am terrified. It is even MUCH worse than I had imagined. OMG.OMG. I am completely sick to my stomach. Tucson drinks Colorado River water.

        We are totally at the mercy of private companies to whom we don’t matter, and OUR land is being plundered without our permission. I remember writing in my Tucson piece about a Spanish priest coming to Tucson, planting a flag and claiming it for Spain, and the native tribes who lived here didn’t even have a clue that land could belong to anyone. That’s how I feel. How can a company plant a flag and say this land is mine to mine?

        • winterbanyan

          Feel free to pass the links along to everyone you know who is concerned, Gerry. I wrote it because of you. Everyone needs to be concerned.

    • Roby NJ

      Speaking of water, the movie “Flow” includes many examples worldwide, including in the U.S., of corporations being granted ownership of drinking water. Shocking privatization in drought-plagued countries, under the guise that water shortages are the fault of people who drink too much, and the solution is to charge indigent people for the little water available, that was previously free.

      And in Michigan, Nestle Co. was literally granted right to remove as much pure water from a community’s streams and aquifers as they wanted to put into bottled water to sell.

      • Roby NJ

        Link to web site for the film “Flow.”

      • NCrissieB

        Yes, the problem is always those pesky poor people who want to drink water and survive and stuff. Don’t they realize that doesn’t leave enough water to maintain the manicured acreage around some rich guy’s seventh home?

  • addisnana

    It seems like there are two separate debates going on. (Maybe there’s more but I am taking the simple approach)

    If the debate is about what makes sense to privatize for a variety of sound reasons, we have one discussion.

    If privatizing is really only about giving private companies a chance to make money off of what were govt. services, it becomes one of ideology and not of decision criteria.

    My personal responses are very different based on the nature of the debate. I don’t want to sell off parks, allow mining or drilling any old place, or ignore safe air and water laws just to let corporations make money with all the hazards and costs externalized.

    How we respond, or at least how I respond, is different in the two scenarios. In the ideologically driven lets take care of corporations, my heels dig in and reason can be seen flying out the window. :roll:

    • NCrissieB

      There’s some of both happening, addisnana. In some cases it does make sense to privatize a service. But a lot of it is ideological. In Wisconsin, Florida, New Jersey, Ohio, and elsewhere, Tea Party-backed governors are pushing plans to privatize everything they can. Governor Scott Walker asked the Wisconsin legislature for authority to sell off public utilities and other services, without competitive bidding, if he decides an offer is “in the best interests of the state.” It looks like the legislature will now give him that unfettered authority.

  • addisnana

    May I just thank Roby for putting on a corporate hat and sensibly representing their positions. Given this group, it could not have been an easy task. Hats off to Roby and all the panelists. This is a fun way to get at a very complex topic. Thanks Crissie.

    • Thanks, Roby, yes. Not only have you fairly represented your corporate masters (ahem), but you were such a good sport when you tripped on those balls on the staircase. I am sure that cast on your arm will be full of wonderful, comforting messages before you know it and your one-handed typing skiils will blossom.

      Great idea, Crissie, yes. Thanks to everyone for playing.

      No I am not signing off. Just sayin’.

      • Roby NJ

        Thanks. I was finally able to get that hat off. Next I have to find squirrel and make up. Always good to have squirrels on your side.

        • Well since you called me a peach – one of my favorite treats – we can definitely be friends. I’ll even share some macadamias with you. You definitely earned them this week.

    • JanF

      I agree. This format was entertaining and informative and I hope we do it again.

  • Costs and efficiency. What’s it going to cost to switch back?

    Hmm, Roby, there might be another factor. (Nice job evading the nuts and balls yesterday and today)

    Example: School lunches used to be pretty good, and the ladies in the cafeteria prided themselves in their work, improved recipes to add nutrition and flavor to get the kids to eat their vegetables, knew which kid liked beets and which liked green beans and so on.

    After the lunchroom was outsourced, it became mac and cheese and chicken nuggets – stuff that can be mass produced without spoiling, and at very little expense. (a candyfactory, in my analogy)

    Some jurisdictions (Berkeley, CA, I think for one),:mrgreen: have taken the lunches back, added school gardens, made classes out of the entire process – not just ag classes – math, science, etc, and the process is better for everyone.

    This is not added just efficiency (academics combined with lunches). The thing is that the pubic sector workers were interested in adding VALUE that the private sector had no interest in.

    • Roby NJ

      Yes, RevGerry. In the sense that “all politics is local”, there is a lot that can be undone at that local level, based on real consideration of benefit and value that is not just economic calculations. The people have voice.

      And privatization at the federal level (as opposed to outsourcing such as Blackwater) is more often inept, misguided, Bush-ish bush league stuff. (I’m less familiar with.)

      But what I worry about most is what states can do. Wisconsin is in the news now, but states faced with budget crunches (we discussed in another BPI series how states are the entity really stuck) can end up privatizing critical mission services that will be very difficult to undo, economically and politically.

      • I worry too, Roby – remember I’m in Arizona, epi-center of crazy – and they have the populace’s tail in a knot about teh scary brown, and nullifying federal law. Meanwhile, they are selling off state properties, canceling most Medicaid, disbanding the University Board of Regents, defunding K-12 and higher education (and giving vouchers to rich people for private schools) and more then I can remember.

        The RW planned carefully.

        I am hoping for a general strike in Wisconsin or something BIG to turn this thing around. But Crissie is right, we probable have to grow a solution, like the RW did.

    • NCrissieB

      Thus the widespread conservative criticism of First Lady Michelle Obama’s campaign against childhood obesity. They’re making money selling those kids junk food in schools. How dare she say that diet isn’t healthy?

  • JanF

    Privatization is the current Big Topic because the low turnout mid-term put a bunch of ideologues in charge of so many states.

    Christie was already in place as the first “referendum” in a low turnout election that allowed people to vent their anger at the HCR battles of 2009.

    Walker, Daniels, Brandstad, Scott, Kasich, Snyder. All from the same mold although I think that Scott is just a run of the mill crook and not as ideologically imprinted as the others. Branstad is old school Republican who is following the prevailing winds.

    Naomi Klein was on Rachel Maddow’s show last night and her theory the Shock Doctrine suggests that the right-wing is exploitiong disaster-shocked people to advance their agenda. Their agenda includes privatization. She believes that the reason it did not work in Wisconsin was because we exposed it for what it was right away. We did not let it get defined as an emergency and we called BS on Scott Walker.

    That is how we push back. We call BS on the phony savings from privatization and we do what Norbrook suggested: look at every single privatization suggestion and see if it meets the criteria for privatization. If the work being done is vital and a key part of good government, it does not get privatized. That means restaurant inspections, water treatment plant inspections, testing, oversight. You cannot outsource the part of government that makes sure that services are completed and get to the right people.

    In my city, garbage collection was outsourced. There is no public interest in doing that in-house. Every two years the contract is looked at. There are other waste disposal companies so there is competition on price and performance. That is a valid use of privatization. However, if the people responsible for reviewing the contracts every year were contractors instead of city workers, that would not be okay. The ultimate responsibility for oversight has to reside in an elected official or someone in under the direct line supervision of one.

    My 45 cents.

    • NCrissieB

      This is essential, Jan:

      Naomi Klein was on Rachel Maddow’s show last night and her theory the Shock Doctrine suggests that the right-wing is exploitiong disaster-shocked people to advance their agenda. Their agenda includes privatization. She believes that the reason it did not work in Wisconsin was because we exposed it for what it was right away. We did not let it get defined as an emergency and we called BS on Scott Walker.

      That is how we push back. We call BS on the phony savings from privatization and we do what Norbrook suggested: look at every single privatization suggestion and see if it meets the criteria for privatization. If the work being done is vital and a key part of good government, it does not get privatized. That means restaurant inspections, water treatment plant inspections, testing, oversight. You cannot outsource the part of government that makes sure that services are completed and get to the right people.

      Yes, there are also partisan political motives for Gov. Walker’s union-busting plan. Unions usually support Democratic candidates, and are the only real counter-balance to corporate funding of GOP candidates. But to focus on that is to miss what I think is the bigger agenda: turning core public services into corporate profit-centers, and framing Government As Business … ultimately a Government, Inc. where only shareholders vote, and get as many votes as they have shares.