Privatization May Cost Us More (Congress, salaries, ethical, lawyers)

[Pandamonium]

The claim is often made that the private sector can perform all functions of government “better” and less costly to the tax payers and is based on the ideology of less government. In Taking the High Road: Local Government Restructuring and the Quest for Quality, Michael J. Ballard and Mildred E. Warner point out that contracting out is often more costly for the tax payers who in turn must face higher costs and less quality in services and may result in bringing the those services back in-house.

Private companies do not have to adhere to the same type of transparency as the local government. More efficient translates into less regulation. Less regulation translates into noted abuses in labor, the environment, questionable ethical and even criminal practices, and may harm or destabilize local economies. Contract writing is a business in and of itself. In writing a contract the name of the game is to place as much risk as possible back on to the government. Opponents argue that the problem is in the contracts itself which allows them to assume no responsibility for their actions.

One of the most famous examples is that of Waste Management Inc (WMI). For a short history, including anti-trust investigations, on WMI up until 1992 please read here. In March of 2002, the SEC filed suit against the founder and five other top officers for massive fraud that occurred between 1992 and 1997. For those interested in the Final Judgment against James E. Koenig, look here. Investors lost more than 6 Billion. WMI also hired a man by the name of Joseph E. Lauricella , in May of 1995, who worked to destroy Cadiz, Inc. because they opposed a landfill . The above link includes information on the “Cadiz Kill” memo.

WMI’s contracts include the money that is paid from the government to provide the service, plus in many areas to set the rates for fees. In many cases, they may be the only provider in the area, or pretend like they are, and face no real competition and are still known to maintain bullying tactics. Trail Ridge Landfill , in Jacksonville Florida, needed to be expanded . The city owns it but the WMI ran it. They rejected a 35 year, $750 million extension for Waste Management. Taxes having been reduced much earlier, it made sense for other companies to bid. WMI was not going to let that happen and decided to sue the city one month later for breach of contract. They came to an agreement that actually will cost 37 million more dollars and the hike will actually go up to $12.50 a month starting October 1st. And now another lawsuit is underway.

When management receives large bonuses for reducing cost they in turn place their employees at significant risk that may result in injuries or death by running one person when it is necessary to have two, like in the case of Raul Figuero, a mechanic whose body was found severed in half. He had requested a ladder and then a second person. He was told neither was available. After his body was found a ladder mysteriously showed up on the site.

In Harm's Way notes the following: WMI’s safety program, “Mission to Zero (M2Z)” emphasizes “maintaining a zero tolerance for unsafe actions and decisions.” Yet Waste Management employees point out that the assumption behind M2Z-that all accidents or injuries stem from workers’ behavior-distracts attention from systemic sources of workplace injury, such as poor engineering or dangerous, company-required work practices. Workers give numerous examples of these practices at Waste Management workplaces.” Waste Management also recently settled an unpaid overtime suit for 7 million dollars. Often, these people work 6 days a week 10 hour days and while the company does not pay for the lunch break it also does not allow them time to eat.

In 2006, after Hurricane Katrina, Nagin suspended the zoning laws and allowed Waste Management to open a controversial landfill, Chef Menteur in New Orleans East, next to a Vietnamese American community and across from Bayou Sauvage. On August 14, Chef Menteur closed but not without the threat of a lawsuit.

From the last link:
　

We were trying to plan a joint sampling effort, but negotiations broke down over what we wanted to measure and what they would allow us to measure," says LSU engineer Dr. John Pardue, whose research led to the "White Paper," an article critical of the landfill's environmental impact. "The water DEQ tested came not from the landfill, but rather an impoundment filled with groundwater next to the landfill. That's not really an honest measurement -- they didn't measure what they had in the landfill."

This is the White Paper. Inside here is a chart that shows the available space at other landfills that were more appropriate. It was that 22% of all revenue gift that got them.

Privatization, more often than not, costs us more in taxes, fees, less quality, and labor and environmental issues. The purpose is profit and we will pay in more than one way. Therefore, what should be privatized deserves great scrutiny.
　
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Taking the High Road Link: http://government.cce.cornell.edu/do...heHighRoad.pdf
Final Report (2nd Link): http://www.p2pays.org/ref/26/25041.pdf
SEC (3rd Link): http://www.sec.gov/news/headlines/wastemgmt6.htm
Final Judgement (4th Link): http://www.sec.gov/litigation/litrel...08/lr20420.htm
Lauricella (5th Link): http://articles.latimes.com/1999/jun/20/news/mn-48448
Another Law Suit (6th Link): http://jaxpoliticsonline.com/2010/06/02/city-council-concealment-exposed-in-latest-trail-ridge-suit/ (broken link)
Raul Figuero (7th Link): http://edlabor.house.gov/documents/111/pdf/testimony/20090430JesusRojasTestimony.pdf (broken link)
Waste In Harms Way (8th Link):
http://www.teamster.org/sites/teamst..._Harms_Way.pdf
Waste Management Settles for 7 Million (9th Link) http://www.lawyersandsettlements.com...e-suit-7m.html
Vietnamese-American Community (10th Link): http://www.advancingequality.org/files/AAJC_Landfill.pdf (broken link)
Bayou Savage (11th Link): http://www.fws.gov/bayousauvage/
Chef Menteur Closing (12th Link): http://bestofneworleans.com/gyrobase...&oid=oid:36697
White Paper (13th Link): http://www.lwrri.lsu.edu/downloads/w...nal.draft2.pdf
14th Link: http://hydrology.rice.edu/SSPEED_200...2/6_Pardue.pdf

　
　
　

[texdav]

The fact is that government is largely run by letting contracts to private businesss. It is a very inefficent business as all of congress agrees . Its much cheaper to have priovte businesss contract sirectly with the consumer than the corrution involved in plical contracts by politics.look at the continued probelms of the poastal system and even military contracts many of which are let and the military does not even want them.Government contracts is perhaps the post corrupting of any governamnt action in this country.

[jm31828]

Very true! The private sector would only be involved in something if they were able to make profits, which of course means charging more than a government entity would.
A perfect example is electricity- several places I have lived had government-run public utility companies for electricity- they run efficiently and rates are very cheap. This is because these are funded to provide the service, we are billed for that service and mostly only for that service- no profits built in.
And it happens time and time again, when these are turned over to private companies around the country those rates soar.

[HighPlainsDrifter73]

Originally Posted by jm31828

Very true! The private sector would only be involved in something if they were able to make profits, which of course means charging more than a government entity would.
A perfect example is electricity- several places I have lived had government-run public utility companies for electricity- they run efficiently and rates are very cheap. This is because these are funded to provide the service, we are billed for that service and mostly only for that service- no profits built in.
And it happens time and time again, when these are turned over to private companies around the country those rates soar.

I agree with this. Whenever they talk about privatization of utilties, watch your wallet.

[GregW]

The primary difference between a privatized service and a commercial equivalent is management overhead. Public managers never get paid as much as their private sector equivalents. Public managers may be paid in the low hundred thousand but upper level private sector managers can make into the mid millions. The other difference is the public sector only has to pay the interest on the loans required for the capital costs of a project. The private sector has to pay more for the same loans and make a return on the invested capital. Both cost more than the public sector equivalent.

Privatizing government services is very popular with the private sector because profits are nearly guaranteed and extra is always available by abusing the frequently non union workforce. Privatizing is just another welfare system for the private sector.

I believe all public services, waste disposal, water supply and sewage disposal, street maintenance and similar should be done by municipal employees. Natural monopolies such as electric power, natural gas supply and the postal service should also be done by public employees. Just by eliminating the executive salaries and profit these things will cost the consumer far less than a private sector entity.

[jertheber]

The old saw about customer satisfaction being the force of private enterprise that guarantees their survival is just not true in our system of monopoly capitalism, business doesn't have to cater to the customer when they have a lock on goods and services rendered. Non profit health care co ops were the best thing going when they started out but as soon as they grew to being a sizable contender in the market we saw the abuses that were common in the for profit sector. Small decentralized business seems to be the ideal model but the high cost of technological innovations has made for a business climate that favored those who could bear that cost.

People love to denigrate the government services for their lack of efficiency but their notion of what constitutes an efficient enterprise is seldom in line with those principles of customer satisfaction, making a profit and satisfying the customer are two separate considerations and often times the customer loses out to the demands of profit. I don't think there is much of a substitute for the vigilance of public oversight in all things governmental, lacking that the government can easily become as much a pain as any private enterprise. To date, privatizing what was once a government responsibility hasn't shown much of an improvement over the non profit model.

[vaughanwilliams]

I don't think the push for privatization has much to do about saving taxpayers money-it has more to do with kick backs and the shedding of those pesky public employees. Let's take it a step further-let's privatize law enforcement. In most municipalities, it constitutes a huge percentage of the general fund.

[Pandamonium]

Why would you want law enforcement to be for profit? At no time should criminal justice be for profit. There is a huge failure for prisons.

[vaughanwilliams]

Originally Posted by Pandamonium

Why would you want law enforcement to be for profit? At no time should criminal justice be for profit. There is a huge failure for prisons.

I was trying to make a point that this rush for privatization is idiotic. As far as law enforcement being privatized, don't be surprised if it doesn't come up-after all, whoever thought that prisons would be for-profit institutions? We're fighting two battle fronts now, and a huge percentage of the support groups (including security) is in the hands of profit driven Corporatists. The privatizing of government services is a slippery slope lined with greased pockets.

The Private Arm of the Law - washingtonpost.com


The New York Times > Log In

[deckdoc]

big chunks of Arizona have for profit fire and EMT service~ rural metro is in fact a private fire department~my fire dept costs are higher than my property taxes