Privatization

see tag pvt

see PVTIZTION 2

see disaster capitalism

extraction?

These are privatization, financialization, militarization, and criminalization, which together are producing a steadily creeping authoritarianism—a new authoritarianism—to fit our times. Let’s call them the Four Plagues, or if we wish, “The Four Horsemenof Our Apocalypse,” from the Book of Revelations

aha: not accident that corps go for education money by pvt charter, then want subsidies:

charter pvtization but also heavy subsidy

http://www.prwatch.org/node/12830

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AHA? STEALTH VIA INDIV ACCTS EG SOC SECURITY B 43 AND HEALTHCARE [COLLEGE TUITION?]

AN 1225

US Sen. Rick Scott, former CEO of the company that was at the center of the biggest Medicare fraud scheme in American history, has emerged as the most vocal Republican proponent of healthcare reform, warning his fellow GOP lawmakers that continued refusal to engage with the issue risks a “slow creep” toward single-payer healthcare.

On Thursday, according to Axios, Scott (R-Fla.) is “convening a group of House and Senate conservatives on Capitol Hill to pore over fresh polling to develop GOP alternatives to the Affordable Care Act.”

Late last month, Scott unveiled his own proposal titled the More Affordable Care Act, which would keep ACA exchanges intact while creating “Trump Health Freedom Accounts” that enrollees could use to pay for out-of-pocket costs. Scott’s plan, as the health policy group KFF explained, would allow enhanced ACA tax credits to expire and let states replace subsidies in the original ACA with contributions to the newly created health savings accounts.

“Unlike ACA premium tax credits, which can only be used for ACA Marketplace plans, the accounts in the Scott proposal could be used for any type of health insurance plan, including short-term plans that can exclude people based on preexisting conditions,” KFF noted. “States could also waive certain provisions of the ACA, including the requirement to cover certain benefits.”

“While ACA plans would still be required to cover people with preexisting conditions under the Scott proposal,” the group added, “it is likely that the ACA marketplace would collapse in states that seek a waiver under his approach.”

Last month, amid the longest government shutdown in US history, Scott leapt at the opportunity to champion possible Republican alternatives to the healthcare status quo, despite his ignominious record.

In 2003, the US Justice Department announced that the hospital chain HCA Inc.—formerly known as Columbia/HCA—had agreed to pay hundreds of millions of dollars in penalties and damages to settle what the DOJ characterized as the “largest healthcare fraud case in US history.”

Scott resigned as CEO of Columbia/HCA in 1997, days after federal agents raided company facilities as part of the sweeping fraud probe. The federal government and company whistleblowers said the hospital giant “systematically defrauded” Medicare, Medicaid, and other healthcare programs through unlawful billing and other ploys.

“In 2000, Scott invoked the Fifth Amendment 75 times in a deposition as part of a civil case involving his time leading the company,” Florida Phoenix reported last year. A former HCA accountant accused Scott, who was never directly charged in the case, of leading “a criminal enterprise.”

Scott later served two terms as governor of Florida and is now one of the wealthiest members of Congress, and he maintains he was the victim of a politically motivated DOJ investigation.

“The Clinton Justice Department went after me,” Scott complained during his 2024 Senate reelection campaign.

It’s unclear whether Scott’s healthcare ideas will gain sufficient traction with President Donald Trump and Republican lawmakers, who have seemed content to bash the existing system without proposing anything concrete or viable to replace it. Trump was supposed to unveil his own healthcare proposal last month, but the White House pulled the plug amid GOP pushback.

Some members of the Democratic caucus, meanwhile, are making the case for the very system Scott is warning his colleagues about.

“Let’s finally create a system that puts your health over corporate profits,” Sen. Chris Van Hollen (D-Md.) said earlier this week. “We need Medicare for All.”

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MMA // MUSK?

### Benny Johnson: “Social Security is completely fraudulent. It should be privatized. They should destroy that entire program.”

05/20/25

DN attacks by kochs go back to 1971

https://www.democracynow.org/2020/8/19/usps_louis_dejoy_:{privatization:(style="background-color:#ffcc66;"):}:

After massive public outcry against cuts to mail service ahead of November’s election, Postmaster General Louis DeJoy has announced he will suspend changes to the U.S. Postal Service until after the election, when a record number of voters are expected to cast ballots by mail. President Trump has admitted he’s working to undermine the USPS in order to make it harder to vote by mail in November. We speak with Lisa Graves, executive director of the policy research group True North Research, who says Louis DeJoy is “the most partisan person, in 100 years at least, to head the Postal Service” and warns that U.S. democracy is at stake. “We need to really hold this Postal Service accountable...

Lisa Graves, but can you lay out what’s going on and the deep concern that, yes, Louis DeJoy, who has, with his wife, something like $75 million to $100 million invested in competitors and contractors to the U.S. Postal Service, that already major changes have taken place? They’re just revoking the ones that were leading up to the election, though they say they’ll introduce them right after.

LISA GRAVES: Well, that’s right, Amy. And I think that we’re at a true crisis point in terms of our democracy and with our Postal Service. And that’s because we have the most partisan person, in a hundred years at least, to head the Postal Service, in Louis DeJoy, who has deep financial conflicts and deep personal ties to President Trump. This is also being pushed forward by Mike Duncan, who was a major fundraiser for Mitch McConnell for the Senate Leadership Fundand is aright-wing partisan who helped stand up American Crossroads, and also at the instigation, in essence, of Steve Mnuchin, who has tried to push additional pressure on the Postal Service, in essence, in my view, to accomplish what really is Charles Koch’s long-term goal of privatizing our Postal Service. So, we have a deep crisis in our country.

The announcement by the postmaster does not reverse the things that have already happened, that he’s already implemented, including the removal of many mail sorting machines. And so, we need to really hold this Postal Service accountable. Actually, I think Louis DeJoy needs to be removed. And we need to reform the Postal Service so we do not have two of the most partisan men ever at the helm of our Postal Service.

That Postal Service belongs to us, even though Charles Koch, as I documented with In the Public Interest and Bold ReThink, that organization has been targeted by Charles Koch for privatization since the 1970s. So, I’m hoping that the members of Congress will respond to citizens who are clamoring to protect our Postal Service, make sure we get our ballots on time, make sure we get medicines on time and checks on time, and really reform the Postal Service and get it the money it needs to survive and thrive in this corona crisis.

JUAN GONZÁLEZ: And, Lisa Graves, in the few minutes we have left, could you talk a little bit more about this hidden effort by Charles Koch to privatize the Postal Service, that has gone on almost unknown by most Americans for so long?

LISA GRAVES: Yes, I was really surprised that he really began staking the men, urging for the Postal Service to be privatized in the 1970s. And when he became the biggest funder for the Libertarian Party in 1976, its platform expressly called for the abolition of the Postal Service. Then, in 1980, when his brother ran for vice president, the Libertarian Party also called for the abolition of the Postal Service. Then he helped to stand up, with the Reagan administration, a privatization commission, with his right-hand man on it, which again called for abolition of the Postal Service.

And then they brought on board to Citizens for a Sound Economy, which is now Americans for Prosperity, the leading advocate of privatizing the Postal Service, who then George W. Bush put on the Board of Governors of the Postal Service in 2003. And that man, James Miller, helped push through the terrible law in 2006 that saddled the Postal Service with unprecedented debt to pay for decades of future retiree health benefits. And that’s the debt that has really hampered the Postal Service in its ability to have a better financial position, and it also limited the Postal Service from opening banks and offering banking services, as well as increasing the rates of first-class mail beyond a penny a year. And so, that really throttled the Postal Service. And that’s the long-term cause to basically prepare it for privatization, which is Charles Koch’s longtime goal.

AMY GOODMAN: Last minute, also, already, the effect — right now the Department of Veterans Affairs has been forced to find other ways to ship mail-order prescriptions to vets all over this country. And it’s not only vets. So many people rely on the Postal Service just to get medicine.

LISA GRAVES: Yes, it’s a true crisis. And I think that if Louis DeJoy thinks that he can issue a press statement and walk away from the damage he’s caused, he’s wrong. The American people are not going to tolerate the destruction of our Postal Service. Millions of Americans rely on it, in small cities and big towns, for medicines and checks. And we need it to work properly. We need it fully funded. We need it to have coronavirus relief just like other businesses and entities in America.

AMY GOODMAN: Finally, who Charles Koch is?

LISA GRAVES: Charles Koch is one of the richest men in the world. He’s one of the richest men in America. And he leads Koch Industries, which is one of the largest privately held corporations in the world, which has a long record of using its funds to advance his political causes.

AMY GOODMAN: Were you surprised that the Postal Service turned around to the extent it did yesterday? I mean, we’re talking about massive outcry. Even Donald Trump, whose bidding DeJoy was doing, tweeted out, ”SAVE THE POST OFFICE!”

LISA GRAVES: Yeah, they’re clearly hearing the heat. So, the question, as Nancy Pelosi said, is: Will they reverse the things that have happened, not just stop doing it? Stopping it, we already see the damage done. The question is, a true reversal to the status quo before Louis DeJoy became the postmaster general this summer.

AMY GOODMAN: Lisa Graves, we want to thank you so much for being with us. And we have to stop saying November is the election, because people who vote by mail are voting in the next weeks, and that goes on for more than a month. Lisa Graves, executive director of the policy research group True North, with a new report we’ll link to, “The Billionaire Behind Efforts to Kill the U.S. Postal Service.”

1219

guk

Court ruling / Nestlé cannot claim bottled water is 'essential public service'

Michigan’s second-highest court rules in favor of township in case that could damage company’s effort to privatize water

3. ProPublica also reported this week on how **electronic monitoring devices such as ankle bracelets are driving defendants into debt**. Private companies charge defendants hundreds of dollars a month to wear the surveillance devices. If people can’t pay, they may end up behind bars. In Illinois, lawmakers recently passed a bill that would require the Illinois Department of Corrections and the Prisoner Review Board to collect data on how electronic monitoring devices are being used and post that information publicly. Learn more about that in this story from WILL-Illinois Public Media.

https://www.alternet.org/news-amp-politics/save-us-postal-service-heres-corrupt-scheme-privatize-precious-american

Unable to find a fatal flaw in our far-flung public mail delivery network, the anti-Postal Service forces manufactured a fake flaw. In 2006, then-president George W. Bush, congressional Republican leaders, the powerful "privatizer lobby" (including FedEx, UPS and Wall Street speculators) and Koch-funded think tanks and Astroturf front groups colluded to put a one-of-a-kind paper "debt" on the books of USPS. Congress enacted a postal-service "enhancement" provision requiring the public postal corporation to pre-fund the health and pension benefits for all postal-service retirees 75 years in advance! Think about that. This arbitrary, wholly unprecedented, legislated requirement to pay now for the retirement benefits of future employees (including those not even born yet) has piled a false cost of about $5 billion a year on the debit side of the agency's balance sheet.

...

https://www.alternet.org/news-amp-politics/heres-why-people-are-so-angry-billionaire-steve-cohen-spending-millions-help

no lnx

Here's Why People Are So Angry That Billionaire Steve Cohen Is Spending Millions to Help Veterans

The hedge fund billionaire’s efforts to assist veterans with PTSD have thrust him into a political fight.

By Isaac Arnsdorf / ProPublica August 3, 2018

At a House hearing last year on post-traumatic stress disorder, a private organization showed up with an ambitious plan to help suffering veterans. The Cohen Veterans Network was opening a chain of free mental health clinics across the country, backed by $275 million from hedge fund billionaire Steve Cohen.

By contrast to the high-profile scandals at the U.S. Department of Veterans Affairs, the Cohen Network claimed 96 percent client satisfaction. In a statement for the hearing, the organization said its clinics “provide a desirable alternative” to the VA — a clear echo of President Donald Trump’s campaign promise to let veterans skip the VA for “a private service provider of their own choice.”

But at that same moment, across the country, the Cohen Network was closing its clinic in Los Angeles less than a year after it opened. The Cohen Network’s leaders had alienated the staff there, former employees said, by telling them to prioritize healthier patients over homeless veterans. The shutdown was so hasty that former therapists said it left some patients in the lurch.

Privatization has become the defining controversy at the VA under the Trump administration. Conservative billionaires such as the Koch brothers and Ken Langone want veterans to increasingly see private doctors, while traditional veterans organizations want to maintain the government-run health system.

The Cohen Network has become a test case for both sides. It is either proof that the private sector can do the job better than the VA — or a template for diverting taxpayer dollars to unaccountable private groups.

Steven Cohen is perhaps an unlikely person to find himself in the crossfire of this debate. He is best known as the billionaire hedge fund titan whose investment returns were the envy of Wall Street, until prosecutors busted his firm for insider trading. (Cohen, 62, was not personally charged; he declined to be interviewed for this article.) Since then, Cohen has launched a new hedge fund and opened 10 clinics serving veterans across the country.

A thorough examination of the Cohen Network’s record — including internal documents, emails and dozens of interviews with current and former employees — reveals a different story from the one the Cohen Network tells about itself. The clinic at the University of Southern California was doomed by the Cohen Network’s mismanagement and insistence on a narrow focus that helped only a subset of veterans, former employees said. “The model we ended up believing would really serve veterans was different than the model the Cohen Network was proposing all clinics operate under,” said Marv Southard, who served as CEO of the Cohen clinic at USC and is now chair of USC’s doctor of social work program. The network’s original clinic, at New York University, got into a spat over who would own the patent rights from research that Cohen funded. And shortly after the hearing, Cohen mounted an aggressive lobbying campaign to get the government to subsidize the clinics....

https://www.counterpunch.org/2013/03/01/socialize-costs-privatize-profits/

Puerto Rico’s governor says he’s moving to privatize the Puerto Rico Electric Power Authority, known as PREPA. It faced widespread criticism after Hurricane Maria destroyed the island’s power grid, and PREPA’s then-director signed a $300 million contract with a tiny Montana company linked to Interior Secretary Ryan Zinke. Many activists have warned politicians would use Hurricane Maria to privatize the power authority, which is now the largest public power utility in the United States.

devos tag: blackwater pvt afgan war EIC //

puerto rico maria: austerity --> fiscal control bd unelected // flint mich emergency mgr --> pvtization aha

https://kpfa.org/episode/hurricane-maria-exploded-fault-lines-poverty-austerity-2/

In Puerto Rico’s Highlands, Hurricane Maria Has Exploded Fault Lines of Poverty & Austerity; Yanis Varoufakis on Global Capitalism & How Trump’s Tax Plan is Class War Against the Poor; Economist Yanis Varoufakis: Puerto Ricans Deserve an Escape from “Permanent Debt Prison”; Greek Economist Yanis Varoufakis on Nazi Resurgence in Europe & Why ”ISIS Loves Donald Trump.”

fdr ~ eg glass sTEAGALL bretton woods, rise of financial sector vs mfg

AN 817

:{On August 15, this “infrastructure of fascism” came into clear focus in a bizarre and tragic way. }.:{ He had key members of his economic team in tow—most notably, Treasury Secretary Steve Mnuchin, Gary Cohn, head of Trump’s National Economic Council—both former Goldman Sachs bankers—and Transportation Secretary Elaine Chao, former Bank of America and Citicorp banker. This announcement of Trump’s “infrastructure plan,” which took only a few minutes, presented even less of a true infrastructure plan than he had floated during the election campaign.}::{ This was simply yet another de-regulation plan dressed up as a plan for infrastructure investment. Effectively, this “executive order” served-up a wish list that would have been compiled by any real estate mogul who doesn’t want any government agency or public group to come between him, his building, and his bottom line. In the name of building more useful infrastructure and generating more jobs, Trump’s executive order is designed to let developers skirt environmental regulations, and most likely, labor, health, and safety regulations as well. The Executive Order will make it a lot easier to build more Trump towers in flood plains, but do little or nothing for the country’s true infrastructure needs.}:

But this roll-out of a fake infrastructure plan was not the most interesting or surprising thing about this event. It was the press conference Trump held afterwards. and the creation of infrastructure and jobs as his bait, Trump took the occasion to assure his neo-fascist, white supremacist and nationalist base that, yes, he was still their man. The reporters at hand, having little interest in infrastructure, wanted to hear a clear statement from Trump decrying the violent and deadly acts committed over the weekend by Nazis and white supremacists in Charlottesville, Va. But instead Trump used his infrastructure plan and his promise of “millions of jobs” to rally his base supporters, all the while demonizing the counter-protestors (calling them violent members of “the alt-left” who were “at least” as responsible for the violence and mayhem as those on the right).

This event, then, tied, in a sinister but clear way, Trump’s infrastructure plan with the racist, anti-Semitic, and neo-fascist members of Trump’s base movement and linked them, in turn, to the bankers and policy makers like Gary Cohn and Steve Mnuchin who have so much to gain from the tax subsidies and privatization that are the essence of these plans. Gary Cohn was reportedly “furious” about what Trump said and did. But according to reporters, Cohn, like so many Republicans in Congress, will most likely remain quiet, and soldier on, presumably in the hope of getting a big payoff down the road. (Cohn reportedly wants to succeed Janet Yellen as Chair of the Federal Reserve; and his friends have millions to gain from the privatization schemes.)

note vacuum death spiral? online charter fail:

http://www.pfaw.org/rww-in-focus/predatory-privatization-exploiting-financial-hardship-enriching-1-percent-undermining-d

Predatory Privatization: Exploiting Financial Hardship, Enriching the 1%, Undermining Democracy

THE AMERICAN LEGISLATIVE EXCHANGE COUNCIL AND ITS CORPORATE AND RIGHT-WING ALLIES PROMOTE ANTI-DEMOCRATIC PRIVATIZATION OF PUBLIC ASSETS AND GOVERNMENT SERVICES.

The combination of state and local budget crises and the 2010 election of anti-government ideologues in many states has left taxpayers and communities increasingly vulnerable to predatory “privatization” of government services and public infrastructure. Privatization, whether promoted as a short-term way to fill a budget gap or as part of a long-term campaign against the government and unionized workers, can bring disastrous long-term consequences for American families and taxpayers as well as for the democratic process.

Privatization is a wonky term that can obscure the real mechanism and process at work. Through privatization schemes to outsource traditional governmental functions, taxpayer dollars are diverted from the building of public assets and institutions to create long-term revenue streams and profit for corporations. The privatization of governmental functions has resulted in the loss of public sector jobs that have been crucial to the growth of the middle class in favor of lower-wage jobs for workers and new profit centers for CEOs and investors. The cycle of privatization weakens the institutions whose funding is robbed to enrich the private sector. And, at the same time, it generates taxpayer-funded revenue that gets invested in lobbying and political investments seeking ever-more taxpayer dollars.

Through privatization schemes that directly sell off assets that belong to the public, legislators enrich corporate interests at the expense of the long-term interests of the American people in assets their taxes have helped build. The privatization of the people’s assets is essentially permanent. Once buildings and lands are sold off to the private sector by a temporary legislative majority, those assets that may have taken years to build or maintain are lost forever to private, nondemocratic control.

The agenda of privatization schemers was manifest at last August’s American Legislative Exchange Council meeting in New Orleans where ALEC members urged that the government, meaning the people, should not own buildings but should sell them to the private sector, which could then lease the space back to the government at a profit. Their aim is to make the private sector the landlords of our public spaces to accrue more profit for the few while rendering “we the people” the tenants of corporations in the halls of our democracy. In 2009, the state of Arizona even mortgaged its own capitol complex to investors and turned the legislature itself into a tenant.

In recent years, dozens of privatization initiatives have been proposed, passed, or implemented. They are aimed at water treatment, transportation infrastructure, education, prisons and prison services, health care and other human services, government buildings, municipal maintenance, emergency services, and more. Those efforts are frequently promoted by the same Wall Street firms that helped create the recession and financial crisis; by right-wing foundations, think tanks and political donors who are eager to exploit the budget-balancing desperation of public officials; and, of course, corporations eager to tap public coffers and take over assets built with taxpayer funds.

Claims that privatization will improve efficiency and accountability often turn out to be false, with legislators running interference to protect companies who do not welcome transparency. For example, according to the February 2012 report from the American Friends Service Committee,

Private prison companies largely are unaccountable to the state or the taxpayers; they are not subject to the same transparency, reporting or oversight requirements as government agencies. This makes it impossible, even for state officials, to do a full comparative analysis of their operations.

WHAT IS PRIVATIZATION?

The term privatization covers an array of actions, some described with other terms such as “outsourcing” or “public-private partnerships.” They can include:

• outsourcing jobs performed by public employees, such as parks maintenance, food service, to for-profit companies

• giving private, profit-making companies managerial or operational control over public services such as the distribution of health and welfare benefits or diverting Medicare and Social Security resources to Wall Street

• diverting tax dollars from public education to for-profit school corporations, including “virtual” schools” as well as religious schools, plus reducing tax revenue by giving _{corporations}_ a tax deduction for contributing to scholarship funds for private schools

• leasing or selling public assets such as highways, parks and airports – or income from those assets – to for-profit companies or groups of investors

A _{report}_ by the nonpartisan Congressional Research Service in 2006 reviewed arguments pro and con and case studies of privatization, some more successful than others. The report notes an essential danger of privatization: “any effort to shift bureaucratic functions to the private sector may risk transferring away some governing discretion into the hands of private parties who are not accountable to the public and may not have its interests at heart.”

The private sector firm, then, has one essential goal: to pursue profits. All other goals are subordinate. Thus it faces strong incentives to undertake activities that promote this essential goal. This can prove beneficial to the government, should the private firm devise more-efficient means of production and develop new products and services. This might also negatively affect the government, should the private firm lower its costs of production by reducing the quality or quantity of the product or service. The private firm, in large part, is rewarded for achieving results pleasing to its owners and shareholders. How it achieves this may or may not prove beneficial to the government.

The report also noted that large-scale privatization transforms the nature of government oversight in ways that “many federal administrators and public administration scholars have found vexatious.”

Given the ways in which multinational companies and anti-government ideologues have harmed taxpayers and undermined the public interest in the name of privatization, those comments come across as cautious understatement.

PRIVATIZATION AS A PHONY PANACEA

Privatization is almost always promoted as a way to save money, improve services, and shake up unaccountable bureaucracies. But in reality, privatization often fails on all counts. Privatization plans can cost government and taxpayers more money, limit accountability and transparency, and leave people who depend on public services worse off.

A _{study}_ released last fall by the nonprofit Project on Government Oversight _{found}_, for example, that in 33 of 35 occupations, the government paid billions more to hire contractors than it would have cost to have the same functions performed by government employees.

Some privatization efforts are windfalls that enrich major corporations or politically connected local businesses at the expense of taxpayers. Sometimes the cause is simply a mismatch between the resources and expertise of a public official and a major Wall Street firm.

“There’s a reason that there’s been so much enthusiasm in the finance community for privatization deals. You are dealing with a less savvy partner,” _{said}_ David Johnson, a partner in a firm that advises struggling municipalities. “The bigger sucker is always the government.” Privatization can be good business, whether successful or not. When privatization plans fail and government steps back in, politically connected financiers brokers, and law firms can still walk away with millions of taxpayer dollars.

Perhaps worst of all, privatization can undermine good public policy and democratic decision making. Turning tax dollars and control of public services over to companies whose overriding incentive is to maximize profits can lead to long-term costs and sometimes devastating consequences.

In February, surveying the privatization push at the state level, economist Paul Krugman _{suggested}_ that Madison, Wisconsin, in 2011 was similar to Baghdad in 2003, when Bush administration officials’ top priority was to “corporatize and privatize state-owned enterprises” and to “wean people from the idea the state supports everything.” Krugman notes that author Naomi Klein, in her book “_{Shock Doctrine}_,” put the Baghdad fiasco in a larger context in which “right-wing ideologues have exploited crises to push through an agenda that has nothing to do with resolving those crises, and everything to do with imposing their vision of a harsher, more unequal, less democratic society.” And such policies also put more profits in the hands of their political allies and election funders.

TAKING ADVANTAGE OF DESPERATION

An October 29, 2011, column in the Cleveland Plain Dealer by Gary Suhadolnik and Jacqueline Thomas, “Pitfalls of Leasing Turnpike,” includes this:

“Desperate government is our best customer. There will be a lot of desperate governments out there,” said the chairman of a major finance company specializing in infrastructure privatization, addressing the annual meeting of the National Council for Public-Private Partnerships in the midst of the financial crisis in 2008.

One harrowing example of civic desperation can be found in Harrisburg, PA. The city has been in a financial crisis caused by excessive borrowing by former officials to pay for overhauling a trash incinerator; the city is being crushed by debt many times its annual budget. The city was being pressured last year by state and county officials to accept a “recovery” plan that would spare bondholders but not taxpayers.

As the Huffington Post _{reported}_ last June, “The finances of Harrisburg, Pa., are so desperate that local officials are considering a deal they fear will ultimately make the city more miserable.” Part of the plan involved leasing or selling the city’s parking garages, resulting in the long-range loss of valuable revenue and leaving city residents vulnerable to the whims of a private corporation. One proposal would have given investors leasing garages the power to double parking rates twice a year. “This is a situation where Wall Street will get paid, and the little guys on Main Street, taxpayers, are going to get stuck holding the bag,” _{said}_ City Council member Brad Koplinski in June.

Last July, the City Council defied pro-privatization Gov. Tom Corbett and rejected the plan it was being pressured to accept. Some councilmembers said Wall Street should share the painful consequences of its lending on the troubled incinerator project. “The bondholders took a risk, ladies and gentlemen,” _{said}_ City Councilor Susan Brown-Wilson. “When you take a risk on Wall Street, guess what? Sometimes it’s a loss.”

The city council attempted to avoid a state takeover by filing bankruptcy; that plan was rejected by courts in November. Chaos continued this spring. At the end of March, a widely respected receiver appointed by the governor last December abruptly quit.

Shortly before he resigned, he reportedly requested state and federal prosecutors investigate an auditor’s report on the financing of the municipal trash incinerator. He’s called the debt structure ‘disturbing.’” Another report said he wanted an investigation because “the people of Harrisburg have been mistreated as a result of the incinerator deals.”

THE ROLE OF THE AMERICAN LEGISLATIVE EXCHANGE COUNCIL

Privatization has long been promoted by ALEC, a nonprofit organization that functions as a matchmaking service between corporations and public officials who are eager to take care of each other’s interests. ALEC, funded by corporations, CEO-funded foundations and extremist ideologues like the Koch brothers, invites corporate lobbyists to write model legislation with and for right-wing state legislators. A campaign by public interest groups exposing ALEC’s efforts to make it more difficult for American citizens to vote and to advance reckless “shoot first” laws – and the departure of major corporate funders – led ALEC to abolish its “Public Safety and Elections” task force in name, although its chairman recently suggested that the agenda would be carried forward through other parts of ALEC. The move is not ALEC’s first PR maneuver to spin public perception of the organization: It _{claimed}_ earlier this year that ALEC “is no longer involved with the private prison industry. Corrections Corporation of America is not, nor is any other private prison company, a member or supporter of ALEC.”

Corrections Corporation of America apparently left ALEC in late 2010 in the wake of controversy over expanded seizure and warehousing of immigrants, but numerous bills approved while CCA led or had a seat on that task force--bills that privatize prisons, expand the use of low-wage prison labor, extend the sentences of prisoners (and occupancy rates) and increase detention of immigrants – remained on ALEC’s agenda as templates for state policy long after CCA left. And ALEC has never repudiated the private prison agenda or worked to repeal bills that had been adopted across the country and that it previously touted as its successes.

ALEC was infamously the incubator of anti-immigration legislation in Arizona through the task force on which CCA had a long-standing seat and previously led.There is no doubt that immigration detention is a profit center CCA and other for-profit prison corporations are interested in, even though CCA claims it did not vote for the bill. (CCA’s claims that it never voted on any bills on the task force it chaired are difficult to believe and are belied by numerous minutes from task force meetings where bills are described as passing “unanimously” without any dissent or abstention from CCA, but there is no evidence that CCA drafted

SB 1070.)

Regardless of its recent efforts to spruce up its image, ALEC plans to focus even harder on its core economic agenda, which is anti-union, anti-regulatory, and pro-privatization; the group also retains a Tea Party-flavored focus on the 10th Amendment, aimed at limiting federal authority and giving more power to state legislatures, where ALEC can more effectively advance its anti-government agenda while disregarding the similarly vague Ninth Amendment’s efforts to preserve unspecified individual rights.

Last year, for a short-time before a new effort was launched to expose ALEC’s agenda, ALEC proudly promoted a project called “Publicopoly” as a way to help legislators promote privatization in seven sectors: government operations, education, transportation and infrastructure, public safety, the environment, health, and telecommunications. As summarized by the magazine “_{In These Times}_”:

Though the specifics are secret and “restricted to members,”ALEC openly advocates privatizing public education, transportation and the regulation of public health, consumer safety and environmental quality including bringing in corporations to administer:

• Foster care, adoption services and child support payment processing.

• School support services such as cafeteria meals, custodial staff and transportation.

• Highway systems, with toll roads presented as a shining example.

• Surveilling and detaining convicted criminals.

• Ensuring the quality of wastewater treatment, drinking water, and solid waste services and facilities. (After all, when someone mentions a safe and secure public water supply, the voter’s next immediate thought is:

“Only if it’s cost-effective!”)

To accomplish these initiatives, ALEC contends that “state governments can take an active role in determining which products and services should be privatized.” ALEC advocates three reforms: creating a “Private Enterprise Advisory Committee” to review if government agencies unfairly compete with the private sector; creating a special council that would contract with private vendors if they can “reduce the cost of government”; and creating legislation that would require government agencies to demonstrate “compelling public interest” in order to continue as public agencies.

Last year, the Center for Media and Democracy obtained a copy of 800 ALEC model legislation bills and last summer launched _{ALEC Exposed}_ to publicize the bills and their harm to Americans’ rights and interests. The Nation’s John Nichols summarizes the impact of ALEC’s agenda: “ALEC’s model legislation reflects long-term goals: downsizing government, removing regulations on corporations and making it harder to hold the economically and politically powerful to account.”

A CAUTIONARY TALE: THE CHICAGO PARKING METER FIASCO

On the negative side, the 2014 review found “weak and inconclusive evidence” that low-cost private schools are truly affordable or accessible to the poor.

Research by groups that oppose for-profit schools goes further. The Privatization in Education Research Initiative reports that when schools aren’t free, poor students must work one day and go to school the next, and boys are educated in favor of girls. The official position of many groups, including the UN’s Committee on the Rights of the Child, is that charging a fee, no matter how low, excludes the most needy and magnifies social divisions—like those between Aki and his neighbors in Tondo, for example.

wired tainz

Columbus Dispatch wrote recently of the academic failures of the Electronic Classroom of Tomorrow (ECOT) where the graduation rate of 38% is among the worst of any school in the state. Among Ohio’s 613 traditional public school districts , the lowest graduation rate is 60.9%. In addition, ECOT received all Fs and one D on the state’s most recent report card.

Despite its abysmal performance record, ECOT continues to expand. More than 14,500 children are currently enrolled, making ECOT the equivalent of the 10th largest school district in the state. The Dispatch story noted that ECOT founder William Lager has donated more than $1 million to Ohio politicians in the last five years as his school has grown exponentially.

Failure at What Cost?

Information at KnowYourCharter.com helps clarify the burden that local public schools must bear to cover the costs of students who chose to attend ECOT. Kids in all 88 Ohio counties are impacted. More than 95% of school districts – 586 of 613 districts – have students and money being transferred to ECOT. As one of the state’s 9 statewide e-schools and one of the country’s largest for-profit K-12 schools, ECOT’s poor performance is exacerbated by its extraordinary financial impact on children throughout the state.

According to state data located at KnowYourCharter.com, more than 90% of the districts that had students and funding transferred to ECOT in the 2012-2013 school year[[1]](http://knowyourcharter.com/2015/01/09/ecot-cost-failure/#_ftn1) had more money go to ECOT than the state would have paid the district[[2]](http://knowyourcharter.com/2015/01/09/ecot-cost-failure/#_ftn2). That forces districts throughout the state to subsidize ECOT with local tax revenues to make up those per pupil state funding differences – differences that in two cases topped more than $10,000 per pupil[[3]](http://knowyourcharter.com/2015/01/09/ecot-cost-failure/#_ftn3).

The average difference between what the state would have paid districts for the kids attending ECOT in the 528 districts was $2,897 per pupil less than what was paid to ECOT. That means local taxpayers had to subsidize the difference to make up for the larger payments to ECOT.

For districts that had at least 1 full-time student transfer to ECOT during the 2012-2013 school year, here are the biggest per pupil funding differences between what ECOT was paid and what the state paid the district in the last school year:

Many of these school districts are among the state’s highest performers, and they are losing significant per pupil funding from the state to a school that graduates students at a 20 percent lower rate than the worst traditional public school district. Consider as well that all this money goes to a school that doesn’t have a building, lunch ladies, buses, a gym, or any one of myriad expenses endured by brick and mortar schools.

Here are some more facts from KnowYourCharter.com:

The $6,440 per student that ECOT received during the 2012-2013 school year is more money per pupil than was received by 91% of Ohio’s traditional public school districts this last school year – nearly $1,000 more than Cincinnati and Columbus together received from the state.

Nearly 3 out of 4 dollars sent to ECOT came from money meant for districts outside the state’s major urban centers.

The all Fs and one D that ECOT received on the state report card data that can be found at KnowYourCharter.com was not matched by any Ohio school district. Only 3 of 613 Ohio school districts received all Fs and one C – and ECOT received between $1,100 and $3,600 more per pupil than those districts.

Since ECOT opened in the 2000-2001 school year, Ohio taxpayers have paid ECOT nearly $690 million. But nearly half that total – $328 million – has come in the last four school years.

ECOT received more than $570,000 from the 25 highest performing school districts on the state’s performance index score. These districts all had scores that were more than 1/3 higher than ECOT’s.

...

Slater’s company owns the water rights to 45,000 acres of land in the Mojave Desert, and he’s already secured contracts to sell the water for $960 per acre-foot (the amount of water it takes to cover an acre of land in a foot of water), according to The Guardian. At that price, the company stands to make $2.4 billion over the 50-year period of its water extraction deal with San Bernardino County.

But in the last 10 years, the company has suffered $185 million in losses.

“To develop the project, the company burns through $10 million to $20 million annually,” The New York Times explained, “paying for a never-ending battle in courthouses and conference rooms across California to win make-or-break government permits and to cover the salaries of its 10 full-time employees.” The company borrows extensively and regularly issues new shares to cover its costs.

The project has faced fierce opposition from environmental groups, local ranchers, Native American tribes, politicians—notably, Sen. Dianne Feinstein (D-Calif.)—and most recently, the U.S. Bureau of Land Management (BLM).

In a letter to Cadiz in October 2015, the BLM informed Cadiz that it “cannot use an existing railroad right-of-way for a new water pipeline that would carry supplies from the project’s proposed well field to the Colorado River Aqueduct,” The LA Times reported.

The project now requires a lengthy and expensive federal environmental review. To further complicate the matter, Feinstein has once again added a rider to the federal budget prohibiting the BLM from spending any money on the project.

“I remain concerned the Cadiz project could damage the Mojave Desert beyond repair and believe the BLM decision to deny the right-of-way is the right one,” Feinstein told The LA Times in October 2015. “I’ll continue to work through the appropriations committee to block any additional attempts to draw down this aquifer. We need to use water more responsibly, not less, and the Cadiz project is a bad idea.”

All of these developments leave many wondering if the project will ever come to fruition. Slater, who was a water rights lawyer for 30 years before taking over as CEO in 2013, contends that the BLM is misinterpreting 19th century railway law. He told The Guardian that not only is the plan a “pretty simple” one, but the 50,000 acre-feet of water a year the company would extract would also “otherwise evaporate, which is far more of a waste than people drinking it.”

Still, many have what Slater described as a “visceral, negative reaction” to a private company making billions off of water. Even public-private partnerships on water ventures face strong opposition. Poseidon Water, a private company, partnered with the San Diego County Water Authority to build the largest desalination plant in the Western Hemisphere. But it took 15 years of lawsuits and regulatory hurdles to do so. The plant finally opened last month in Carlsbad, California, and the San Diego County Water Authority estimates it will produce enough water to meet 7 to 10 percent of the San Diego region’s water needs.

That may sound like a drop in the bucket for the drought-stricken state, but there are already about 15 other desalination plants being proposed in California. Despite this, critics contend that desalination and the Cadiz water project are not good solutions to addressing the state’s drought.

Watch Slater explain the Cadiz Water Project in an interview on KCAA 1050AM, a California radio station:...

http://www.globalpossibilities.org/reversing-the-tide-cities-and-countries-are-rebelling-against-water-privatization-and-winning/

http://www.alternet.org/education/wisconsin-republican-compromise-ups-state-ed-budget-then-steals-money-vouchers

Wisconsin, led by extreme-right Governor Scott Walker, demonstrates how one party state government can execute a compromise. In February, Walker proposed cutting $127 million out of the budget for K-12 public education. Last week the Republican dominated state legislature put back a good part of that money. Then the legislature re-directed much of it away from public education to private and parochial schools.

Here is how Jessie Opoien of the *Capital Times*describes what happened: “The co-chairs of the Wisconsin Legislature’s Joint Finance Committee said on Tuesday its Republican members have reached an agreement to provide an additional $200 million for K-12 education than what Gov. Scott Walker proposed in his two-year budget. The funds will restore a $127 million cut next year that was proposed in Walker’s budget, and will provide an additional $100 per pupil in state aid the following year.”

Except here’s the catch, according to *Wisconsin Public Radio*: “Republicans on the Legislature’s budget-writing committee filled Gov. Scott Walker’s proposed cut to public schools… but they also changed the way the state pays for school vouchers. From now on, public and private voucher schools will both be competing for the same pot of money. In the first year of the budget, that means voucher schools will get $18 million more while public schools get $18 million less.”

AnAssociated Press reportexplains the details. The plan would lift a 1,000 student cap statewide on the number of vouchers and let any public school student apply. Students in grades K-8 would receive $7,210 from their local school district to attend a voucher school. School districts would have to provide $7,856 for any high school student. In the 2014-2015 school year more than 3,500 students applied for a voucher, indicating that the new legislation would rapidly expand school choice beyond the current 1,000 student cap. Like other states with voucher programs, Wisconsin does not require a student to have been enrolled in a public school before applying for a voucher. This means that students already enrolled in private and parochial schools could qualify for public funds to underwrite their private school education....

water 5/15

http://www.alternet.org/environment/water-industry-launches-attack-water-democracy-promotes-privatization

...

nstead of promoting private involvement in municipal water systems in the form of public private partnerships, the federal governmentshould adequately fund water infrastructure projects. It’s understandable that communities consider private investment to improve crumbling systems: much of our country’s water infrastructure is nearly a century old, and many community leaders look to lease their water systems out to address budgetary shortfalls.

However, instances of water privatization are still pretty rare in the U.S. As of 2012, only six percent of local governments contract their drinking or wastewater services to private, for-profit entities. Since 2000, major water companies have lost 169 contracts in the United States.

That’s because communities have learned the hard way that they can do better. Part of democracy is asking local and federal leaders to stand up for what’s right when it comes to the things we can’t live without. We cannot live without water.

The real truth from the tap

These brazen water industry attacks underscore that advocates and communities are being effective in their work every day to protect our essential resources. They also present an opportunity to talk about how big companies attempt to sway the debate around important issues like how our water should be managed.

CONDITIONS AT FOR-PROFIT IMMIGRANT DETENTION FACILITIES IN TEXAS DRAW LEGAL ACTION:Though its deportation relief efforts have been put on hold, the Obama administration continues to carry out its policy of detaining Central American immigrant children and families apprehended at the border. Attorneys for the detainees recently took legal action to address harsh conditions at the government's privately-managed family detention centers. (2/19/2015)

Around the world, private firms have been given “carte blanche rights to mine local groundwater supplies at the expense of local populations, say experts.” In 1997, Swiss food giant Nestlé signed a contract with the privately- owned water services provider in Fryeburg, Maine, to buy freshwater in bulk for its Poland Spring brand of bottled water. Fearing that large-scale commercial water exploitation would lead to groundwater depletion and the Saco River drying up, the town of Fryeburg enacted a Land Use Ordinance that required that any company pumping more than 10,000 gallons of water a day get approval from the planning board. With a constant stream of litigation and appeals, however, Fryeburg Water Co. was able to buy time while continuing its moneymaking sideline business without interruption.

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this is random sample/one day from CMD 10/14

White Hat’s Magic Trick: Transforming Public Schools into Private Assets

There’s a lot of money at stake in Ohio charter schools, which as a group will receive almost $900 million in 2014. Charters get about $7,200 per student in taxpayer funding, compared to about $3,500 per student in traditional public schools.

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Governor Brownback Outsourced Child Support Services to Donor

When he was elected in 2010, Kansas Governor Sam Brownback began to slash core government services and privatize the rest. His austerity politics resulted in the state being downgraded by S&P in August 2014, and his privatization initiatives have also drawn criticism, causing one leading Republican to state, “I had hoped that it wouldn’t be as extreme as it’s been … what we didn’t know was that Sam would use this state as crash test dummies for his own fiscal experiments.”

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LePage Supports Pumping Public Water for Private Gain

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MO ALEC Leader Says Right to Work Is Solution to Ferguson

The protests that erupted in the wake of 18 year old Michael Brown's death at the hands of a Ferguson, Missouri police officer in August have many causes, ranging from longstanding tensions between the largely African-American community and a largely white police force, systematic targeting of people of color fueled in part by revenue-driven law enforcement practices, residential segregation, and disparities in racial power arising from under-representation in local government thanks in part to Ferguson's unusual elections calendar.

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Inmates Die in Droves After Governor Rick Scott Outsources Prison Healthcare

Suffering from lung cancer? Here’s a Tylenol and some warm compresses. Are your intestines escaping? Not to worry; here’s some K-Y Jelly to shove them back in. An investigation reveals that Florida inmates have been dying in droves since the state privatized prison health care.

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Governor Snyder Stands Behind Prison Privatization, Even After Maggots and Murder for Hire

Ideological slogans often trump facts when it comes to the outsourcing of public services. When independent studies are commissioned, the conclusions are often disregarded. In some cases, however, there seems to be solid research supporting the cost-efficiency of privatization. Such was the case in Michigan – at least at first glance.

A bill that would allow New Jersey municipalities to sell their public water utilities to private, for-profit corporations without putting the measure to voters is awaiting Gov. Chris Christie’s signature.

Until now, any municipality in New Jersey that sought to sell off its water system to a private bidder had to hold a public vote. But a bill passed with bipartisan support by the state’s Senate last week would allow municipalities with aging and deteriorating water systems to put their systems up for sale without holding a referendum.

NJ voters have approved the sale of water systems to private developers in about 45% of the state–making New Jersey one of the more receptive states in the union to privatization. It seems a bit strange that there would be a need to cut the citizens out of the decision making process.

A report from Corporate Accountability International found that privatization of water supplies was often followed by rate increases. In Bayonne, New Jersey, a 2012 contract with United Water led to an 8.5 percent rate increase in the first year, according to the nonprofit. And a 2010 report from Food and Water Watch found that customers in New Jersey municipalities with private water systems paid on average 64 percent more than others in the state.

But New Jersey, as with many states across our country has spent next to nothing on its infrastructure over the past decades and now the water systems are in bad shape.

So the bill, with minimal amendments, is fast-tracking through New Jersey legislature.

The amendments were approved unanimously 24-0, on Monday by the Senate.

The sponsors of the “Water Infrastructure Protection Act” have said the legislation is aimed at getting investment into public water systems that have been neglected to the breaking point. State Sen. Joseph Kyrillos (R-Monmouth) told NJ Advance Media last month that sales will not happen “willy nilly” – and many other people in the Garden State already are already supplied by private companies.

Opponents of the bill bring up this wacky idea:

Why don't our municipalities spend our tax money on building and maintaining and upgrading our infrastructure?

Maybe it's because the guy with the pen has already cut hundreds of millions out of environmental protections in the state of New Jersey. Chris Christie looks the part of a gangster and a bully but he's just doing what everyone else in his party has been doing for years. Privatizing our infrastructure.

ORIGINALLY POSTED TO WEINENKEL ON MON DEC 29, 2014 AT 10:26 AM PST.

ALSO REPUBLISHED BY CHRISTIE WATCH AND NEW JERSEY KOSSACKS.

Privatization Fail: The Troubled History of Maximus Inc.

- See more at: http://www.prwatch.org/node/12638#sthash.nmk9rIP6.dpuf

Based in Virginia but with offices all over the world, Maximus Inc. rakes in more than $1 billion a year from U.S. states and governments outsourcing social service and administrative functions. Wisconsin and the privatizing giant have a long and very troubled history, but breaking up, it seems, is hard to do.

Between 1997 and 2001, the Wisconsin Department of Workforce Development awarded Maximus three contracts to administer the newly created Wisconsin Works (W-2) program for $107 million. W-2 provides employment counseling and cash assistance for families living below the poverty line. There is no entitlement to assistance; it must be earned through “work participation and personal responsibility.”

While the struggling Wisconsin families kept their part of the responsibility bargain, Maximus did not. In 2000, it transpired that the company had improperly billed the state hundreds of thousands of dollars for expenses that had nothing to do with W-2, including “social functions and entertainment.” In the end, Maximus was forced to pay back $500,000. As a show of “good faith,” it also wrote a check for a further $500,000.

Whether it was the show of good faith or its impressive history of maximizing profits is impossible to say, but in 2004 Wisconsin once again contracted Maximus, this time as a “revenue-maximization consultant.” The company was charged with helping the Department of Health Services prepare and file Medicaid claims to extract more money in federal reimbursement. The $3.4 million dollar contract – footed by Wisconsin taxpayers – ran until 2009. And initially, things seemed to be going fine. Perhaps the appropriation of $500,000 some years earlier was just a bad day in the office for Maximus?

When the contract expired, DHS continued filing in accordance with the “best practices” developed by the company. In 2013, these practices caught the eyes of the inspector general for the U.S. Department of Health and Human Services, who found that they did not comply with federal requirements. Out of $41 million claimed for residential care services between 2004 and 2006, $39 million was deemed “unallowable" by the federal government. That translates into $19 out of every $20 and the feds are demanding Wisconsin pay back $23 million. Chances are that this number will increase by a magnitude when the claims made after 2006 get the fine-tooth-comb treatment.

W-2 and Medicaid consultancy are not the only services that have been outsourced to Maximus in Wisconsin. After spending more than $114,000 on lobbying the legislature on bills related to the “W-2 budget allocation process,” Maximus was awarded a renewed six-year contract with the Wisconsin Department of Children and Families worth some $21 million in 2011. Once again, Maximus was charged with deciding whether cases (this time children placed in foster care) met the criteria for federal reimbursement.

Indeed, Maximus has experience providing this type of service. In July 2007, Maximus paid $30 million to the federal governmentto settle criminal charges related to falsifying foster care claims. "Even after Maximus was paid $30 million for false claims in the DC foster care system, Wisconsin went ahead and signed a contract with the firm for the same type of service. States are failing to learn from each other's experiences or in Wisconsin's case, even their own," said Shar Habibi an expert on privatization at the nonprofit resource center In the Public Interest.

- See more at: http://www.prwatch.org/node/12638#sthash.nmk9rIP6.dpuf

New Report Documents How Privatization Steals Wages, Harms Communitiesll across the country, public services are increasingly outsourced to private contractors in the name of efficiency and cost savings. But a new report from the non-profit research group In the Public Interest (ITPI) shows that outsourcing public services hurts middle and working class communities as well as workers. :{Read more:(style="outline:none"):}:
http://org.salsalabs.com/dia/track.jsp?v=2&c=xc6IAZYohIkox5j%2B%2BjzM0nqPTrwZQOHC

New Report Documents How Privatization Steals Wages, Harms Communitiesll across the country, public services are increasingly outsourced to private contractors in the name of efficiency and cost savings. But a new report from the non-profit research group In the Public Interest (ITPI) shows that outsourcing public services hurts middle and working class communities as well as workers.

:{Read more:(style="outline:none"):}:

http://org.salsalabs.com/dia/track.jsp?v=2&c=xc6IAZYohIkox5j%2B%2BjzM0nqPTrwZQOHC

BO will sign?

The broader law, agreed upon by large majorities in both the House and Senate over the past week following a year of negotiation, is known as the Water Resources Reform and Development Act. The full bill authorizes funding for a spectrum of new water infrastructure projects—particularly around ports and waterways, including flood protection and restoration—worth some $12.3 billion, though this money will still have to go through an appropriations process.

Assuming that President Obama signs it, the Water Resources Reform and Development Act will be the first such water-related funding package to become law since 2007. Even then, the 2007 bill passed over the threat of veto from President George W. Bush, primarily due to budgetary concerns. As with any large funding bill, the act has received criticism from conservatives worried that Congress will not be able to provide adequate oversight for what they expect to be a frenzy of project requests.

The bill also includes provisions aimed at dealing with what experts say is a multi-billion-dollar funding gap for drinking water and wastewater systems across the country. Last year, the U.S. Environmental Protection Agency (EPA) estimated that some $384 billion in improvements would be needed in U.S. drinking water infrastructure over the next two decades. The EPA also found that many of the country’s 73,400 water systems are between 50 to 100 years old.

“[T]he nation’s water systems have entered a rehabilitation and replacement era in which much of the existing infrastructure has reached or is approaching the end of its useful life,” EPA Acting Administrator Bob Perciasepe said at the time. “This is a major issue that must be addressed so that American families continue to have the access they need to clean and healthy water sources.”

http://ecowatch.com/2014/05/29/new-law-facilitate-water-privatization/

AlterNet [1] / By Alex Henderson [2]

6 Things That Should Never Be Privatized

May 26, 2014 |

The idea behind operating gas, water or electric services as public utilities is that those things are important to people’s health and survival and therefore, must be protected from corporate greed. Some things belong in the private sector, others don’t.

Here are six things in the United States that should remain in the public sector.

1. Running Water

In 2000, residents of Cochabamba (Bolivia’s third largest city) suffered enormous hardship when the city’s public water utility SEMAPA was sold and taken over by the private consortium Aguas del Tunari: prices doubled or tripled, service was shut off for those who couldn’t afford the higher rates, and manycochabambinos suddenly found themselves without running water in their homes. Civil unrest and huge demonstrations followed, and a general strike shut the city down for four days.

But eventually, after many violent clashes between protestors and Bolivian riot police, water went back to being a public utility in Cochabamba, and the Aguas del Tunari contract was canceled. In fact, leftist Evo Morales’ strong opposition to water privatization and support of the Cochabamba Water Revolt [3] is one of the things that led to his presidential victory in Bolivia’s 2005 election. But in the U.S., Americans are still learning the hard way that privatizing running water is a terrible idea.

In 2012, Eleanor Sochanski [4], a 91-year-old resident of Camden, NJ, suddenly received a bill from United Water for $2,167 after averaging quarterly bills of $50-$60—and even though the private company couldn’t explain the bill and no leaks were found, it placed a lien on Sochanski’s home. Similarly, California-American Water couldn’t explain the $9,800 bill Toni Ray of Carmel Valley, CA suddenly received after having averaged bills of around $40 a month in her home. And Middletown, NJ resident Joe Pezzano was shocked to discover that New Jersey American Water Co. (another private company) had shut off his water entirely because of an overdue balance of 84 cents. If this type of insanity continues, Americans may need a Cochabamba Water Revolt of their own.

2. Prisons

Justice, at least in theory, is supposed to be blind. But when corporate greed is involved, it can become very biased in favor of incarcerating people. The United States incarcerates, per capita, more people than any other country in the world, including North Korea, Saudi Arabia, Iran and the People’s Republic of China. While the vast majority of incarcerated Americans are held in government-owned prisons and jails, the growth of privately owned prisons is a disturbing and dangerous trend because the profit motive encourages more arrests, more prosecutions and more convictions.

In a 2011 study, the American Civil Liberties Union reported: “Private prisons for adults were virtually non-existent until the early 1980s, but the number of prisoners in private prisons increased by approximately 1600% between 1990 and 2009. Today, for-profit companies are responsible for approximately 6% of state prisoners, 16% of federal prisoners and, according to one report, nearly half of all immigrants detained by the federal government.”

The ACLU also reported that private prisons in the U.S. were more likely to have poorly trained and underpaid staff, unsanitary conditions and “a heightened level of violence against prisoners.” And the ACLU noted that when the largest private prison company in the U.S., the Corrections Corporation of America, filed an annual report with the Securities and Exchange Commission in 2010, it admitted that its business model depends on high rates of incarceration, saying [5], “The demand for our facilities and services could be adversely affected by the relaxation of enforcement efforts, leniency in conviction or parole standards and sentencing practices or through the decriminalization of certain activities that are currently proscribed by criminal laws. For instance, any changes with respect to drugs and controlled substances or illegal immigration could affect the number of persons arrested, convicted and sentenced, thereby potentially reducing demand for correctional facilities to house them.”

New Hampshire Gov. Maggie Hassan [6] has opposed efforts to privatize prisons in that state, and any politicians—Democrat, Republican or otherwise—who don’t share that view should be voted out of office.

3. Fire Departments

Libertarian John Stossel (a host on the Fox Business Channel and writer for FoxNews.com) has long been a proponent of privatizing fire departments, which he believes would lower Americans’ tax burden and make them safer. As Stossel sees it, privatization would make firefighting more efficient. But the subscription-based privatized firefighting model can have disastrous results.

In 1996, the village of Rye Brook, NY (which is about 30 miles from Manhattan) made the mistake of hiring the Rural/Metro Fire Department (a private company) to fight fires—prior to that, firefighter protection in Rye Brook was handled by the fire department of nearby Port Chester, NY. But Rye Brook returned to public-sector firefighting only two years later after a $1 million home was destroyed by fire—perhaps avoidably. Salvatore M. Cresenzi, Rye Brook’s mayor at the time, acknowledged that Rye Brook’s deal with Rural/Metro “was not a success [7]”—and public-sector firefighters’ unions asserted that the home could have been saved had Rural/Metro operated more efficiently in Rye Brook.

Seventeen years later in August 2013, there was another horror story involving Rural/Metro—this time in Surprise, Arizona (a Phoenix suburb), where Justin and Kasia Purcell lived in a mobile home. Two weeks after their home burned to the ground, the Purcells received a bill for $19,825 from Rural/Metro because they had not paid the annual subscription Rural/Metro charges for firefighter service in Surprise. But the Purcells told the Huffington Post they had no idea such a service existed [8] and that they would have gladly paid the annual fee had they known.

The Purcells’ nightmare is a classic example of why the public is much better served by an “all for one/one for all” approach to firefighting: people pay taxes, and firefighting is among the things those taxes cover. Period. And there are no outrageous bills for $19,825 when your home burns to the ground.

4. Social Security

During his two terms as president of the U.S., George W. Bush called for the privatization of Social Security—and that dreadful idea should have been put to rest permanently after the economic meltdown of September 2008. But instead, far-right wingnuts have doubled down on their insanity: the Tea Party, Texas Gov. Rick Perry, Wisconsin Rep. Paul Ryan, the Club for Growth [9] and the Heritage Foundation still cling to the delusion that allowing Wall Street banksters to play Russian roulette with Social Security would be a good idea. They haven’t learned the lessons of the Great Depression of the 1930s or the current economic crisis, both of which underscore the need for strict regulation of banking. Certainly, saving for retirement doesn’t have to involve Social Security exclusively—there is nothing wrong with having an FDIC-insured private-sector IRA (individual retirement account) in addition to Social Security. But Social Security itself needs to remain in the public sector just as President Franklin Delano Roosevelt envisioned.

5. Medicare

During the U.S.’ healthcare reform debate in 2009, low-information members of the Tea Party became the butt of jokes when they carried signs saying things like, “Keep government out of my Medicare, you damn socialists” and “keep your government hands off my Medicare.” But Medicare, which covers all Americans 65 and older, was not founded by Blue Cross or Aetna: it’s a government program that was started in 1965 as part of President Lyndon Johnson’s Great Society and was expanded by his Republican successor Richard Nixon (who, for all his flaws, was relatively sensible when it came to economics, the environment and healthcare reform).

Medicare has been wildly popular among America’s senior citizens, who like the fact that they are guaranteed coverage. But that hasn’t stopped Paul Ryan from trying to end Medicare as we know it [10]: Ryan has proposed replacing Medicare with vouchers for private insurance, which would make healthcare much more expensive for seniors. Richard Kirsch of the Roosevelt Institute was not exaggerating when he said that the privatization of Medicare as envisioned by Ryan “would kill tens of thousands of people. Every year.”

6. Gas and Electric

In Philadelphia, many people get their electricity from PECO Energy (a public utility) and their gas from the city-owned PGW (which was founded in 1836). One of the most outspoken opponents of Nutter’s desire tosell PGW to UIL [11] has been Sam Bernhardt, senior Pennsylvania organizer for Food & Water Watch. Bernhardt has been warning that under UIL, Philadelphians can expect major increases in their gas bills—often noting that major rate hikes have occurred “time and time again” when water utilities were privatized.

Nutter’s deal with UIL states that UIL cannot increase rates for three years, but after that, Bernhardt warns, all bets are off. To illustrate how harsh utility privatization can be for consumers, Food & Water Watch has offered the following data on water/sewer privatization in the Philadelphia suburbs. In Bensalem, PA, for example, a typical water and/or sewer bill went from $137.08 annually before privatization to $578.05 annually after privatization—while in Bristol Township, average rates went from $165.44 a year pre-privatization to $661.43 a year post-privatization. And in Media, average annual water charges increased from $335.69 before privatization to $792.22 after privatization.

In a Huffington Post commentary, Thom Nickels asserted: “PGW is good for Philadelphia because, as a nonprofit public utility, it benefits the entire city with gas rates that, though high, would be three times as high if a private corporation like UIL—which exists only to maximize shareholder value—gained control of it....Within 10 years or less, gas rates under UIL will be through the roof....With very cold winters becoming the norm, future gas rates under UIH may very well spell disaster for most city residents.”

Indeed, if UIL is allowed to significantly raise rates on PGW customers, a lot of Philadelphians are going to be much colder during the winter [12].

See more stories tagged with:

private [14]

Source URL: http://www.alternet.org/economy/6-things-should-never-be-privatized

Links:

[1] http://alternet.org

[2] http://www.alternet.org/authors/alex-henderson

[3] http://www.yesmagazine.org/people-power/the-cochabamba-water-revolt-ten-years-later

[4] http://www.foodandwaterwatch.org/blogs/outrage-files-private-water-company-squeezes-elderly-n-j-woman-for-every-last-drop/

[5] http://www.inthepublicinterest.org/blog/corporate-prison-leaders-tell-truth-about-themselves

[6] http://thinkprogress.org/justice/2013/04/05/1827901/new-hampshire-rejects-all-private-prison-bids/

[7] http://www.nytimes.com/1998/03/13/nyregion/experiment-in-private-fire-protection-fails-for-a-westchester-village.html

[8] http://www.huffingtonpost.com/2013/11/08/justin-purcell-fire_n_4242734.html

[9] http://www.clubforgrowth.org/perm/?postID=14110

[10] http://www.salon.com/2013/03/17/paul_ryans_budget_plan_would_literally_kill_thousands_of_americans_partner/

[11] http://www.nbcphiladelphia.com/news/business/PBJ-PGW-Sale-Means-Higher-Gas-Bills-Advocacy-Group-248537911.html

[12] http://www.huffingtonpost.com/thom-nickels/a-new-urban-crime_b_4979837.html

[13] mailto:corrections@alternet.org?Subject=Typo on 6 Things That Should Never Be Privatized

[14] http://www.alternet.org/tags/private

[15] http://www.alternet.org/%2Bnew_src%2B

AlterNet [1] / By Dave Johnson [2]

The Privatization Scam: 5 Horror Stories of Gov't Outsourcing to Greedy Private Companies

May 14, 2014 |

For decades we’ve been subjected to constant propaganda that government is inefficient, bureaucratic and expensive. We’re told that the answer is to “privatize,” or “outsource” government functions to private businesses and they will do things more efficiently and everyone comes out ahead. As a result we have experienced decades of privatization of government functions.

So how has this wave of privatization worked out? Has privatization saved taxpayers money and improved services to citizens? Simple answer: of course not. If a company can make a profit doing something the government had been doing, it means that we're losing out one way or another. It’s simple math. And the result of falling for the privatization scam is that taxpayers have been fleeced, services to citizens have been cut way back and communities have been made poorer. But the companies that convinced governments to hand over public functions have gotten rich off of the deal. How is this a surprise?

Here are 5 privatization horror stories, where government outsourcing has gone terribly wrong. (Or maybe you’d say it has gone terribly right if you are one of the companies getting the taxpayer dollars.)

1. Chicago Parking Meters

The mother of all privatization horror stories is what happened with Chicago’s parking meters. In 2008 the city “financialized” its parking meter revenue stream. It leased the rights to collect from parking meters to a consortium led by Wall Street bank Morgan Stanley. The lease is for 75 years.

Right away parking-meter rates went up fourfold and meters stopped working. The city’s residents were unhappy, but there was nothing they could do about it.

But wait, it gets worse. Unsurprisingly, it turns out that the big Wall Street bank was more interested in making money than in giving Chicago the best deal it could. An inspector general looked into the deal and found that the city was shortchanged by at least $974 million. But a 2010 Forbes story [3] says the Morgan Stanley consortium may realize a profit of $9.58 billion after paying Chicago only $1.15 billion.

To top it off, the city not only gave up 75 years of revenue for not nearly enough up-front cash, it had signed a contract prohibiting the city from interfering with Morgan Stanley’s ability to profit from the deal. This means the city can’t build parking structures where they are needed and can’t even give out disabled parking permits. The city can’t even close streets to have street fairs or festivals without paying Morgan Stanley for lost meter profits.

2. Toll Roads

Some states are considering privatizing their roads with “public-private partnerships.” The deal is that private companies maintain the roads and in exchange can charge a toll and make a profit. How is this working out?

In 2006 Indiana privatized I-80, the Indiana Toll Road. For $3.8 billion [4] the state gave a 75-year lease to the Australian company Macquarie Group and Spain’s Cintra. (Goldman Sachs is said to have earned $20 million for brokering the deal.) At the time Washington Post business columnist Jerry Knight wrote that the deal sounded like “tossing the family furniture in the fireplace to keep the house warm.”

Since then tolls have just about doubled [5]. And it’s going to get worse. Dave Jamieson at the Huffington Post explained [5], “The road's leaseholders can now raise the toll annually at one of three rates -- at a flat two percent, at the percentage increase in the consumer price index or at the percentage increase in gross domestic product -- whichever is highest. Over the course of the coming decades, Hoosiers can expect to learn a hard lesson in compound interest, long after Gov. Daniels is gone.”

In 2007 Colorado leased its Northwest Highway to a Portuguese/Brazilian company for 99 years [6]. The company raised tolls 50% and taxpayers have to pay the company if too many carpoolers use the high-occupancy lanes. The contract includes a [7] “non-compete” clause that "requires payments to the foreign corporation if certain roads or facilities are built in the area that would compete with the toll road." In other words, if traffic gets really bad Colorado is not allowed to do anything to solve the problem for its citizens – mass transit, congestion-relief arteries, etc. -- instead forcing citizens to use that highway and pay whatever the toll is. For 99 years.

3. Prisons for Profit

Imagine a system where someone makes a profit if more and more people are put in prison. This is known as a “perverse incentive.” Really, can you think of anything worse than getting a profit to get people put in jail? What you think could go wrong is exactly what does go wrong. These companies want profits, so rehabilitation becomes a “cost.”

These companies push for government policies that put more people into prison for more crimes and for longer sentences. Prison-for-profit companies working with the corporate/right-wing lobbying outfit American Legislative Exchange Council (ALEC) came up with model legislation [8] pushing things like “three strikes” and “truth in sentencing” which greatly increase the number of prisoners and the amount of time they serve.

But the worst part of prison privatization is companies saving on “costs” by cutting back on staff, food quality and you-name it. A 2013 Palm Beach Post investigation [9] found that “dangerously low numbers of corrections officers — including local guards with criminal backgrounds — and reports of squalor, rape and riots dog corporate prison operators. ...Audits, security reports, lawsuits, government records and state and federal investigations in 21 states unveil a startling pattern of murder, riots and sexual assault at private prisons nationwide. Often, those failures stem from not enough guards.”

Nine major riots erupted since 2000. At least 25 inmates died amid claims of mistreatment, inadequate medical care or in riots. Three prisons for teenagers were shuttered between 2000 and 2012 after discoveries of squalor and sex abuse. A women’s prison was emptied after widespread reports of rape by staff.

How does this compare to prisons that are not run by private companies for profit?

At Florida’s state-run prisons in the same 12-year period: No major damage or severe injuries from riots; no closures over squalor; no Justice Department investigations over human rights.

In another example [10] in Mississippi, a private company called the GEO Group ran the Walnut Grove Youth Correctional Facility. The Justice Department spent two years looking into conditions at the facility and issued a report saying the facility engaged in “systemic, egregious and dangerous practices.” A judge wrote the company "has allowed a cesspool of unconstitutional and inhuman acts and conditions to germinate, the sum of which places the offenders at substantial ongoing risk."

(Listen to an NPR report on this here [10].)

A recent In the Public Interest report, The Costs of Private Prisons [11], says “the promised cost savings often fail to materialize.” The report looked at more than 40 studies of private prisons and how this turned out, in five states. They found “no cost advantage” and that for-profit prison companies, “employ questionable methodology when calculating costs of private facilities. This includes finding ways to hide the costs of private prisons, ensuring that increased costs are not apparent until after the initial contract is signed, and using inflated public prison costs during comparisons.”

4. Cost Overruns

Cost overruns are a common scam when governments outsource to private companies.

In 2008 New York City decided to “save money” by contracting out its payroll system. The original estimate to develop the “CityTime” system was $68 million. A little over 10 years later the cost had ballooned to more than $700 million and the system still didn’t work. A recent Daily Kos [12]post descibed what an investigation revealed:

The corrupt contractors lined their pockets with millions of dollars as they accepted kickbacks, funneled huge sums into shell companies, deposited stolen money into overseas accounts, inflated bills and maintained a bloated payroll with excessively paid and even fired employees.

The contractor, Science Applications International Corp. has agreed to pay the city $500 million [13] “under a deferred-prosecution agreement to resolve claims that it conspired to defraud the city.” Three employees were recentlysentenced to 20 years [14] each for their roles in the theft and fraud.

5. Any Government “Outsourcing” Anything

If you examine the claim that private companies are always more efficient than government, the argument starts to fall apart. Just how are companies more efficient?

The first way companies are supposed to be better is cost-savings. But just how do they save money? There are two ways a company can save money over what government spends. The first is to reduce what it pays employees and suppliers. The second is to cut back on the amount or quality of the service the company is taking over.

So let’s say a town decides to “save money” by outsourcing its trash collection. The people who were employed by the city to do this are laid off and things are turned over to the company. Typically the company will hire people at as close to minimum wage as possible and likely with no benefits. It will employ fewer managers and pay them less as well. It will cut back on maintenance of the fleet, and it will try to cut back on the pickup service.

Does this actually save government money? If people with OK public-employee jobs are replaced by lower-paid workers the community is poorer in the aggregate. More people will need public “safety-net” services. There will be foreclosures. Tax revenue drops because of lower pay but also because poorer people can’t spend as much in stores. Sales taxes drop as stores face fewer customers able to get by.

Daphne Greenwood of the University of Colorado did a study of privatization titled, The Decision to Contract Out: Understanding the Full Economic and Social Impacts [15]. The study found that the resulting wage and benefit cuts hurt the community at large, including declining retail sales, greater reliance on public assistance and a larger share of at-risk children in low-income families. On a recent phone call discussing the study Greenwood said that when governments outsource, “the availability of middle-class jobs is affected, even upward mobility.” She said, “Contracting to private corps usually means big reductions in worker benefits and benefits,” and “lower wages often mean a shift to less experienced employees.”

In addition, she said, “There are more workers and retirees who end up on public assistance, which means more children in poverty so local schools are dealing with more problems.”

Janice Fine of Rutgers University has also done a study, Overlooking Oversight: A Lack of Oversight in the Garden State is Placing New Jersey Assets and Residents at Risk [16]. She looked at outsourcing in New Jersey and found that a “stunning lack” of government oversight of contractors caused problems for Hurricane Sandy victims as well as greater risk for vulnerable children – and millions in wasted tax dollars in New Jersey.

On the same call as Greenwood, Fine said she found, “a stunning lack of government oversight of contractors,” and that, “oversight shouldn’t be set aside because of cost, it should be an essential part of outsourcing.”

Time To Reassess

Government outsourcing, also known as privatization, has been going on for decades, and now governments are reassessing whether turning public property and services over to private companies has really been a good idea. Story after story has appeared detailing horror stories of corruption, incompetence and general scamming by companies interested only in profit. Molly Ball reported recently in The Privatization Backlash [17] in the Atlantic, “In states and cities across the country, lawmakers are expressing new skepticism about privatization, imposing new conditions on government contracting, and demanding more oversight. Laws to rein in contractors have been introduced in 18 states this year, and three—Maryland, Oregon and Nebraska—have passed legislation, according to In the Public Interest, a group that advocates what it calls 'responsible contracting.'"

Other Horror Stories

A report by In the Public Interest [18] titled “Out of Control: The Coast-to-Coast Failures of Outsourcing Public Services to For-Profit Corporations [19],” highlights several other horror stories that happen when local and state governments privatize public functions to private companies. The report begins,

“Eager for quick cash, state and local governments across America have for decades handed over control of critical public services and assets to corporations that promise to handle them better, faster and cheaper. Unfortunately for taxpayers, not only has outsourcing these services failed to keep this promise, but too often it undermines transparency, accountability, shared prosperity and competition – the underpinnings of democracy itself.”

The next time someone tells you private companies are always “more efficient” than government, tell them the facts are against them. It has been tried and it didn’t work.

See more stories tagged with:

privatization [21]

Source URL: http://www.alternet.org/economy/privatization-scam-5-horror-stories-govt-outsourcing-greedy-private-companies

Links:

kpfa 3/12/14 8 am mickey huff

http://www.amazon.com/Stop-Thief-Commons-Enclosures-Resistance/dp/1604867477

PM press

The International Private Water Association (IPWA) was established in 1999 by Philip Dyk with the help of the association management company Marketshare Inc. ^[1]

According to its website, IPWA was formed "to address the changing dynamics" in the "water/wastewater infrastructure project and service arena. IPWA serves as a conduit between the public and private sector players." ^[2]

IPWA is a member of the Sustainable Water Infrastructure Investment Coalition ^[3] and the World Water Council, a think tank focused "on the privatization of water -- water for profit." ^[4]

IPWA vice-president Richard M. Temple wrote in a May 2003 article, "Experience shows that public sector provision is in many cases inadequate and cannot cope with the huge capital needs of the water and sewage network. ... The way forward lies in combining the skills of the public and private sectors through public/private partnerships (PPPs) to make use of their complementary skills to address the particular needs of a community." ^[5]

[hide]

1 Activities

6 External links

Activities

Lobbying

IPWA supported federal legislation introduced in 2008, H.R. 6194, the Sustainable Water Infrastructure Investment Act (SWIIA). "The bill would bring water and wastewater projects out from under the state volume cap on private activity bonds, and thereby significantly expand the availability of low-cost financing for water infrastructure projects," according to a description by the National Association of Water Companies. Representative Bill Pascrell introduced the bill, which was co-sponsored by Rep. Philip English. ^[3] The bill was referred to the House Committee on Ways and Means, but not voted on. ^[6]

Exhibitions

IPWA has participated in the Middle East Electricity exhibition, an event promoting companies providing water services. "The countries of the Middle East have recognised that it is essential for them to work in close conjunction with the private sector to build a lasting infrastructure," IPWA's Kathy Shandling said in July 2007. "The region is set to spend a staggering amount - over $120US billion - on water investments during the next 10 years as without this investment experts estimate that by 2050 the Middle East could face a severe water shortage and providing adequate amounts of safe water for drinking and sanitation could be an unsurmountable challenge." ^[7]

Conferences

In July 2002, IPWA took part in the "Partnering for Clean Water in Asia Conference," held in Bangkok, Thailand. According to a press release, the conference engaged "U.S. technology and service providers in the implementation of large-scale projects in the areas of water supply for industrial, commercial, and residential use; wastewater treatment; desalination; irrigation; decontamination of potable water; and flood control and flood forecasting. The combined value of projects to be presented at the conference is expected to exceed several billion dollars." The event was organized by the U.S. Trade and Development Agency, the U.S. Departments of Commerce and State, the U.S. Environmental Protection Agency, the U.S. Agency for International Development and the U.S. - Asia Environmental Partnership. ^[8]

A 1999 conference organized by IPWA and the Singapore Trade Development Board also focused on water issues in Asia. Conference participants urged governments in the region to revise laws, "to allow greater private participation in the water industry, the region's next driving force for infrastructure development. ... According to published estimates of the Asia Development Bank, the region needs to spend at least 80-100 billion US dollars between 1995 and 2000 in the water sector," to update infrastructure. ^[9]

Founding

A March 1999 press release announcing IPWA's formation said it was launched "to represent the common interests of firms involved in the evolving private water infrastructure business which is expected to require more than $700-billion in investments in the next 10 years." The steering committee that helped create IPWA had representatives from "a geographically balanced spectrum of companies involved in private water infrastructure," including Asea Brown Boveri,Atlantis Water Fund, Cameron McKenna LLP, Cemonics, Enertech, Hagler Bailly, Milbank, Tweed, Hadley & McCloy, Morrison & Foerster, OMI, Inc., PricewaterhouseCoopers LLP, Stone & Webster, Thelen, Reid & Priest, Vivendi, and the Yale Center for Environmental Law & Policy. ^[10]

Members

IPWA has four different classes of members: advisory board membership, for development banks, aid agencies, export credit agencies and others "actively involved in the water and wastewater infrastructure/service sectors"; corporate board membership; basic corporate membership; and individual membership. ^[11]

Members listed on the IPWA website, as of February 2009, include: ^[11]

AIDIS USA, the Inter American Association of Sanitary Engineering and Environmental Sciences
Asian Development Bank
UK Department for International Development (DFID)
European Bank for Reconstruction and Development (EBRD)
Export Development Corporation of Canada (EFC)
Inter-American Development Bank (ADB)
International Finance Corporation (IFC)
Institute of the Americas
Japan Bank for International Cooperation (JBIC)
North American Development Bank (NADBank)
Organization for Economic Cooperation and Development (OECD)
Overseas Private Investment Corporation (OPIC)
Public-Private Infrastructure Advisory Facility (PPIAF)
Transparency International
United Nations Development Programme (UNDP)
Export-Import Bank of the United States
Yale Center for Law and Policy

A 2003 article stated that IPWA "includes water companies ranging from Vivendi's main subsidiary in North America, U.S. Filter, to the British company, Bi-Water. The IPWA is organized to 'promote opportunities for private water project development globally' by arranging meetings with government water ministries and local authorities." ^[12]

Contact information

c/o Kathy ShandlingInternational Private Water Associationc/o 125 West 55th Street, 14th floor (consultant)10019 New YorkUnited StatesTelephone: +1-212-873-0920E-mail: kshandling (AT) nyc.rr.comWebsite: http://www.ipwa1.org

Articles and resources

References

:{Jump up:(style="top:-99999px;clip:rect(1px 1px 1px 1px);overflow:hidden;position:absolute !important;padding:0px !important;border:0px !important;height:1px !important;width:1px !important"):}:↑ "Anti-privatisation Wave Sinks Corporate Lobby Group," Corporate Europe Observatory, accessed May 2006.
:{Jump up:(style="top:-99999px;clip:rect(1px 1px 1px 1px);overflow:hidden;position:absolute !important;padding:0px !important;border:0px !important;height:1px !important;width:1px !important"):}:↑ "Homepage," International Private Water Association website, accessed February 2009.
↑ ^Jump ^up ^to:3.0 ^3.1 "Rep. Pascrell Introduces Sustainable Water Infrastructure Investment Act," States News Service, June 10, 2008.
:{Jump up:(style="top:-99999px;clip:rect(1px 1px 1px 1px);overflow:hidden;position:absolute !important;padding:0px !important;border:0px !important;height:1px !important;width:1px !important"):}:↑ Denise D. Wight, "It saves to be Green," National Petroleum News, March 2006 (Pg. 26 Vol. 98).
:{Jump up:(style="top:-99999px;clip:rect(1px 1px 1px 1px);overflow:hidden;position:absolute !important;padding:0px !important;border:0px !important;height:1px !important;width:1px !important"):}:↑ Richard M. Temple, "How is water privatization working?," Environmental Science & Engineering, May 2003; Quoted in Phil McNichol, op/ed: "South Bruce faces pipeline challenge: Sauble Beach is long overdue for municipal sewer and water services. The only question should be how to do it - what to build and how to pay for it," Owen Sound Sun Times (Ontario, Canada), March 13, 2004.
:{Jump up:(style="top:-99999px;clip:rect(1px 1px 1px 1px);overflow:hidden;position:absolute !important;padding:0px !important;border:0px !important;height:1px !important;width:1px !important"):}:↑ "All actions on H.R. 6194," THOMAS Library of Congress database, accessed February 2009.
:{Jump up:(style="top:-99999px;clip:rect(1px 1px 1px 1px);overflow:hidden;position:absolute !important;padding:0px !important;border:0px !important;height:1px !important;width:1px !important"):}:↑ "Middle East water sector poised for massive essential investment," Al-Bawaba, July 30, 2007.
:{Jump up:(style="top:-99999px;clip:rect(1px 1px 1px 1px);overflow:hidden;position:absolute !important;padding:0px !important;border:0px !important;height:1px !important;width:1px !important"):}:↑ Press release, "U.S. Co-Sponsors Clean Water Conference in Bangkok; Meeting to include U.S. suppliers of water-related technologies," State Department, June 20, 2002.
:{Jump up:(style="top:-99999px;clip:rect(1px 1px 1px 1px);overflow:hidden;position:absolute !important;padding:0px !important;border:0px !important;height:1px !important;width:1px !important"):}:↑ "Asia asked to pave way for private-led development of water industry," Agence France Presse, November 2, 1999.
:{Jump up:(style="top:-99999px;clip:rect(1px 1px 1px 1px);overflow:hidden;position:absolute !important;padding:0px !important;border:0px !important;height:1px !important;width:1px !important"):}:↑ Press release, "International Private Water Association Founded This Week To Promote Private Investment in Global Water Sector," IPWA via PR Newswire, March 24, 1999.
↑ ^Jump ^up ^to:11.0 ^11.1 "Membership," International Private Water Association website, accessed February 2009.
:{Jump up:(style="top:-99999px;clip:rect(1px 1px 1px 1px);overflow:hidden;position:absolute !important;padding:0px !important;border:0px !important;height:1px !important;width:1px !important"):}:↑ "Global water grab: how corporations are planning to control our local water services," Catholic New Times, June 29, 2003.

External resources

External articles

"Anti-privatisation Wave Sinks Corporate Lobby Group," Corporate Europe Observatory, accessed May 2006.

External links

Categories:

PR Watch [1] / By Mary Bottari [2]

The Fight to Take Public Assets Back from Private Control May Be Winning in California

October 30, 2013 |

While high profile privatizations have dominated the news in recent years, a new trend is quietly emerging -- communities taking public assets back under public control. The trend is most pronounced in the area of water resources. In communities across the country, people are deciding that water is just too precious to subject to the profit motive.

No state has seen more of these "reverse" privatizations than California. Today, multiple towns are fighting for-profit firms for control of the public's water. One of those firms is the New Jersey-based for-profit American Water (known as California American Water Co. or Cal Am in California).

On the scenic Monterey Peninsula, a citizen's group called "Public Water Now" makes a compelling case for public control of the peninsula's scarce water resources. Public Water Now alleges that Cal Am's long-term mismanagement of the water resources and failed efforts to secure new water resources have cost ratepayers some $100 million [3] since 2004.

In 1995, a court ordered pumping of the area's primary water source, the Carmel River, to be cut back by 70 percent by 2017. With the deadline looming, Cal Am has failed to secure another source of water. "Cal Am has shown either poor planning, poor management, poor judgment, poor decision-making, or all of the above," says Public Water Now's website. Even though it has failed in its major responsibility to the Monterey Peninsula, the firm has raked in a steady rate of profit from peninsula residents -- 30 cents on the dollar [4] in pretax profits for 2012.

After abandoning two prior plans for establishing desalination facilities, Cal Am has a new proposal for another "desal" plant. The project would depend on a ratepayer surcharge and a public bond offering. This would pass nearly all risks on to ratepayers say critics, but at the end of the day ratepayers would have no ownership stake in the asset.

Some peninsula residents are saying enough. They want public control of the public's scarce water resources.

When it Comes to Precious Water, Is it Better to Be a Renter or an Owner?

In the United States, 86 percent of Americans receive their water services from a publicly owned and operated utility. But for-profit firms have made inroads in recent decades and see public water as a new profit center. In 2011, Citigroup economist Willem Buiter predicted that "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."

"Any solution to the Monterey Peninsula's serious water problem demands long term planning, long term investment and a consistent public planning process unfettered by short term demands for shareholder profitability. Public ownership and public control would make the whole process easier and remove conflicts of interest," Wenonah Hauter, Executive Director of the non-profit watchdog group Food & Water Watch, told CMD.

Cal Am is "so strongly driven by pure profit that they will simply ignore more economical options," says Ron Cohen. Cohen, a successful software executive, founded the nonprofit advocacy organization Public Water Now [5]. The group studied the situation and drafted an initiative for voters that would require the Monterey Peninsula Water Management District to pursue a public purchase of Cal Am's local assets.

"You just have to ask yourself," Cohen said [6], "do you want to be a renter for the rest of your life, and for generations to come, or do you want to be an owner?"

The initiative reads [7]: "The voters of the District assert that the District should, as soon as practicable and to the extent permitted by law, pursue the acquisition of Cal Am's water system assets and infrastructure in order to deliver maximum value to ratepayers in perpetuity. Such public ownership of the water system not only will remove Cal Am's current for-profit, investor-driven bias, but will also eliminate the excessive fees, costly procedures, and burdensome jurisdictional control of the CPUC over water service on the Monterey Peninsula."

The issue will be put to the voters on the June 2014 ballot.

Cal Am Prepping for Battle

But it won't be smooth sailing for proponents of public water. Cal Am has made a lot of money on the peninsula and is not likely to go down without a fight. It successfully beat back a previous referendum on public water.

In November 2005, groups mobilized behind "Measure W," a question on the ballot that would have simply authorized a study to assess the process for a community buy-out of the water utility. To defeat the measure, Cal Am hired BNA Communication, which used direct mail, field communications, and television, radio, and newspaper advertisements to fight back. Measure W was defeated [8] with 62 percent voting no. A judge later allowed Cal Am to pass the costs of its "public outreach" -- $1,353,831 -- onto its customers through new surcharges.

This time around, it will be different, says Cohen. First, while the previous initiative authorized only an expensive study, "the new initiative maps a direct line from passage to acquisition," says Cohen. Second, Public Water Now conducted a poll showing that two-thirds of residents were inclined to support the initiative. The group has teams geared up to go door-to-door to make the case for public control, and they are already past the halfway point on signature collection. But the biggest difference between 2005 and today is that "we have had eight more years of Cal Am and they have failed on two more occasions to solve the peninsula's water problems," says Cohen.

Scare tactics will be the company's preferred rebuttal. Cal Am representative Catherine Bowie told the local news [9] that any public takeover will result in an eminent domain proceeding because Cal Am's assets are "not for sale." She warned that any eminent domain proceeding would be lengthy, contentious, and costly.

Eminent domain is a legal tool used by governments to purchase private property for a public purpose, such as for the construction of power lines. If homeowners don't want to sell, the government can still legally secure the property as long as it pays "fair market value."

But the threat does not bother Cohen. He points to Felton, California. In 2001, Cal Am purchased Felton's water system and a year later proposed a 74 percent rate hike. In response, residents formed an action group and petitioned Santa Cruz County to establish a public agency to exercise control over the water system. In July 2005, Felton residents voted 3-to-1 in favor of issuing $11 million in bonds and raising taxes in order to buy their water system back. The water district offered Cal Am $7.6 million, its appraised value, but the company refused, demanding $25 million. A week before the eminent domain proceeding was set to begin, however, the company settled the case for $10.5 million [10].

Since then, the community has steadily invested in the water system, and homeowners have saved about 30 percent [11] on their water bills, says Food & Water Watch.

Trend Towards Public Ownership or "Municipalization"

In case you think the Monterey struggle is quixotic, you should know there is a bit of a trend in successful public takeovers or "municipalizations."

Ron Cohen explains that most of these municipalizations have to do with three issues: local control, better customer service, and better prices:

In 2007, the city of O'Fallon, Missouri was considering selling its public water system to American Water, but delayed after public protest. In 2009, after more than two decades of contracting with private companies to run the system, the city opted for complete public provision of water. It saved 15 percent by operating the systems with public workers instead of private contractors.
In 2008, citizens in the town of Cave Creek, Arizona took control of their water system, which had always been privately owned and operated.
In 2001, Montara, California residents voted four-to-one in favor of a public takeover of the water system. At first, Cal Am refused to sell, but the California Public Utilities Commission and Montara Water & Sanitary jointly purchased the system in August 2003.

But there is a fourth reason as well. When Public Water Now polled peninsula residents on how they felt about a public takeover, "their number one reason was to keep the money in the local community. In the next 10 years, $300 million will be sucked off the peninsula and sent to New Jersey never to be recovered," contends Cohen.

With a public water system, any revenues raised are not forked over to distant shareholders, but are reinvested into the public system for the long term. And any desalination facility that is built will be owned and controlled by the members of the community themselves.

For the first time on the Monterey Peninsula, citizens will be owners and not renters.

See more stories tagged with:

water [12],

water privatization [13]

Source URL: http://www.alternet.org/water/fight-take-public-assets-back-private-control-may-be-winning-california

Links:

[1] http://www.prwatch.org/

[2] http://www.alternet.org/authors/mary-bottari

[3] https://www.publicwaternow.org/public-vs-private/cal-am-stewardship/

[4] http://www.sourcewatch.org/images/9/91/AL_976-A_--_Monterey_2013_Step_Rate_Increase_--_Filed_with_the_CPUC.pdf

[5] https://www.publicwaternow.org/

[6] http://www.montereyherald.com/news/ci_24096870/public-water-nows-ron-cohen-brings-focus-cal

[7] https://www.publicwaternow.org/the-ballot-initiative/

[8] http://www.sourcewatch.org/index.php/American_Water_Works_Company

[9] http://www.ksbw.com/news/central-california/monterey/Continuing-controversy-about-peninsula-water/-/5738820/21398088/-/rvl5iez/-/index.html

[10] http://www.inthepublicinterest.org/case/felton-water-system

[11] http://documents.foodandwaterwatch.org/doc/Felton_FS-2013-10.pdf

[12] http://www.alternet.org/tags/water-0

[13] http://www.alternet.org/tags/water-privatization

[14] http://www.alternet.org/%2Bnew_src%2B

http://www.alternet.org/print/environment/fighting-fires-big-business-private-companies

AlterNet [1] / By Paul Buchheit [2]

6 Reasons Privatization Often Ends in Disaster

October 20, 2013 |

Private systems are focused on making profits for a few well-positioned people. Public systems, when sufficiently supported by taxes, work for everyone in a generally equitable manner.

The following are six specific reasons why privatization simply doesn't work.

1. The Profit Motive Moves Most of the Money to the Top

The federal Medicare Administrator made $170,000 [3] in 2010. The president of MD Anderson Cancer Center in Texas made over ten times [4] as much in 2012. Stephen J. Hemsley, the CEO of United Health Group, made almost 300 times [5]as much in one year, $48 million, most of it from company stock.

In part because of such inequities in compensation, our private health care system is the most expensive system in the developed world. The price of common surgeries [6] is anywhere from three to ten times higher in the U.S. than in Great Britain, Canada, France, or Germany. Two of the documented [4] examples: an $8,000 special stress test [7] for which Medicare would have paid $554; and a $60,000 gall bladder operation [8], for which a private insurance company was willing to pay $2,000.

Medicare, on the other hand, which is largely without the profit motive and the competing sources of billing, is efficiently run, for all eligible Americans. According to the Council for Affordable Health Insurance [9] and other sources[10], medical administrative costs are much higher for private insurance than for Medicare.

But the privatizers keep encroaching on the public sector. Our government reimburses [11] the CEOs of private contractors at a rate approximately double what we pay the President. Overall, we pay the corporate bosses over $7 billion a year.

Many Americans don't realize that the privatization of Social Security and Medicare would transfer much of our money to yet another group of CEOs.

2. Privatization Serves People with Money, the Public Sector Serves Everyone

A good example is the U.S. Postal Service (USPS), which is legally required [12] to serve every home in the country. Fedex and United Parcel Service (UPS) can't serve unprofitable locations. Yet the USPS is much cheaper for small packages. An online comparison revealed the following for the two-day shipment of a similarly-sized envelope to another state:

-- USPS 2-Day $5.68 (46 cents without the 2-day restriction)

-- FedEx 2-Day $19.28

-- UPS, 2 Day $24.09

USPS is so inexpensive, in fact, that Fedex actually uses the U.S. Post Office for about 30 percent [13] of its ground shipments.

Another example is education. A recent ProPublica [14] report found that in the past twenty years four-year state colleges have been serving a diminishing portion of the country's lowest-income students. At the K-12 level, cost-saving business strategies apply to the privatization of our children's education. Charter schools are less likely to accept students with disabilities [15]. Charter teachers have fewer years of experience [16] and a higher turnover rate. Non-teacher positions have insufficient [17] retirement plans and health insurance, and much lower pay.

Finally, with regard to health care, 43 percent [18] of sick Americans skipped [19] doctor's visits and/or medication purchases in 2011 because of excessive costs. It's estimated [20] that over 40,000 Americans die every year because they can't afford health insurance.

3. Privatization Turns Essential Human Needs into Products

Big business would like to privatize our water. A Citigroup economist exulted [21], "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."

They want our federal land. Attempts at privatization were made by the Reagan [22] administration in the 1980s and the Republican-controlled Congress [23] in the 1990s. In 2006, President Bush proposed auctioning off 300,000 acres [22] of national forest in 41 states. Paul Ryan's Path to Prosperity [24] was based in part on Republican Jason Chaffetz' "Disposal of Excess Federal Lands Act of 2011," [25] which would unload millions of acres of land in America's west.

They want our cities. A privatization expert told [26] the Detroit Free Press that the real money is in urban assets with a "revenue stream." So Detroit's most valuable resource, its Water & Sewerage Department (DWSD), is the collateral [27] for a loan of $350 million to pay off the banks handling the litigation. Bloomberg [28] estimates a cost of almost half a billion dollars, in a city where homeowners can barely afford the water services.

And they want our bodies. One-fifth of the human genome [29] is privately owned through patents. Strains of influenza and hepatitis have been claimed [30] by corporate and university labs, and because of this researchers can't use the patented life forms to perform cancer research.

4. Public Systems Promote a Strong Middle Class

Part of free-market mythology is that public employees and union workers are greedy takers, enjoying benefits that average private sector workers are denied. But the facts show that government and union workers are not overpaid. According to the Census Bureau [31], state and local government employees make up 14.5% of the U.S. workforce and receive 14.3% of the total compensation. Union members make up about 12% of the workforce, but their total pay [32]amounts to just 10% of adjusted gross income [33] as reported to the IRS.

The average private sector worker makes about the same salary as a state or local government worker. But themedian [34] salary for U.S. workers, 83% [31] of whom are in the private sector, was $18,000 less in 2009, at $26,261. Inequality is much more pervasive in the private sector.

5. The Private Sector Has Incentive To Fail, or No Incentive At All

The most obvious incentive to fail is in the private prison industry. One would think it a worthy goal to rehabilitate prisoners and gradually empty the jails. But business is too good. With each prisoner generating [35] up to $40,000 a year in revenue, the number of prisoners in private facilities has increased [36] from 1990 to 2009 by more than 1600%, from about 7,000 to over 125,000 inmates. Corrections Corporation of America [37] recently offered to run the prison system in any state willing to guarantee that jails stay 90% full.

Nor do privatizers have incentive to maintain infrastructure. David Cay Johnston [38] describes the deteriorating state of America's structural foundation, with grids and pipelines neglected by monopolistic industries that cut costs rather than provide maintenance. Meanwhile, they achieve profit margins of over 50%, eight times the corporate average.

As for public safety, warning signs about unregulated privatization are becoming clearer and more deadly. The Texas fertilizer plant [39], 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 [40] to cut 500 firefighters. The rail disaster[41] in Lac-Megantic, Quebec followed deregulation of Canadian railways. At the other extreme is the public sector, and the Federal Emergency Management Agency (FEMA), which rescued [42] hundreds of people after Hurricane Sandy while serving millions more with meals and water.

The lack of private incentive for human betterment is evident throughout the world. The World Hunger Education Service [43] states that "Harmful economic systems are the principal cause of poverty and hunger." And according toNicholas Stern [44], the chief economist for the World Bank, climate change is "the greatest market failure the world has seen."

6. With Public Systems, We Don't Have to Listen To "Individual Initiative" Rantings

Back in the Reagan years, a stunning claim was made by Margaret Thatcher: "There is no such thing as society. There are individual men and women, and there are families." More recently, Paul Ryan complained [45] that government support "drains individual initiative and personal responsibility."

That's easy to say for people with good jobs.

Individual initiative? Our publicly supported communications infrastructure allows the richest 10% of Americans to manipulate their 80% share of the stock market [46]. CEOs rely on roads and seaports and airports to ship their products, the FAA and TSA and Coast Guard and Department of Transportation to safeguard them, a nationwide energy grid to power their factories, and communications towers and satellites to conduct online business. Perhaps most important to business, even as it focuses on short-term profits, is the long-term basic research that is largely conducted with government money. As of 2009 universities [47] were still receiving ten times more science & engineering funding from government than from industry.

Public beats private in almost every way. Only the hype of the free-market media keeps much of America believing that "winner-take-all" is preferable to working together as a community.

See more stories tagged with:

public [48],

private [49],

privatization [50],

david cay johnston [51],

taxes [52]

Source URL: http://www.alternet.org/civil-liberties/6-reasons-privatization-often-ends-disaster

Issa trying to privatize the PO (have to fund pension 75 years when no other biz or agency has to; also ALEC?

alec oklahoma may? 2013:

Jane Carter, an economist at AFSCME, identified the problems with the ALEC privatization agenda, particularly the Public-Private Fair Competition Act, a "forced privatization" [11] bill that requires public services be turned over to corporate control if private industry claims they can do the service; this bill was recently introduced in Michigan. Phillip Martin of Progress Texas described how ALEC's healthcare agenda -- particularly its adoption of the Health Care Compact, which asserts state control over health care -- could be used to thwart federal healthcare reform.

ALEC Bills Undermine Environmental Regulations, First Amendment

ALEC energy, environment, and agriculture bills moving in the first six months of 2013 include:

The "Electricity Freedom Act," introduced in six states, repealing (or in some states weakening) Renewable Portfolio Standards. The standards have been a key component driving renewable energy growth -- which threatens the profits of ALEC's polluter members.

Variations on the "Resolution in Support of the Keystone XL Pipeline"(introduced in ten states) calling on the federal government to approve the controversial project to transport tar sands oil from Alberta, Canada across the United States. It is no coincidence that pipeline operator TransCanada is an ALEC member and funder.

The misleadingly-named "Disclosure of Hydraulic Fracturing Fluid Composition Act" (introduced in five states) which would actually make it harder to find out what chemicals are being pumped underground through the fracking process. The bill, which was brought to ALEC by Exxon Mobil, carves out a giant loophole for "trade secrets" -- potentially concealing the information the public might want to know.

The "Environmental Literacy Improvement Act" (introduced in five states), seeks to sow doubt in the minds of young people about man's role in the warming planet by requiring that educators "teach the controversy" when it comes to topics like climate change, where the science is beyond dispute.

The "Environmental Services Public-Private Partnership Act" (introduced in two states) would give for-profit companies control of vital public health services like treating wastewater and drinking water -- the last place where you want a company to cut corners to increase profits.

The "Animal and Ecological Terrorism Act" (variations of which were introduced in nine states) have come to be known as "Ag-Gag" bills, as they criminalize investigations into abuses on factory farms and deem videographers "terrorists."

The "Disposal and Taxation of Public Lands Act" (considered in :{seven states:(style="background-color:#fff200"):}:) was modeled after a Utah law from 2012 and is an updated version of the ALEC "Sagebrush Rebellion Act," where Western states assert control over federal lands that are being protected as wilderness preserves, in many cases to allow for resource extraction.

On February 25, 2011, Florida State Representative Chris Dorworth (R-Lake Mary) introduced HB 1021. The bill sought to curtail the political power of unions by prohibiting public employers from deducting any amount from an employee’s pay for use by an employee organization (i.e., union dues) or for any political activity (i.e., the portion of union dues used for lobbying or for supporting candidates for office).

Furthermore, HB 1021 stated that, should a union seek to use any portion of dues independently collected from members for political activity, the union must obtain annual written authorization from each member.

In effect, this bill defunds public-sector unions–like AFSCME, SEIU, the American Federation of Teachers and the National Education Association–by making the collection of member dues an onerous, costly task. With public-sector unions denatured, they would no longer be able to stand in the way of radical free marketeers who plan to profit from the privatization of public services.

Given the similarities between HB 1021 and a rash of like-minded bills in states across the country, including Wisconsin, on March 30 a public records request was sent to Dorworth’s office seeking copies of all documents pertaining to the writing of HB 1021, including copies of any pieces of model legislation the American Legislative Exchange Council (ALEC) may have provided.

Within an hour of submitting this request, Florida House Speaker Dean Cannon’s (R-Winter Park) Communications Director Katherine Betta responded: “We received a note from Representative Dorworth’s office regarding your request for records relating to the American Legislative Exchange Council and HB 1021. Please note that Mr. Dorworth’s legislative offices did not receive any materials from ALEC relating to this bill or any ‘model legislation’ from other states.”

But two weeks later Dorworth’s office delivered 87 pages of documents, mostly bill drafts and emails, detailing the evolution of what was to become HB 1021. Buried at the bottom of the stack was an 11-page bundle of neatly typed material, labeled “Paycheck Protection,” which consisted of three pieces of model legislation, with the words “Copyright, ALEC” at the end of each.

Dorworth legislative assistant Carolyn Johnson claims that, although Dorworth is an ALEC member, neither she nor her boss have any idea how the ALEC model legislation found its way into Dorworth’s office. Dorworth could not be reached for comment.

Enter the Koch Brothers

Nov. 2, 2010 saw a radical cohort of Republicans swept into office in states across the country.

When the legislative sessions began in January, the American news-consuming public was shocked by the tenacity of this new breed of Grand Old Partier as it set to the task of breaking public employee unions, dismantling state government and privatizing civic services.

While battles still rage in the nation’s legislatures and statehouses, mainstream media attention peaked in February and March with the culmination of the fight over Gov. Scott Walker’s budget bill AB 11, which sought to curtail the collective bargaining rights of government employees and thus disempower Wisconsin’s public sector unions.

When on February 23 the Buffalo Beast published recordings and transcripts of a prank call to Walker from a Beast reporter posing as billionaire GOP donor David Koch, it became apparent how intimately involved brothers David and Charles Koch were in Walker’s efforts to break public sector unions.

Subsequently, bloggers and editorialists began batting around possible scenarios involving myriad right-wing public policy foundations funded by the Koch brothers and proceeds of Wichita, Kan.-based Koch Industries (and other Koch-controlled corporations). During such speculation, one name arose as the favorite villain behind the multitude of bills aimed squarely at public employee unions. That name was ALEC (see sidebar detailing the organization’s Koch connections).

An exhaustive analysis of thousands of pages of documents obtained through public records requests from six states, as well as tax filings, lobby reports, legislative drafts and court records, reveal that these suddenly popular anti-public employee bills, while taking different forms from state to state, were indeed disseminated as “model legislation” by ALEC.

Not coincidentally, bills similar to those in Florida and Wisconsin have been introduced in Arizona, California, Illinois, Iowa, Indiana, Kansas, Maine, Maryland, Michigan, Minnesota, Missouri, North Carolina, New Hampshire, New Jersey, New Mexico, Ohio, Oklahoma, Rhode Island, Tennessee, Texas, Utah and Vermont.

The purported goal of this nationwide movement has been to reduce the budgetary burden posed by public employee salaries by limiting the right of public employees to collectively bargain for pay and other benefits. These restrictions, along with “paycheck protection” laws, curtail the political power of public employee unions by cutting off funds for political campaign and lobbying expenditures. These measures would effectively thwart attempts by public employee unions to resist privatization of government functions and to support candidates opposing elected officials who vote for corporate giveaways of public resources.

‘Publicopoly’ in play

ALEC contends that government agencies have an unfair monopoly on public goods and services. To change that situation, it has created a policy initiative to counter what it calls “Publicopoly.” ALEC’s stated aim is to provide “more effective, efficient government” via privatization–that is, the shifting of government functions to the private sector. ALEC lists its initiatives on its website (alec.org/publicopoly).

Though the specifics are secret and “restricted to members,” ALEC openly advocates privatizing public education, transportation and the regulation of public health, consumer safety and environmental quality including bringing in corporations to administer:

• Foster care, adoption services and child support payment processing.

• School support services such as cafeteria meals, custodial staff and transportation.

• Highway systems, with toll roads presented as a shining example.

• Surveiling and detaining convicted criminals.

• Ensuring the quality of wastewater treatment, drinking water, and solid waste services and facilities. (After all, when someone mentions a safe and secure public water supply, the voter’s next immediate thought is: “Only if it’s cost-effective!”)

ALEC nuts and bolts

ALEC is a 501(c)(3) not-for-profit organization that in recent years has reported about $6.5 million in annual revenue. ALEC’s members include corporations, trade associations, think tanks and nearly a third (about 2,000) of the nation’s state legislators (virtually all Republican). According to the group’s promotional material, ALEC’s mission is to “advance the Jeffersonian principles of free markets, limited government, federalism, and individual liberty, through a nonpartisan public-private partnership of America’s state legislators, members of the private sector, the federal government, and general public.”

ALEC currently claims more than 250 corporations and special interest groups as private sector members. While the organization refuses to make a complete list of these private members available to the public, some known members include Exxon Mobil, the Corrections Corporation of America, AT&T, Pfizer Pharmaceuticals, Time Warner Cable, Comcast, Verizon, Wal-Mart, Phillip Morris International and Koch Industries, along with a host of right-wing think tanks and foundations.

ALEC is composed of nine task forces–(1) Public Safety and Elections, (2) Civil Justice, (3) Education, (4) Energy, Environment and Agriculture, (5) Commerce, Insurance and Economic Development, (6) Telecommunications and Information Technology, (7) Health and Human Services, (8) Tax and Fiscal Policy and (9) International Relations–each comprised of “Public Sector” members (legislators) and “Private Sector” members (corporations and interest groups).

Each of these task forces, which serve as the core of ALEC’s operations, generate model legislation that is then passed on to member lawmakers for introduction in their home assemblies. According to ALEC promotional material, each year member lawmakers introduce an average of 1,000 of these pieces of legislation nationwide, 17 percent of which are enacted. For 2009, ALEC claimed a total of 826 pieces of introduced legislation nationwide, 115 of which were passed into law–slightly below the average at 14 percent. ALEC does not offer its model legislation for public inspection.

ALEC refused to comment on any aspect of the material covered here.

‘Paycheck Protection’

The three pieces of model legislation contained in the ALEC “Paycheck Protection” bundle (archived at dbapress.com here) provided by Rep. Dorworth’s office were titled “Employee Rights Reform Act,” “Labor Organization Deductions Act” and “Political Funding Reform Act.”

Employee Rights Reform Act (ERRA): This bill establishes limitations on fees that may be charged to nonunion public employees who are part of a collective bargaining unit represented by a union.

ERRA states that no nonunion public employee may have more than a proportionate share of collective bargaining union costs withheld from their pay by a public employer. Chargeable activities are defined as expenditures for purposes of collective bargaining, contract administration and grievance adjustment. ERRA states that whether or not a public employer can deduct funds from a public employees pay for political activity–union organizing campaigns, contributing to political campaigns of elected officials, lobbying on behalf of their members, or raising money from their members to pay for union organizing campaigns–is dependent on “controlling court decisions.”

Labor Organizations Deductions Act (LODA): This is the only piece of the “Paycheck Protection” trilogy not aimed specifically at public employee unions (although the bill does name both the National Education Association and the American Federation of Teachers as entities that must comply with restrictions). LODA establishes a stringent set of criteria governing the means through which any labor organization may collect and use funds for political activity, such as lobbying, electoral and political activities, including contributions to any candidate, party or voter registration campaign.

LODA establishes criminal penalties for any labor organization found to have made a political contribution derived from dues or any other fee paid by union members. Further, LODA prohibits unions from soliciting funds for political use from any individual other than union members and their immediate family members.

Political Funding Reform Act (PFRA): While ERRA and LODA seek to significantly limit the amount and type of funds that may be deducted from employee pay–particularly as those funds may apply to union political activity–PFRA is designed to eliminate all withholding of public employee pay for use in any political activity. Simply put, under PFRA, unions would have to raise money for political purposes by directly fundraising to their members or other union supporters.

Florida: A case study

In the case of Florida’s HB 1021, e-mails provided by Rep. Dorworth’s office through a public records request reflect that the initial version of the bill had been drafted in January by then-Florida Chamber of Commerce (FCoC) Vice President of Government Affairs Adam Babington. A member of the FCoC Foundation’s board of trustees, Cincy Marsiglio, the senior manager of public affairs and government relations in Florida for Wal-Mart, is the Florida ALEC “private sector” chair (see sidebar below for more on ALEC’s public and private chairs). Babington’s original draft (evidently based on ALEC “Paycheck Protection” model legislation) underwent a revision aimed at curtailing the political activity of public employee unions. This revision was made by Florida State Senate staff who were working with Babington to create a Senate companion version of the bill.

This companion bill, SB 830, was sponsored by Sen. John Thrasher (R-Jacksonville). Thrasher worked for the influential Tallahassee lobby firm of Southern Strategy Group, Inc., from 2002 through his election to the Florida Senate in 2009, where he represented several FCoC and ALEC member corporations, many with interests in the privatization of state governmental functions (particularly in the areas of mental health and healthcare service contracting).

The primary actor on the Senate end of HB 1021’s formation was Andy Bardos, special counsel to Senate President Mike Haridopolos (R-Merrit Island). After a stringent anti-public employee union dues collecting provision was added by Bardos, Babington wrote in an e-mail to Dorworth and Johnson: “So, paycheck protection is about to go on steroids. Apparently the Senate wants to be more aggressive.”

Bardos, prior to joining the office of Senate President Haridopolos in early 2011, had worked since 2005 for the Florida law firm of GrayRobinson as an attorney specializing in governmental affairs.

Bardos’ former colleague, GrayRobinson attorney Fred Leonhardt, is currently on the board of directors of the FCoC, of which he was the former chair. Leonhardt is a member of Enterprise Florida, Inc., a “public-private partnership” that works as the economic development arm of the state.

Another director of Enterprise Florida is former Florida House Speaker Allan Bense (R-Panama City). Bense is the present chairman of FCoC, who derives a large portion of his annual income from a company he co-owns: GAC Contractors, Inc. As reported on his 2009 statement of financial interests (filed pursuant to his membership on the board of the quasi-public Enterprise Florida), Bense held nearly $5 million in GAC asssets, much of which was money earned from contracts to repair state and federal highways.

GAC is a prominent member of Associated Builders and Contractors, Inc. (ABC), which through its legislative efforts seeks to encourage the free flow of public-sector cash to nonunion private companies. ABC bills itself as being the nonunion “construction industry’s voice within the legislative, executive and judicial branches” of government. The bundled “Paycheck Protection” package containing ERRA, LODA and PFRA in Dorworth’s office had originated in ABC’s 2010 “legislative handbook.”

In addition to his FCoC, GAC and ABC connections, Bense is chair of the Florida-based, Koch-funded, ALEC-member public policy foundation, the James Madison Institute (JMI). FCoC baord member Leonhardt serves on the JMI board with Bense.

When asked why the FCoC was so deeply concerned with protecting the paychecks of public employees (to the point where FCoC top lobbyists were drafting legislation to such effect), FCoC Director of Public Affairs Edie Ousley declined to comment.

Both HB 1021 and SB 830 died in their respective chambers following pressure exerted on the FCoC by public employee union members.

According to materials obtained through a public records request, news of a large-scale opposition action made its way back to Dorworth in the form of an e-mail from Ousley, with the terse subject line “here’s the issue.” That e-mail contained a press release from a coalition of unions known as Floridians Outraged at the Chamber of Commerce’s Attack on Workers, which read in part: “Wednesday, April 20…Workers respond to attacks from the Chamber of Commerce… Labor organizations and members withdrew close to $10 million in funds from the Chamber’s largest banks.” The press release went on to indicate that the group was prepared to issue further “wave(s) of withdrawals” and other actions.

Weeks later, on May 7, the bills’ sponsors withdrew both bills from legislative hearings calendars.

lueprint for privatization

Should state employee unions be effectively prohibited from politicking, as “paycheck protection” legislation seeks to do, other pieces of ALEC model legislation seeking to privatize state functions would meet with less resistance. Three of these model bills–the Council on Efficient Government Act (CEGA), the State Council on Competitive Government Act (SCCGA) and the Public-Private Fair Competition Act (PPFCA)–call for the creation of state “councils” or “committees” tasked with streamlining state agency performance and identifying services to be outsourced to the private sector.

PPFCA calls for the broadest scope of privatization. The act seeks to prohibit state governments from “engaging in any commercial activity of any goods or services to or for government agencies or for public use which are also offered by private enterprise.” It also calls for the creation of “Private Enterprise Advisory Committees” (PEAC). The committee members–the majority of whom are business owners or corporate officers–would review what services, if any, government should continue to provide citizens.

The nonprofit roach motel

Public records requests demonstrate a clear tradition of ALEC model legislation being passed from ALEC-member corporate lobbyists through the offices of ALEC’s elected public-sector chairs to other lawmakers. In essence, ALEC has created a web of lawmakers and public employees who act as lobbyists/agents on their behalf and on behalf of their corporate and special interest members.

It is important to note that ALEC, as a 501 (c) (3) entity, is strictly prohibited by federal tax code from taking part in the formation of legislation. In the past year, ALEC has vociferously insisted (since falling under increased scrutiny as a result of the July 2010 In These Timescover story, “Corporate Con Game,” which documented ALEC’s role in disseminating model legislation based on Arizona’s SB 1070), that it simply passes model legislation along to lawmakers. As such, ALEC claims it is not engaged in the crafting of actual legislation, nor is it engaged in lobbying.

Despite such protestations, ALEC is a conduit, an intermediary between Corporate America and the Republican Party–a legislative roach motel controlled by corporations, special interest groups and right-wing think tanks through which lawmakers (whose election campaigns are often funded by the same corporations and interest groups) gather model laws to take home and introduce in state legislatures.

Taken together, ALEC’s efforts to shape legislation, beguile lawmakers and privatize government services have one clear goal: to eliminate the public sector altogether.

SIDEBAR: PLAYING FAST AND LOOSE WITH NONPROFIT STATUS

ALEC annually spends more than $1 million for corporate lobbyists to meet state lawmakers at lavish retreats–lawmakers who will return home and try to shepherd ALEC’s corporate-sponsored “model legislation” into law.

However, through an accounting sleight of hand, ALEC hides the identity of the corporations that are paying for the lawmakers’ junkets and backing the group’s model legislation.

In recent years, ALEC has taken in about $6.5 million in tax-deductible donations: From 1999 through 2009, ALEC reported $743,446 in legislative (“public sector”) membership dues, with a two-year membership at $100; during the same 10-year period, ALEC reported $54,504,702 in “gifts,” “grants” and other contributions from its corporate and special interest members.

In 2009 alone, ALEC tax returns show that the group spent a combined $2,620,343 on organizing conferences and a membership services program that manages “the recruitment and retention of ALEC state legislator members” and “provides assistance to ALEC state chairs in raising state scholarship funds, tracking the expenditures of these funds, and ensuring that members of ALEC leadership are operating in accordance with ALEC policies and procedures.” In 2009, ALEC held $1,042,629 as “scholarship” funds to reimburse lawmakers attending ALEC functions. That’s listed on the tax returns not as an expenditure, but as a liability. Through this accounting trick, ALEC retains its tax-exempt status while simultaneously wining and dining thousands of the nation’s state lawmakers–who then go on to introduce ALEC’s legislation. In each state, ALEC has both a “public sector” and “private sector” chair.

In a memo to its “public sector” chairs, on Oct. 29, 2010, ALEC justifies its active role in creating model legislation while maintaining its not-for-profit status this way:

[L]aws are not passed, debated or adopted during this process and therefore no lobbying takes place. That process is done at the state legislatures. … Just like teachers, farmers and ranchers, senior citizens and other groups, businesses have the right to representation and to inform legislators about their industry.”

Case study: Arizona

Documents released following a public records request to the office of then-Arizona Senate President Bob Burns (R-Peoria) indicate that in 2009 and 2010, Arizona ALEC lawmakers requested more than $60,000 in reimbursement for travel, lodging and registration fees from ALEC’s scholarship fund for their time at ALEC functions–including the December 2009 event at which State Senator Russell Pearce (R-Mesa) submitted his draft of SB 1070 for approval as a piece of ALEC model legislation, the law known as “breathing while Brown” to its critics. (See “Corporate Con Game: How the private prison industry helped shape Arizona’s anti-immigrant law,” In These Times, July 2010.)

Records indicate that Burns approved all of these requests. Disbursements ranged from around $1,000 to $3,000. This is a considerable sum, given that an Arizona legislator earns $24,000 per year and that the maximum allowable contribution from an individual or political action committee to legislative candidates in the state is $424.

But because the monies raised for the ALEC scholarship fund are donated by member corporations and their representatives, and because the identity of these donors is impossible to determine, ALEC may be operating in direct opposition to a provision of Arizona’s “gifting” law.

Arizona Revised Statutes (ARS), title 41-1232.03, section (I), states: “A person or organization shall not make a gift to or an expenditure on behalf of a member or employee of the legislature through another person or organization for the purpose of disguising the identity of the person making the gift or expenditure.” In addition, Arizona law requires lawmakers to disclose all “gifts” over $500.

Yet ALEC does not give “gifts,” according to ALEC Senior Director of Public Affairs Raegan Weber, based in Washington, D.C. “It’s not a ‘gift,’ ” she says. “It’s a ‘scholarship.’ We don’t give gifts. A gift is something given out of kindness. I’m gonna give you this. A scholarship has specific specifications which must be met.”

According to Weber, the scholarship funds do not come from ALEC. Rather, Weber says that all funds are raised in each state by either the state’s public or private sector chairs, independent of ALEC. After being raised, the funds are simply given to ALEC for the group to hold until each state’s public sector chairs request a disbursement, she says.

On Nov. 8, 2010, the Tucson chapter of the American Friends Service Committee (AFSC), a Quaker social justice organization, called on the Arizona Secretary of State and the Arizona Attorney General to investigate what it describes as ALEC’s “influence peddling.”

“Any rational person can look at what these corporations are doing through ALEC and on their own and know that essentially for-profit corporations are writing legislation in Arizona,” said Caroline Isaacs, AFSC program director. “The spirit of the law–which I think most of us believe is there to prevent money from buying undue influence in politics–is clearly being violated.”

When asked to provide a list of specific donors to the Arizona ALEC scholarship fund, Russell Smoldon, the ALEC Arizona “private sector” chair, utility lobbyist and a member of the ALEC Private Enterprise Board task force that raises those funds, declined to do so. “No. I don’t want to start scaring people off. I have a hard enough time raising money.”

SIDEBAR: ALEC AND ITS TEA PARTY SUGAR DADDIES

ALEC claims to be an independent, nonpartisan, public-private partnership, but the best metaphor for the organization is an aspen grove. An aspen grove appears to be a cluster of individual trees, but a look beneath the surface reveals that each tree is an offshoot of the same large root network, each tree genetically identical to the other.

In the case of ALEC, a common filament in that network is the Koch brothers, Charles and David. Through the profits of Wichita, Kan.-based Koch Industries (and other Koch-controlled corporations), the two billionaire brothers fund myriad right-wing public policy foundations.

ALEC has received significant funding from the Charles Koch Foundation (CKF), which also funds the Cato Institute, a libertarian think tank. In 1974, Cato was originally incorporated as The Charles Koch Foundation. David Koch is currently on its board of directors.

David Koch is also a trustee of The Reason Foundation, a libertarian public policy institute and prominent ALEC member that promotes the privatization of government (and also receives CKF funding). Michael Flynn, Reason’s current director of government affairs, served as a director of ALEC policy and legislative activities/strategic initiatives for several years ending in 2003.

David Koch also currently chairs the Americans for Prosperity Foundation (AFPF), formerly known as the Citizens for a Sound Economy Educational Foundation (another prominent ALEC-contributor), largely funded by CKF and Koch Industries. Joining him on that board is Koch Industries Executive Vice President Richard Fink, who is also the former executive vice president of the Mercatus Center, yet another Koch-funded, right-wing ALEC public policy member.

In 2003, AFPF incarnated two more foundations: Americans for Prosperity and FreedomWorks. As noted in AFPF’s 2003 tax records, the group paid U.S. House Majority Leader Dick Armey (R-Texas) $429,583, via FreedomWorks, as a “consultant”–his first year salary as chairman of FreedomWorks.

As Kate Zernike noted in our October 2010 cover story, “Tea Party Confidential,” Armey and the group’s president Matt Kibbe wrote an op-ed article in 2007 proposing the Boston Tea Party as a model for putting grassroots pressure on a central government. She writes, “Presaging Tea Party tactics in the summer of 2009, they described how Samuel Adams packed town hall meetings with his supporters to drown out Tory voices and used each new British policy or tax as ‘an excuse to rally new recruits to the cause of American independence.’ They wrote, ‘Adams was the first American to recognize that “it does not require a majority to prevail, but rather, an irate, tireless minority keen to set brush fires in people’s minds.’ “

Beginning in 2009, FreedomWorks was instrumental in creating the faux-populist Tea Party. The mainstream media uncritically hyped the scores of Tea Party tax day protests orchestrated by FreedomWorks and the National Taxpayers Union (another Koch-funded ALEC group headed by former ALEC executive director Duane Parde), thus helping enable unprecedented Republican legislative majorities in states across the nation.

The source material for this story, including ALEC model legislation and anextended version of this story, is archived at dbapress.com, a website maintained by the author.

Beau Hodai, a former In These Times Staff Writer, is the founder of DBA Press (dbapress.com), an online news publication and source materials archive.

More information about Beau Hodai

AlterNet [1] / By Michael Hudson [2]

Oligarchs of the New Feudal Order Have Big Plans for You: Buy the Pavement and Charge You to Walk

July 7, 2013 |

The Federal Reserve’s QE3 has flooded the stock and bond markets with low-interest liquidity that makes it profitable for speculators to borrow cheap and make arbitrage gains buying stocks and bonds yielding higher dividends or interest. In principle, one could borrow at 0.15 percent (one sixth of one percent) and buy up stocks, bonds and real estate throughout the world, collecting the yield differential as arbitrage. Nearly all the $800 billion of QE2 went abroad, mainly to the BRICS for high-yielding bonds (headed by Brazil’s 11% and Australia’s 5+%), with the currency inflow for this carry trade providing a foreign-exchange bonus as well.

This financial engineering is not your typical bubble. The key to the post-2000 bubble was real estate. It is true that the past year and a half has seen some recovery in property prices for residential and commercial property. But something remarkable has occurred. So in this new debt-strapped low-interest environment, Hedge funds and buyout funds are doing something that has not been seen in nearly a century: They are buying up property for all cash, starting with the inventory of foreclosed properties that banks are selling off at distress prices.

Ever since World War II, the operating principle of real estate investors is never to use their own money – or at least, to use as little of their own as possible. Debt leveraging leaves the rental income paid to the banks as interest. The absentee owner is after the capital gain at the end of the bubble’s rainbow. That is what a bubble economy is all about. But the only way that investors can obtain current returns above today’s miniscule rates is to buy assets directly for cash.

In a bubble economy, falling interest rates (e.g., from 1980 to today) almost guarantee capital gains. But today’s near-zero interest rates cannot fall any further. They can only rise, threatening capital losses. That is what is panicking today’s bond and stock markets as the Fed talks about ending QE3’s near-zero interest rate regime. So there is little incentive for bond buying. Once interest rates rise, we are in an “anti-bubble” economy. Instead of capital gains driving “wealth creation” Alan Greenspan style, we have asset-price deflation.

In the bubble economy, families became convinced that the way to build up their wealth was to borrow as much as they could to buy the most expensive home they could, and ride the wave of asset-price inflation. But since 2008, consumers have paid down about $5 trillion of personal debt. This has meant using their wages and other income to pay down mortgages, student debt, auto debt, credit-card debt and other bank loans. This leaves only about a quarter of the typical family’s paychecks to spend on goods and services after paying the Finance, Insurance and Real Estate (FIRE) sector and the taxes shifted onto wage earners and consumers. The outlook looks dim for corporate sales and hence earnings. So instead of debt-leveraged inflation of asset prices, we have debt deflation of the overall economy.

To put this in perspective, from 1945 until interest rates rose to their peak in 1980, there was an almost steady 35-year downturn in bond prices. The Bubble Economy was fueled by interest rates being rolled back down to their 1945 levels and even lower. Credit flowed into the financial markets to buy stocks, peaking in the dot.com bubble in 2000, and then to inflate the 2001-2008 real estate bubble.

So we are now in is the Bubble Economy’s legacy. We can think of this as Phase 2: repayment time, along with foreclosure time. That is what happens in debt deflation. The Obama Administration has broken its 2008 campaign promises to Congress and to voters to write down mortgage debt to the ability to pay or to market prices reflecting realistic rental values. The debt legacy has been kept in place, not written down.

Carrying this debt overhead has caused a fiscal crisis. The financial and real estate bubble helped keep state and local finances solvent by providing capital gains taxes. These are now gone – and properties in default or foreclosure are not paying taxes. And whereas public pension funds assumed an 8+% rate of return, they now are making less than 1%. This has left pensions underfunded, and prompted some municipalities to engage in desperate gambles on derivatives. But the Wall Street casino always wins, and most cities have lost heavily to the investment banking sharpies advising them.

In place of a new bubble, financial elites are demanding privatization sell-offs from debt-strapped governments. Pressure is being brought to bear on Detroit to sell off its most valuable paintings and statues from its art museums. The idea is to sell their artworks for tycoons to buy as trophies, with the money being used to pay bondholders.

The same dynamic is occurring in Europe. The European Union and European Central Bank are demanding that Greece sell off its prime tourist land, ports, transport systems and other assets in the public domain – perhaps even the Parthenon. So we are seeing a neo-rentier grab for basic infrastructure as part of the overall asset stripping.

This is a different kind of inflation than one finds from strictly financial bubbles. It is creating a new neo-feudal rentier class eager to buy roads to turn into toll roads, to buy parking-meter rights (as in Chicago’s notorious deal), to buy prisons, schools and other basic infrastructure. The aim is to build financial charges and tollbooth rents into the prices charged for access to these essential, hitherto public services. Prices are rising not because costs and wages are rising, but because of monopoly rents and other rent-extraction activities.

This post-bubble environment of debt-strapped austerity is empowering the financial sector to become an oligarchy much like landlords in the 19th century. It is making its gains not by lending money – as the economy is now “loaned up” – but by direct ownership and charging economic rent. So we are in the “economic collapse” stage of the financialized bubble economy. Coping with this legacy and financial power grab will be the great political fight for the remainder of the 21st century.

*Michael Hudson’s book summarizing his economic theories, “The Bubble and Beyond,” is available on Amazon. His latest book is Finance Capitalism and Its Discontents. He is a contributor to Hopeless: Barack Obama and the Politics of Illusion, published by AK Press. He can be reached via his website, mh@michael-hudson.com [3]

This article was originally published by World Economic Association.

Pushback Against Privatization Across the Country

by Brendan Fischer [1] — June 28, 2013 - 8:17am

Topics: Corporations [2], Democracy [3]

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The decades-long effort to privatize public services and assets is hitting some bumps, with state and local governments reconsidering whether for-profit companies should be allowed to indiscriminately profit off of taxpayer dollars with limited accountability.

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In New Jersey, legislation to ensure that public services won't be privatized unless it will result in actual savings for taxpayers has passed both chambers of the legislature. In Texas, a bipartisan coalition is fighting against a private prison in Montgomery County, and Kentucky is rejecting private prisons altogether. And in Fresno, California, voters rejected a proposal backed by the city's popular mayor to privatize trash collection services.

“The fact is, when taxpayers see what they lose by handing over control of their roads, prisons and other services, they don’t want anything to do with outsourcing," says Donald Cohen, chair of In The Public Interest, a resource center on privatization. "We hope that what we’re seeing in places like New Jersey, Texas, Kentucky and Fresno is part of a trend to restore control of services to American taxpayers.”

New Jersey Could Curb Privatization Abuses

The New Jersey bill, if signed by Governor Chris Christie, might be the first of its kind in the nation. The legislation would prohibit privatization contracts that achieve "cost savings" by cutting services or raising rates, and also require that the company provide its workers comparable wages and benefits. This would thwart efforts by corporate interests to provide the veneer of cost savings by replacing middle-class public employees with low-wage workers.

The bill would also require for-profit corporations to actually stand by their promises: their performance would be subject to audit, which could lead to penalties or the loss of a contract if they fail to produce the promised cost savings.

Not surprisingly, the bill is opposed by groups like the Chamber of Commerce, who will likely urge Christie to veto it. And Gov. Christie is no stranger to privatization: at the same time the bill was moving through the legislature, Gov. Christie entered a contract to privatize the state's lottery system. Whether he will sign this latest bill to guarantee accountability for privatizers remains to be seen.

Tea Party and Others Raising Voices Against Private Prisons

Although the New Jersey proposal tracks a Republican-Democrat divide, in Texas, opposition to prison privatization is crossing party lines.

GEO Group is seeking to purchase a second prison in Montgomery County, but Tea Party groups and others are rallying against it.

Jon Bauman, vice president of the Texas Patriots PAC of The Woodlands, says the first correctional facility in the county -- which was constructed with $45 million in tax-exempt bonds -- ended up being primarily run as a federal institution rather than holding county inmates, as originally promised.

“This idea that they were building a jail for us was bogus, it was a fraud” he said. “They weren’t building a jail for us, they were building a jail for an industry.”

GEO Group is becoming familiar with rejection: earlier this year, for example, its effort to spend $6 million for naming rights on a Florida Atlantic University stadium was met with protests from students and faculty, causing the company to withdraw its [5] offer.

Other private prison operators are also feeling the heat. Kentucky is not renewing its contract [6] with Corrections Corporation of America, ending its three decade experiment on letting outside companies incarcerate inmates for the state. This is the fifth contract cancellation for CCA in a month.

In Fresno, "The People's Voice is Being Heard"

In Fresno, voters this month rejected an effort [7] backed by[8]Mayor Ashley Swearengin to outsource trash service for the city's 500,000 residents to a private company (and cut pay for its workers), in order to make up for budget shortfalls. Lawmakers narrowly passed the privatization plan in December, but it was sent to voters for approval after opponents collected 40,000 petition signatures.

Pro-privatization forces outspent opponents nearly 3-to-1 [9], but voters nonetheless voted to reject the Mayor's plan and keep trash collection in public hands.

Council Member Sal Quinterosaid of the vote [10]:

"The people's voice (against privatization) is being heard."

Center for Media and Democracy • 520 University Avenue, Suite 260 • Madison, Wisconsin 53703

Phone: 608-260-9713 • Fax: 608-260-9714

Source URL: http://www.prwatch.org/news/2013/06/12153/pushback-against-privatization-across-country

Links:

[1] http://www.prwatch.org/users/35275/brendan-fischer

[2] http://www.prwatch.org/topics/corporations

[3] http://www.prwatch.org/topics/democracy

[4] http://www.addtoany.com/share_save?linkurl=http%3A%2F%2Fwww.prwatch.org%2Fnews%2F2013%2F06%2F12153%2Fpushback-against-privatization-across-country&linkname=Pushback%20Against%20Privatization%20Across%20the%20Country

[5] http://www.nytimes.com/2013/04/03/sports/ncaafootball/stadium-wont-be-named-for-private-prison-company.html?ref=geogroupinc&_r=0

[6] http://www.businessweek.com/ap/2013-06-25/ky-dot-to-walk-away-from-last-private-prison

[7] http://wasterecyclingnews.com/article/20130612/NEWS08/130619968/fresno-voters-decide-to-stick-with-city-collections

[8] http://www.fresnobee.com/2013/06/08/3334755/power-shift-possible-at-city-hall.html

[9] http://www.fresnobee.com/2013/06/22/3356451/trash-vote-excites-local-left.html

[10] http://www.fresnobee.com/2013/06/08/3334755/power-shift-possible-at-city-hall.html#storylink=cpy

Group Launches "Taxpayer Empowerment Agenda" to Reclaim Public Control Over Public Assets and Destructive Outsourcing

by Brendan Fischer [1] — July 3, 2013 - 9:19am

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As cities and states struggle to raise revenue in a sagging economy, they have increasingly turned control of public services and assets over to for-profit corporations. But these short-term efforts to close budget gaps can have a disastrous long-term impact.

In Chicago, a Morgan Stanley-backed company took control of 36,000 public parking meters with a 75 year contract -- and as a result, parking fees have exploded, meters run until 10pm, and taxpayers must reimburse the company for lost meter profits when they want to hold a parade or street fair. The plan was quickly pushed through the City Council and passed with no public input or debate.

"It was a bad deal and has tied the hands of taxpayers ever since," said Alderman Roderick Sawyer of Chicago's Sixth Ward on a conference call Tuesday.

In South Carolina, after the state outsourced its water system, the for-profit corporation failed to pay state employee payroll taxes, lost track of tens of thousands of dollars, and lost millions of gallons of water. But the private company refused to come clean about what happened and comply with the public records law's transparency requirements, despite being funded by public dollars.

"Time and again, when we have privatized public infrastructure, the promises of better, faster, cheaper have failed to be delivered," says Donald Cohen, chair of In The Public Interest, a group that has long tracked the outsourcing of public services and assets to for-profit firms. "Outsourcing [in many cases] means taxpayers have little say in how tax dollars are spent and how services are run." Cohen's group is fighting to put control of public services and assets back into the hands of taxpayers.

Taxpayer Empowerment Agenda Lays Groundwork for a Turnaround

In the Public Interest and a bipartisan group of legislators are now promoting an affirmative agenda to put taxpayers in the driver's seat and avoid future privatization disasters.

The "Taxpayer Empowerment Agenda," which can be viewed on the ITPI website [3], is a set of legislative proposals that Cohen says are "rooted in basic American good government values and traditions:" accountability, transparency, shared prosperity, and competition.

The proposals would require that private companies trying to take over public services open their books and meetings to the public -- just as public institutions must do -- and actually follow through on their promises, with requirements that contracts provide for taxpayer oversight and the right to cancel if a company doesn't actually provide cost savings.

ITPI would also ban contractual language guaranteeing a company's profits, such as language in private prison contracts that call for 98% occupancy. Before contracts are signed, ITPI calls for an assessment of how outsourcing would affect the community, and after the contract expires, it would promote competition by requiring competitive bidding (rather than automatic renewal) and letting public workers and their unions submit their own cost-saving plans.

Additionally, because Cohen says outsourcing often results in a "race to the bottom for the local economy," where "middle class jobs become low wage jobs," the plan would also require contractors pay workers a living wage and benefits. Without these protections, he says, the loss of decent middle class jobs with benefits will continue to accelerate.

Bipartisan Support for Putting Taxpayer Back in Charge

On a call Tuesday announcing this proactive legislative agenda, a bipartisan group of legislators expressed support for this proactive agenda.

In cities like Chicago, Alderman Sawyer says, the drop in wages from privatization has disproportionately affected African-American and Latino families. He has introduced an ordinance that reflects ITPI's priorities, including a requirement that contractors pay a living wage and that at least half of its employees live within city limits.

Former Florida State Senator Paula Dockery, a Republican, emphasized that accountability for taxpayer-funded private entities should not be a partisan issue.

“Outsourcing our most vital public services shouldn’t be about left versus right," she said. "It should be about right versus wrong.”

Center for Media and Democracy • 520 University Avenue, Suite 260 • Madison, Wisconsin 53703

Phone: 608-260-9713 • Fax: 608-260-9714

Source URL: http://www.prwatch.org/news/2013/07/12167/group-launches-taxpayer-empowerment-agenda-reclaim-public-control-over-public-ass

Links:

[1] http://www.prwatch.org/users/35275/brendan-fischer

[2] http://www.addtoany.com/share_save?linkurl=http%3A%2F%2Fwww.prwatch.org%2Fnews%2F2013%2F07%2F12167%2Fgroup-launches-taxpayer-empowerment-agenda-reclaim-public-control-over-public-ass&linkname=Group%20Launches%20%22Taxpayer%20Empowerment%20Agenda%22%20to%20Reclaim%20Public%20Control%20Over%20Public%20Assets%20and%20Destructive%20Outsourcing

[3] http://www.inthepublicinterest.org/

http://www.projectcensored.org/top-stories/articles/13-education-reform-a-trojan-horse-for-privatization/

http://www.projectcensored.org/top-stories/articles/21-conservatives-attack-us-post-office-to-break-the-union-and-privatize-postal-services/

During the past two decades, the food industry has taken over much of the FDA’s role in ensuring that what Americans eat is safe. The agency can’t come close to vetting its jurisdiction of $1.2 trillion in annual food sales. In 2011, the FDA inspected 6 percent of domestic food producers and just 0.4 percent of importers. The FDA has had no rules for how often food producers must be inspected.

The food industry hires for-profit inspection companies — known as third-party auditors — who aren’t required by law to meet any federal standards and have no government supervision. Some of these monitors choose to follow guidelines from trade groups that include ConAgra Foods Inc., Kraft Foods Inc. and Wal-Mart. The private inspectors that companies select often check only those areas their clients ask them to review. That means they can miss deadly pathogens lurking in places they never examined.

Food sickens 48 million Americans a year, with 128,000 hospitalized and 3,000 killed, the Centers for Disease Control and Prevention estimates. The rate of infections linked to foodborne salmonella, which causes the most illnesses and deaths, rose 10 percent from 2006 to 2010. The U.S. had 37 recalls of fruits and vegetables in 2011, up from two in 2005. Many of the victims of contaminated food are those with under-developed or weakened immune systems, such as children and the elderly. More from Grist

http://www.privatizationwatch.org/ Nader? Reason?

http://heartland.org/policy-documents/privatization-watch

heartland? Articles include: Does Rail Transit Spurs Economic Development?, Boosting the Economy by Fighting Congestion, Fixing Downtown Detroit, Seven Keys to Development, Video Franchise Reform, Privatization Briefs; and Who, What, Where.

http://reason.org/publications/privatizationwatch/

cities of the commons:

ch 5 (online?)

Penn Turnpike up for sale 500 mi 7 tunnels

RMN sells mil is israel in 73 war embargo oil 2x times in 6 yrs (Bretton Woods breaking down, US crisis RMN dumps gold st'd0 NYSxge loses 1/2 in 2 yrs 159 ...current crisis, cities in trouble

The sell-off of public assets is described in another essay with examples of frittering away assets under value to the detriment of future generations.

griftopia

DN: As we discuss the spate of extreme weather in the United States, the author and professor Christian Parenti argues that the Republican-led assault on the public sector will leave states more vulnerable to global warming’s effects. "Another thing that’s missing from these discussions is not just the words 'climate change,' but the words 'public sector,'" Parenti says. "I mean, who’s out there fighting these fires? It’s the public sector, you know? Where do people go when there are these cooling centers? It’s the public sector. ... This assault on the public sector must be linked to climate change." We’re also joined by The Guardian’s U.S. environment correspondent Suzanne Goldenberg and by Jeff Masters, director of meteorology at the Weather Underground website. [includes rush transcript] http://www.democracynow.org/2012/7/3/climate_disasters_toll_worsened_by_sustained

day before 911 don r said us wastes 3b/yr by not outsrc non-combat

kbr no-bid contract, only did 7% of work but billed for all 174 just before report it got 2.3 b contract 5 yrs

blackwater got more than billion from gov 174

erik p at u of mi talk said he still ran com called in airstrike in afgan, ~ geneva conv, moved to bahrain, said we shd have pvt contactors in nigeria, yemen, somalia, saudi 175

cia allows employees to moonlight for corps and hedge funds crier

onday, Aug 23, 2010 12:30 PM UTC

The creeping threat of backdoor privatization

Bit by bit, financial responsibility for some of the most important public services is being passed on to you

By Alyssa Battistoni

It has come to this: Parents are now being asked to send their children to school with their own toilet paper. And not just toilet paper, but all sorts of basic items that schools themselves used to provide for kids. It’s all part of a disturbing trend, highlighted by the New York Times last week, of cash-strapped public schools — their budgets eviscerated by state cutbacks — shifting more and more financial responsibility onto parents.

Privatization meant transferring responsibility for entire programs or functions to the private sector. But with the drastic budget cuts that states have been forced to make, responsibility for public services and programs is literally being forced into private hands one roll of toilet paper at a time. We’ve entered the era of backdoor privatization.

On the surface, these stop-gap measures don’t seem unreasonable. After all, it’s hardly new for parents in well-off school districts to chip in for supplies, music classes and even teacher’s salaries in an effort to minimize the effect of school budget cuts on their children. What is new, though, is the extent to which families are being asked to contribute basic items. This may be too much to ask of parents who are struggling to pay their own bills — especially since they’ve already paid taxes that are supposed to support the public school system.

Nor is backdoor privatization a phenomenon limited to local schools.

Public university systems are increasingly emulating private universities by turning to wealthy alumni for donations — even as tuition rises because some legislators see hiking it as a way to raise money for their fungible state budget items.

Missouri, Georgia, and Arizona have been forced to slash their transit budgets and services, leaving hundreds of thousands without a way to get to their jobs, or to a doctor, or school. This has forced thousands of people to revert to private modes of transportation.

Many states have also cut funding for fire and police departments, resulting in slower emergency response times and diminished crime investigation. Fire department cuts have exacerbated the trend in wildfire-prone areas (among those who can afford it) of hiring private firefighting companies to protect homes, heralding a return to the 19th-century practice in which private firefighting companies raced each other to put out blazes and collect their reward.

Some towns have even started to shut off street lights to save money on electricity bills.

This backdoor privatization diminishes the quantity and quality of the services available to the general public while nurturing the growth of a parallel profit-making infrastructure for those who can afford supplementary services.

Presumably, such budget cuts are temporary, a product of the recession. But it’s not hard to imagine a future in which, say, ever-strapped state and local governments decide to follow the private sector’s lead in taking advantage of new “efficiencies.” In fact, some schools are already refraining from hiring needed teachers despite receiving federal dollars to help tide them over for the year. And even temporary cuts can do a lot of damage: Public transportation reductions, for example, can force people to give up jobs that require them to commute to work.

Certainly, some budget cuts are necessary in difficult economic times. But when we decide it’s better to turn off street lights and shut down bus lines than to raise taxes on the rich, reduce charitable tax deductions, or create a value-added tax, we are deciding that the quality and availability of the public goods should be determined by the amount individuals can pay — and not the amount a rich nation can afford. It’s a choice that undermines not only our claim that we value “ordinary Americans” as equals but also our ability to produce the healthy, educated, productive population on which our future prosperity depends.

The best-case scenario is that the impact of these cuts will help people understand just what their tax dollars are paying for and spur greater consciousness about the relationship between public spending and public goods. Now that shortages of teachers and books are spreading to suburbia, we’ll decide that shortfalls in education funding are unacceptable after all.

The worst-case scenario, though, is that reduced public spending on essential goods and services will continue to hollow out our infrastructure and reduce our capacity to meet the needs of most Americans. And that rather than have a real conversation about which public goods we consider essential and what we’re willing to do to pay for them, we’ll gradually starve core programs until working- and middle-class Americans grow accustomed to a lower standard of living while better-off Americans pay out of pocket for benefits that everyone once enjoyed.

Here’s hoping for a wake-up call.

Alyssa Battistoni writes about the environment and politics from Seattle.

Competitive Sourcing Initiative: Push for WRAMC Privatization

The Bush administration's push for privatization of WRAMC "may be responsible for the 'deplorable' outpatient care for soldiers," Ron Brynaert reported March 3, 2007, for The Raw Story. A "five-year, $120 million contract" was awarded to IAP Worldwide Services, Inc., a "firm run by" Al Neffgen, a former senior official at Halliburton, "a multi-national corporation where Vice President Dick Cheney once served as CEO."

"Before the contract, over 300 federal employees provided facilities management services at Walter Reed," according to Rep. Henry A. Waxman (D-Calif.), "but that number dropped to less than 60 the day before IAP took over. ... 'Yet instead of hiring additional personnel, IAP apparently replaced the remaining 60 federal employees with only 50 IAP personnel,'" Waxman wrote in a March 2, 2007, letter to Maj. Gen. Weightman.

A September 2006 memorandum which "Garrison Commander Peter Garibaldi sent through [Weightman] to Colonel Daryl Spencer, the Assistant Chief of Staff for Resource Management with the U.S. Army Medical Command," Waxman wrote, "describes how the Army's decision to privatize support services at Walter Reed Army Medical Center was causing an exodus of 'highly skilled and experienced personnel' ... As a result, ... 'WRAMC Base Operations and patient care services are at risk of mission failure.'"

Privatization

Predatory Privatization: Exploiting Financial Hardship, Enriching the 1%, Undermining Democracy

Failure at What Cost?

White Hat’s Magic Trick: Transforming Public Schools into Private Assets

Governor Brownback Outsourced Child Support Services to Donor

LePage Supports Pumping Public Water for Private Gain

MO ALEC Leader Says Right to Work Is Solution to Ferguson

Inmates Die in Droves After Governor Rick Scott Outsources Prison Healthcare

Governor Snyder Stands Behind Prison Privatization, Even After Maggots and Murder for Hire

ALSO REPUBLISHED BY CHRISTIE WATCH AND NEW JERSEY KOSSACKS.

TAGS

Privatization Fail: The Troubled History of Maximus Inc.

6 Things That Should Never Be Privatized

May 26, 2014 |

The Privatization Scam: 5 Horror Stories of Gov't Outsourcing to Greedy Private Companies

Contents

Activities

Lobbying

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Founding

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Contact information

Articles and resources

Related SourceWatch articles

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The Fight to Take Public Assets Back from Private Control May Be Winning in California

6 Reasons Privatization Often Ends in Disaster

ALEC Bills Undermine Environmental Regulations, First Amendment

Enter the Koch Brothers

‘Publicopoly’ in play

ALEC nuts and bolts

‘Paycheck Protection’

Florida: A case study

lueprint for privatization

The nonprofit roach motel

SIDEBAR: PLAYING FAST AND LOOSE WITH NONPROFIT STATUS

Case study: Arizona

SIDEBAR: ALEC AND ITS TEA PARTY SUGAR DADDIES

Oligarchs of the New Feudal Order Have Big Plans for You: Buy the Pavement and Charge You to Walk

Pushback Against Privatization Across the Country

New Jersey Could Curb Privatization Abuses

Tea Party and Others Raising Voices Against Private Prisons

In Fresno, "The People's Voice is Being Heard"

Group Launches "Taxpayer Empowerment Agenda" to Reclaim Public Control Over Public Assets and Destructive Outsourcing

Taxpayer Empowerment Agenda Lays Groundwork for a Turnaround

Bipartisan Support for Putting Taxpayer Back in Charge

The creeping threat of backdoor privatization

Bit by bit, financial responsibility for some of the most important public services is being passed on to you

Competitive Sourcing Initiative: Push for WRAMC Privatization