MauledAgain

Reader Morris pointed to a commentary I wrote back in August of 2004. In Equitable Taxation, after explaining why user fees are more appropriate in some instances than the federal income tax, I noted, parenthetically, “(Yes, I know that privatization of many government functions makes sense, and would shift charges from a "user fee" to a mere "private sector price" but I don't want to stray into that discussion at this time.)” Morris then pointed to my commentary in December of 2023, Should (Will) Implementing the Mileage-Based Road Fee Cause Privatization of Highway Infrastructure?, in which I wrote, “What I do not support is the privatization of government functions,” citing multiple posts in which I explained my reasoning. Those posts reached back to 2010.

Reader Morris phrased his question as an observation: “It appears that your position on privatization of government services has changed from 2004 to 2023.” He is correct. It did.

In Should (Will) Implementing the Mileage-Based Road Fee Cause Privatization of Highway Infrastructure?, I explained:

There are several principal reasons that I oppose putting public functions into the hands of those who control the private sector.

First, public-private partnerships don’t work out well, [citing a number of my commentaries dating back to 2010]. These posts pointed out failures in places like San Diego, Orange County, and South Carolina. The failure list grows, and now includes arrangements that did not work for the Interstate 69 project in southern Indiana, and the Pocahontas Parkway in Virginia. From the searching that I undertook, it appears that the problem is a global one and not limited to the United States.

Second, when public functions are re-routed into the hands of private sector businesses, voters lose the ability to control, vote out, or do much of anything with respect to the private entities now running government functions. It is a regression from democracy to a blend of feudalism and authoritarianism.

Third, these arrangements contribute to the corruption of government. They are the product of legislative attempts to find funding without raising taxes while generating revenue for their private sector donors, with hopes that the outcry against tolls and similar charges will be directed against the private entity involved in the project. When things go wrong, legislators don’t react because they perceive themselves at risk of losing funding from the favored private entities and thus at risk of losing the next election, something on which they focus too much.

Aside from the long-term disadvantages of privatizing public functions, the arguments offered in support of that path are flawed. To argue that privatization is “a concept supported by numerous studies showcasing the efficiency and performance improvements possible through transparent and well-structured public-private partnerships,” totally ignores the repeated failures, perhaps because from the viewpoint of the companies and individuals collecting public funds not only find these partnerships to be a success for themselves but manage to persuade everyone else that the success of these private sector participants translates to success for everyone, which is the opposite of reality. The claim that “The private sector has a proven track record of driving innovation in transportation safety” is hilarious when one considers the track record of the private sector when it comes to safety. Aside from noting the Corvairs and Pintos of the world, it has been government that has compelled the implementation of safety features and insisted on recalls due to flawed manufacturing despite the sing-song of the anti-government crowd that chants “we don’t need no regulation.” Yes, you do.

The claim that “Extending this partnership to infrastructure allows for the implementation of cost-effective technologies, ultimately making our roads safer and more efficient” ignores the reality that even if the roads are made safer and more efficient, a questionable claim in and of itself, it makes voter control more difficult rather than more efficient, it funnels public money into the hands of private individuals and companies, and in the long run it increases the cost to the public of using highways, bridges, and tunnels to levels higher than they would be if there weren’t a need to generate profits for those private individuals and companies.

It is sad and alarming that, yet again, when a good idea in the public sector begins to gain traction, the wealthy who yearn for even more wealth, and their acolytes, turn their thoughts into how they can milk more money from the proposal. Enough with the outsourcing of government to privateers.

What led me to think, back in 2004, that privatization could and would work? The few instances of privatization that I had observed had persuaded me that moving those government functions into the private sector worked, and supported the proposition that many more could similarly work out as well. Here is an example. In high school I worked at a service station, which, among other things, provided state vehicle inspections. The state required that vehicles meet specified safety requirements but let vehicle owners choose a private enterprise (mostly dealerships and service stations) to do the inspections. These enterprises were licensed and inspected by the state’s Department of Motor Vehicles. Vehicle owners had choice. Mechanics and service station operators had business opportunities, with the job creator being the state. Unhappy customers had recourse, with various avenues of recourse if they were dissatisfied with the service. During those years, a neighboring state had similar safety requirements (for all I know, they could have been identical), but required vehicle owners to visit a state owned and operated inspection facility where, as I was told and read, vehicle owners were served first-come, first-serve, without the opportunity to make appointments and thus sitting in lines for hours (all of that has since changed in that state). In that state, there wasn't the blend between government and private sector control that was found in the Pennsylvania system. Unfortunately, that blend isn’t found in the privatization proposals and projects popping up in the twenty-first century. When I explore the many failures of privatization projects, the lack of that blended control stands out.

It's a different situation when a private-public partnership arises from public involvement in what would otherwise be a private sector project. Those private-public partnerships don’t involve private sector takeovers of public functions. Of course, those sorts of partnerships are disliked by those who prefer the ones that not only reject government involvement in private projects but also want to push government out of public functions. So, something that is a private-public partnership is not necessarily deserving of criticism. It depends on which functions are being shifted.

As I re-read what I wrote in 2023, I recognized that it built on what I had written in those commentaries starting in 2010. I saw the blended public-private control of limited private sector involvement slowly shift to increasing amounts of private control. Worse, that private control did not sit in the hands of thousands of middle-class mechanics and service station operators but in the hands of the oligarchs. The more I re-read what I have written the more I realize that the signs were there, as long as a decade and a half ago, that left unchecked, as it has been, the trend would bring us to where we are now and worse, where we appear to be heading. So yes, when the facts changed, my thinking changed.