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Predatory Privatization

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The American Legislative Exchange Council and its corporate and right-wing allies promote antidemocratic 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.