Privatization is the goal of the Trump administration and you will soon see massive moves in this direction when the orange jackal takes power on January 20.

What is privatization?  It is the takeover of government services by private corporations.  It is a goal of many conservatives, especially those with large amounts of money, because it is a way for private corporations to profit by exploiting the public.  

For example, private prisons, once all the rage, have been abandoned by the federal government already because of poor outcomes and increased violence, but are still on Donald’s lips whenever he is asked about the subject.  Many states have private prisons still.  The stocks of private prison corporations have gone up dramatically since November 9.  See New York Times article of January 10, 2017 for details on private prisons.

Privatization means a takeover of state assets as well as services.  This is a way for private corporations to acquire state property at fire sale prices, as occurred in Russia after the fall of the Soviet Union.

Privatization does not mean an improvement by any means.  There is no formula by which private companies can obtain better outcomes than government— it is purely a form of magic thinking by conservatives who feel cramped by the very idea of government.  

The reason a corporation cannot perform better than a government is that the corporation must show a profit for its shareholders or bosses, in addition to providing the services required.  Only a nonprofit organization can efficiently perform the tasks at hand in cases where the services required are: 1) essential to the public welfare, and/or 2) generally unwanted or avoided by most persons.

Essential services must perform to certain standards in order to satisfy the public, standards that are anathema to private corporations.  Remember the calumny heaped on government regulation by conservative commentators.  Regulations are critical to the adequate provision of essential services.

Essential services also can demand large amounts of money from those who benefit— rich targets for private corporations, but the money obtained is critical to the adequate operation of the essential service.  Think of the money as making it possible for the service provider to be available at all times and all places, both popular and unpopular.  An essential service cannot pick and choose the times and places to be available— it must cover everyone, everywhere to perform adequately.

Governments are basically huge nonprofits with legal monopolies.  Their roles are defined ideally by constitutions, and our government is so defined.  In the Preamble to our Constitution, the roles that our government is intended to play are spelled out in a single sentence which is quoted by schoolchildren:

“We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.”

The key phrase here is “promote the general welfare” and this phrase applies to the relevant government programs that are targets for privatization.  The military is a separate target and is already highly privatized, as we found to our sorrow in Iraq.

Despite the proven disadvantages of privatized services, privatization is a tempting maneuver for businessmen like Trump because it provides the opportunity to reward friends and distribute graft in a less-than-obvious manner.  Once privatized, it is difficult to recapture a service that gives huge profits to private parties— especially when the political process is dominated by money contributions from private corporations.

It is only when disaster strikes and the privatized service becomes notoriously bad or damaging that there is an opportunity to return the service to government hands.  By that time, numerous members of the public have been harmed and chaos reigns in the service sector affected.  Private prisons are a particularly good example of this process.  Studies have shown privatized prisons to have higher rates of violence, more lockdowns, and greater rates of inmates carrying weapons (see New York Times story on this subject.)

In summary, Trump’s first goal will be to spread privatization as far as he can take it, in order to reward his friends and supporters with graft.  We should resist this process with all our efforts.

An example of the tensions that occur in society and a possible way of handling them is Bell Telephone.  Bell was started by Alexander Graham Bell as a private company that provided telephone services.  Telephony, which started as a convenience for wealthy customers, soon became an essential service for rapidly summoning aid from police and fire services— both government-provided.  

The rapid growth of Bell Telephone, which had a natural monopoly on telephony, attracted the attention of the federal Department of Justice.  Investigations into this monopoly began as early as 1912.  The huge profits obtained from telephony were ploughed into research by the directors of Bell, and Bell Labs quickly became the largest research institute going.

After years of investigation and litigation, in 1956 an odd agreement was reached between the government and AT+T.  The monopoly was allowed to continue, but the tremendous benefits to be had from the patents that Bell Labs developed were required to be available to all comers at nominal prices.  The result was a fountain of innovation that powered many of the great advances of the 20th century: the laser is one of the greatest examples.  Details can be found in the book “How We Got to Now” by Steven Johnson, pp 100-102.