The Risks of Privatization

Tomorrow, the Kentucky General Assembly convenes in special session to try to close the gap in the state's budget for Medicaid.

A big part of the discussion will - or should - concentrate on the multi-million-dollar fraud committed by the state's Medicaid contractor.


Actually, the headline in this post is misleading. Privatizing is not at all risky. It is 100 percent guaranteed to waste money. Huge amounts of taxpayers' money.

Massive fraud and waste by private contractors using tax dollars to provide public services that government should be providing is the rule, not the exception.

Not only does privatizing government services NOT save money, it always costs more than having public employees provide the service.

Down with Tyranny:

According to InThePublicInterest.org privatization in America is a very risky business... for most of us, if not for the well-placed very rich looking, through political cronyism, to become mega, super-rich.

Since the 1980s, governments from the local to national level have experimented with privatizing public services and assets. The trend has been spurred by the belief that the private sector can achieve efficiencies and cost savings for government budgets. Unfortunately, numerous examples demonstrate that these supposed benefits of privatization are merely myths. Privatization has often moved forward without adequate public deliberation or oversight. Poorly conceived and constructed contracts have resulted in cost increases, as well as diminished service quality, and have failed to protect against corruption, profiteering, and loss of the accountability and openness required of government processes.

Privatization involves turning over previously governmental functions to private entities. It takes two basic forms:

• The government receives money for the purchase or long-term lease of revenue-producing infrastructure, facilities or other assets.

• The government pays a contractor to provide public services.

Many complex variations have evolved, including various forms of public-private partnerships, known as P3s.

Concerned with the loss of democratic accountability and control, many groups and communities are reconsidering privatization. They are working with lawmakers to provide protections against contracts that are against the public interest by promoting fair and responsible contracting standards, and requiring full public deliberation of decisions to sell or lease public assets.

Without proper protections, putting public services and assets in private hands can result in lost accountability and transparency, increased costs for government and taxpayers and degraded quality.

Other common risks of privatization include: corruption, reduced access, reduced labor standards, lost public capacity for core functions, environmental harm, and human and civil rights violations.

Wisconsin is now in the process of privatizing everything Scott Walker can sell off before he can be recalled by outraged Wisconsinites next January-- including the state's power plants, public parks and Wisconsin's beloved state university system. And Wall Street predators are jumping for joy, unable to contain themselves, over Michigan's quieter, but even more deadly, lurch down the same path Walker is dragging Wisconsin. They're already passed heinous legislation that will enable the state to turn over local government entities to private corporations, and will also enable union contracts to be broken, pension boards to be overturned... a right-wing wet dream. Turning elected government entities over to corporations is the height of anti-democratic privatization. It's a whole new concept in both sharing and redistributing the wealth... it's the Republican way.

Have you talked to your Democratic neighbors today?