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The Privatization of the Public Sphere

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The Republican Party is consolidating behind Donald Trump and, on May 12th, House Speaker Paul Ryan kissed the ring of the party’s presumptive presidential candidate, thus sending a signal to other party hacks to get in line.  And the line is getting longer every day.

Remarkably missing from the Trump-Ryan powwow was any mention of potentially contentious issues of Social Security and Medicare, federal “entitlement” programs.  Ryan has long led the effort among Republicans to kill off these programs.  He’s repeatedly called for the privatization of Social Security by creating what he calls “voluntary retirement accounts,” essentially private investment accounts run by bankers or other money managers.  In similar fashion, Medicare would be privatized so people could purchase a private insurance plan.

Trump has strongly supported the two programs, thus raising one of his most contentious positions challenging Republican orthodoxy.  During a March 29th interview with a Wisconsin radio station, WROK, he strongly objected to Ryan plan:

But I disagree with him [Ryan] on this. You know, Paul wants to knock out Social Security, knock it down, way down. He wants to knock Medicare way down. And, frankly – well, two things. Number one, you’re going to lose the election if you’re going to do that. That’s going to be easy. I was watching Bernie and Hillary debating, and they can’t give enough on that. So you’re going to lose the election. So that’s not the purpose of it. We have to do what is right, but you will lose the election if you do that.

But more importantly, in a sense, I want to keep it. These people have been making their payments for their whole lives. I want to keep Social Security intact. Now, I want to get rid of waste, fraud, and abuse. I want to do a lot of things to it that are going to make it much better, actually. But I’m not going to cut it, and I’m not going to raise ages, and I’m not going to do all of the things that they want to do.  But they want to really cut it, and they want to cut it very substantially, the Republicans, and I’m not going to do that.

How long will Trump hold to his commitments on Social Security and Medicare is an open question as the campaign drags.  As he staffs-up his campaign team with far-right economists, policy wonks and politicians, he may become just another conservative Republican but with more provocative flare.

* * *

The attempt to privatize Social Security and Medicare are but two of a growing number of campaigns underway to privatize key aspects of public or social life.  These efforts range from local water services, schools and healthcare insurance as well as prisons and the military.  And this says nothing about the effort by private corporations to control the postal service and the telecommunications superhighway.  With privatization comes increased cost, the deterioration of quality, the increased power of the 1 percent and America’s deepening social crisis.

Screen Shot 2016-03-17 at 5.07.13 PM

Water

The Flint, MI, water crisis shined a spotlight on the growing crisis of water supply in America.  Is water a public utility, a basic social requirement of life, or merely just one more commodity to be exploited by opportunist corporations?  The nonprofit Food & Water Watch conducted a study of 500 of the largest community water systems and found that private, for-profit companies charged households an average of $501 a year for 60,000 gallons of water — $185 more than what local governments charged for the same amount of water.  Often overlooked, private corporate sewer services typically charge 63 percent more for sewer service than local government utilities; increased rates for private sewer services ranged from 7 percent in West Virginia to 154 percent in Texas.  Equally disturbing, failures or abuses of water service have been documented by for-profit operators in California, Georgia, Illinois, Indiana, New Jersey, Texas, Massachusetts and Rhode Island.

Education

Private schools have long been the privilege of those who either could afford to send their children to a “better” school or a religious school.  Over the last quarter century, the charter school movement of quasi-public schools has emerged.  The schools are primarily tax-payer funded and do not permit teachers to be members of a union.  In 2015, there were an estimated 6,000 such schools in the U.S. with an enrollment of about 2.3 million.  In New Orleans, for example, most schools have been privatized.

In a revealing article in the Atlantic, Bruce Fuller discussed how during the 1990s liberal Democrats championed the charter movement.  Ember Reichgott, a Democratic Minnesota state senator, proposed the nation’s first charter school law in 1991; the following year, Gary Hart, a California liberal, promoted charter schools as an alternative to vouchers; and in ’93, the recently-elected president, Bill Clinton, backed federal funding for charter school as part of his campaign to “reinvent government.”  In the mid-2000s, a New York group of hedge-fund hustles, Democrats for Educational Reform, took up the cause.

Today, charter schools are embraced by mega-moguls like the Gates Foundation, the Koch brothers, the Walton family, Eli Broad and Mike Bloomberg.  They are a pet project of American Legislative Exchange Council (ALEC).  Mega hedge-fund magnets like Joel Greenblatt (Gotham Asset Management), Charles Ledley and James Mai (Cornwall Capital) and David Einhorn (Greenlight Capital) are a few of the 1 percenters backing charters.

Healthcare Insurance

Healthcare insurance is one of the major issues dividing the two Democratic presidential candidates, Hillary Clinton and Bernie Sanders.  In simplest terms, Clinton wants to expand Pres. Obama’s Affordable Care Act by covering three doctor visits a year and extending free preventative care services, such as blood pressure screenings and vaccines. Sanders has proposed a version of government backed, single-payer program, Medicare-for-all program, that would eliminate the need for private insurance premiums.

Edward Kleinbard, a USC professor of law and business, estimates that the federal government spends about $1 trillion per year on the health of Americans.  The EU’s OECD estimates that in 2013, the U.S. spent $8,713 per person on healthcare — 152 percent, or $5,260, more than the average for all OECD countries; the U.S. spent 100 percent, or $4,362, more per person than Canada that has a single-payer system.

“Obama care” has led to upwards of 30 million Americans securing private healthcare insurance and this has fueled a financial boom for the insurance industry.  According to the Insurance Information Institute, the U.S. insurance industry’s net premiums written in 2014 totaled $1.1 trillion, with premiums recorded by life/health insurers accounting for 56 percent or $644.5 billion.  It also reports that in 2014 there were 857 health-related insurance companies operating in the U.S.

Robert Reich pointed out that the significant uptick in insured Americans has fueled a round of consolidation within the insurance industry.  Among the acquisitions that occurred or proposed in 2105 were:  Aetna acquired Humana for $35 billion; Aetna offered to acquire Cigna for $47 billion; Centene acquired Health Net for 6.3 billion; and Anthem acquired Simply Healthcare for $800 million.

Prisons

Private prisons have long been a growth industry.  The ACLU notes, “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.”  At the end of 2013, roughly 6.9 million adults — 2.8 percent of the population — were under some kind of “correctional supervision.”  About 70 percent of these are on either parole or probation, with the remaining 2.3 million in local jails or state or federal prisons.

For-profit companies are responsible for approximately 6 percent of state prisoners, 16 percent of federal prisoners and inmates in local jails in Texas, Louisiana and a handful of other states.  The U.S. Immigration and Customs Enforcement (ICE) locks up roughly 400,000 immigrants each year and spends over $1.9 billion annually on custody operations.  It plans “massive immigration detention centers, managed largely by private companies,” in states including New Jersey, Texas, Florida, California and Illinois.

NBC News reports that private prisons industry is estimated to be a $4.8 billion industry, with profits at $629 million.  The industry includes includes nearly 400 companies, but the two largest private prison companies control approximately two-thirds (65%) of the business.  Corrections Corp. of America (CCA) has a 37 percent share with revenues of 1.6 billion and The GEO Group Inc. (GEO) has a 28 percent share and $1.7 billion in revenues. Between 2010 and 2015, the two companies spent a combined $8.7 million on lobbying efforts.

Military

In his 1961 Farewell Address, Pres. Dwight Eisenhower famous singled out the “military-industrial complex” as a prime example of the privatization of the most essential public service, a configuration that threatened U.S. foreign policy.  A half-century later and under the rubric of “national security,” this configuration now tyrannizes domestic life.  Over the last half-century, the military-industrial complex has become a enormously profitable racket; in fiscal year 2015, it totaled nearly $600 billion and accounted for 54 percent of all federal discretionary spending.

According to one study, the Defense Department is the largest federal bureaucracy, with 2.48 million employees and 700,000 contractor employees; the DoD reports that “contract employees comprised 22% of [DOD’s] workforce but accounted for 50% of its cost.”  That’s $300 billion.

John Whitehead, writing for the Rutherford Institute in 2012, reports: “The war effort in Iraq, Afghanistan and Pakistan has already cost taxpayers more than $2 trillion and could go as high as $4.4 trillion before it’s all over. At least $31 billion (and as much as $60 billion or more) of that $2 trillion was lost to waste and fraud by military contractors, who do everything from janitorial and food service work to construction, security and intelligence—jobs that used to be handled by the military. That translates to a loss of $12 million a day since the U.S. first invaded Afghanistan. To put it another way, the government is spending more on war than all 50 states combined spend on health, education, welfare, and safety.”

* * *

The outcome of the 2016 presidential election will likely have significant repercussions for continuing efforts to privatize the public sphere.  The differences between Trump and Ryan over Social Security and Sanders and Clinton over healthcare insurance are representative of the bigger issues at stake.  But these are but two of an ever-growing list of domains of social life in which private corporate interests determine social policy.

One can only hope that as the presidential campaign moves to a final showdown, media pundits will examine how deeply privatization is taking place and the positions of the major candidates on the issue.  Sadly, the growing power of the 1 percent, the role of federal agencies as giant money troughs for corporate pigs to devour gluttonously and the power of big money in lobbying and politics make any meaningful end to the privatization of the public sphere unlikely.

David Rosen is the author of Sex, Sin & Subversion:  The Transformation of 1950s New York’s Forbidden into America’s New Normal (Skyhorse, 2015).  He can be reached at drosennyc@verizon.net; check out www.DavidRosenWrites.com.

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