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Privatization: Remember the Word

January 16, 2017
Plain English Version

One view of privatization. Credit: TPM.

One view of privatization. Credit: TPM.

What is privatizing? Take something the government does. Turn it over to a private company to do. That is privatization.

Why do this? The first question is what did the service cost the taxpayer? The second question is what is the cost if a private company does the service? For the private company the question is can I do this and make a profit?

It is popular to turn prisons over to private companies. Studies have shown that private companies have more trouble with inmates. They go into lockdown more often. They have a poor record on health care. The Justice Department wants to close down prisons run by private companies.

There is a problem. Donald Trump is going to be president. He said private prisons “seem to work a lot better.” After his election, the value of prison companies’ stock went up.

Nursing homes are another example. It is a service that is hard to measure. Private homes may use drugs to sedate patients, even patients who want to be active. By sedating patients, nursing homes can save costs on staff and programs.

For-profit colleges have turned out to be a bad investment. They get lots of money from the government. They are more expensive that public schools. Their degrees are less valuable in the marketplace.

Trump wants to privatize many services. He says the private sector will deliver better services for less money. He wants to privatize the Veterans Administration’s health services. He wants private companies to build roads and bridges.

Experts say privatization is not in itself a good thing or a bad thing. What services might it make sense to turn over to the private sector? Experts say when you can measure how well companies deliver the service. Garbage collection is a good example. It is tons of refuse and frequency of service.

Another expert said that some think a profit motive makes everything run better. He says rich business owners “see the private sector as a solution to all the world’s problems.”

What are things going to be like during the Trump presidency? It is a good way to reward friends. Citizens need to keep a close watch.

Source: The New York TImes January 10, 2017

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