Consumers of cell phones – actually, consumers of any product or service that isn’t essential for health or survival — clearly benefit from the competitive, market-driven economies of today’s modern world.
There are certain goods and services, however, that are essential for the public’s welfare: Drinking water, city sewage systems, financial support in old age, and the administration of things like prisons, schools, and health care. These “public goods” benefit from government influence. That’s because the profit motive needs some restraint in matters essential for basic survival. (Schools are not technically essential, but they’re important for a successful, prosperous society.)
This is only my opinion, of course. Conservatives, libertarians, free market fundamentalists, and members of the Tea Party would disagree vigorously.
Privatization is the transfer of responsibility for public interests to the private sector. The PR argument for privatization is that the private sector is more efficient than government. The more basic, underlying motive, however, is that privatization has great potential for private profits. (See my recent post on the privatization of water as the investment opportunity of a lifetime.)
The downside of privatizing public services is that corporations are answerable only to their shareholders, not to the public they serve. We saw this quite clearly during the health care debate, as the dirty linen of the health insurance industry was aired in Congress.
Some examples of privatization:
- Seventy million people in the US get their water from either a private company or one that shares private and public ownership.
- George W. Bush pushed unsuccessfully for the privatization of social security during his second term.
- The first private prison in the US opened during the Reagan administration in 1984. Private companies now house 99,000 adults in 264 correctional facilities.
BTW, if you think the privatization of prisons is harmless, read this investigative report on the role of the Corrections Corporation of America in Arizona’s recent immigration law. Glenn Nichols, city manager of Benson, AZ, was approached last year by two salesmen. What they were selling was a prison for women and children who were illegal immigrants.
“They talk [about] how positive this was going to be for the community,” Nichols said, “the amount of money that we would realize from each prisoner on a daily rate.”
But Nichols wasn’t buying. He asked them how would they possibly keep a prison full for years — decades even — with illegal immigrants?
“They talked like they didn’t have any doubt they could fill it,” Nichols said.
That’s because prison companies like this one had a plan — a new business model to lock up illegal immigrants. And the plan became Arizona’s immigration law.
Privatization is a major spoke in the wheel of neoliberalism — a political, economic, and social philosophy espoused by anti-Keynesian economists such as Milton Friedman and Friedrich von Hayek. It dates back to the 1930s, but experienced a resurgence among conservatives beginning in the 1970s (for the early history, see William Davies’ essay “The making of neo-liberalism”).
Friedman was an economic adviser to presidential candidate Barry Goldwater in 1964. If Goldwater’s bid for office had been successful, we might have seen neoliberal policies implemented much sooner. It wasn’t until the 1980s that neoliberalism made a real impact in the US under Ronald Reagan.
Reagan’s colleague in the UK, Margaret Thatcher, became known at the time for her slogan TINA — There Is No Alternative. By this she meant: there is no alternative to free markets, free trade, and capitalist globalization – a succinct summary of neoliberal beliefs.
The main components of neoliberalism — in addition to privatization — include:
- A free market for goods, services, and capital. (It’s the free market for capital that makes a financial crisis these days a global one.) The market should be allowed to regulate itself. Wealth will be distributed by “trickling down.” Unions should be eliminated. Governments should in no way interfere with the market.
- Public spending by the government on social services, such as health and education, should be reduced and – ideally – eliminated. Such services are best relegated to the private sector or charitable organizations.
- Market forces must be allowed to act as a self-regulating mechanism. For example, if the coal industry produces “negative externalities,” such as acid rain or black lung disease, market forces should be allowed to correct the problem. Under neoliberal policies we’ve seen the deregulation of such things as transportation (airlines, trucking, railroads), energy (oil, electricity, gas, coal), and finance (markets, institutions, services).
- Public perceptions should be shifted away from the value of the common good to the value of the individual. The individual is responsible for his or her behavior in all matters, including economic behavior, health, participation in the workforce, and avoiding environmental risks.
Margaret Thatcher captured this very nicely in her disarming attempt at logic (emphasis added):
They’re casting their problem on society. And, you know, there is no such thing as society. There are individual men and women, and there are families. And no government can do anything except through people, and people must look to themselves first. It’s our duty to look after ourselves and then, also to look after our neighbour.
Neoliberalism and personal responsibility for health
There’s a wonderful example from the Reagan era of promoting individual responsibility when it comes to health. In 1987, scientists had confirmed that there was an ozone hole over Antartica. The cause was identified as chlorofluorocarbons (CFCs) released by spray cans, air conditioners, and refrigerators. To save these industries from economic inconvenience, Reagan’s secretary of the interior, Donald Hodel, came up with his “personal protection plan.” Since the main downside of ozone depletion was skin cancer, he proposed wearing long-sleeved shirts, donning hats, and staying in the shade.
Another great example: In a 1980 report on the impact of carbon dioxide on climate change – a report requested by Congress – physicist and free-marketer William Nierenberg argued that we should do nothing to prevent climate change because people could simply migrate. “Not only have people moved [in the past], but they have taken with them their horses, dogs, children, technologies, crops, livestock, and hobbies. It is extraordinary how adaptable people can be.”
This is surely the ultimate in personal responsibility: If your home town runs out of water (or goes underwater), just pick up and move. Never mind those national borders — or the fence India has built to keep out residents of Bangladesh. And don’t forget to bring your children and hobbies.
The next post explains why I’m so interested in neoliberalism as it relates to health. Politicians who advocated neoliberal policies in the 1970s realized that if they could persuade people to assume personal responsibility for their health, the government would be let off the hook.
Water privatization: An investment bonanza
The Cochabamba water wars
Water privatization in South Africa: Prepaid meters
Water privatization in South Africa: Victory and reversal
Congress finds health insurance industry fundamentally flawed
Blogging: Time to get over it
The tyranny of health
The tyranny of health then and now
“Tyranny of health” on KevinMD
Image source: BBC News
Elizabeth Martinez and Arnoldo Garcia, What is Neoliberalism? A Brief Definition for Activists, Corp Watch, July/August 1996
Robert Taylor, “Advice on Ozone May Be: `Wear Hats and Stand in the Shade,’ ” Wall Street Journal, 29 May 1987, sec. A, 1. Cited in Naomi Oreskes & Erik M. Conway, Merchants of Doubt: How a Handful of Scientists Obscured the Truth on Issues from Tobacco Smoke to Global Warming
William Davies, The making of neo-liberalism, potlatch, November 12, 2009 (PDF)