How privatization increases inequality

The problem with privatization is it often involves granting monopoly powers to a private company instead of opening up the market to private competition. This in some ways is even worse than leaving the entity under government control because there is an incentive to squeeze as much profit as possible out of the entity and no pressure from competition to keep the private entity honest. Privatization in itself is not a problem, and neither is inequality (in modest form, created by competition, not unfairly), but creating an environment where the quality of goods and services suffer for the consumer/citizen because those providing those goods and services don't have an incentive to do a good job.

This is not convincing.<p>1) As to user fees. Most public infrastructure in the US is dramatically underfunded. Public transport, road, and water systems are a major cause of the multi-trillion infrastructure spending backlog we have (according to the American Society of Civil Engineers). We pay far too little for services like water, which precludes municipal water utilities from upgrading infrastructure. Governments often privatize when that situation becomes untenable, because they don&#x27;t want to be the one that raised water rates on grandma.<p>2) As to wages, I&#x27;m supportive of income equality. But unionized public sector jobs are a misallocation of resources. If we want to subsidize a particular kind of job at the public expense, why not start with the lowest income folks first, instead of relatively well off public sector workers?<p>Public services in the US are a disaster, and most of it is not privatized. It&#x27;s not privatization that drove Chicago to the brink of bankruptcy. It&#x27;s not privatization that left the DC Metro in shambles. It&#x27;s not privatization that left Atlanta with ancient sewers that dump raw sewage into the Chattahoochee river. And ironically, it&#x27;s the poor that suffer. Rich people can send their kids to private school - bypassing the failing inner city systems that often spend far more money than neighboring suburban ones. Rich people can take Ubers everyday and avoid subways that are delayed and shut down due to years of diverting money from maintenance to pensions and benefits.

The battle between &quot;new deal era problem solving&quot; and &quot;market based privatization&quot; is a distraction from the actual reality that government comes up with all the plans, public or public&#x2F;private, and corruption in both is widespread.<p>The only way we will improve upon the quality of solutions is to have a zero tolerance policy for corrupt officials, regardless of which &quot;side&quot; of this &quot;battle&quot; they claim to be passionate about.<p>Is it any surprise that in a country with significant government corruption such arrangements would also be corrupt? New Deal programs like Social Security have been raided by corrupt politicians, the PBGC is not actuarially sound, most of the military&#x27;s budget is un-accounted for. This is corruption at the Trillion dollar scale and has nothing to do with the fake ideological war between public sector ideologues and free market ideologues.<p>There are several relevant layers, few of which are exposed to democratic <i>or</i> market pressure&#x2F;discipline:<p>- Making the determination that a service is necessary<p>- Deciding on the characteristics of the service.<p>- Creating a playing field for private sector participants to compete<p>- Revising the requirements and playing field to keep quality and value high (democratic or market-based)<p>- Creating transparency requirements for firms and government agencies participating in public&#x2F;private partnerships.<p>- Assessing the outcomes and reconsidering all of the above based on results.<p>In our system, each of these breaks down. I can&#x27;t think of a single example that has succeeded in all of the above areas.<p>Notably, privatization has been used by officials to avoid transparency requirements in recent wars. Chances are this is a major objective of privatization schemes. Officials from both major political parties have set up privatized email servers recently to avoid transparency&#x2F;accountability.

I just want to point out nationalization&#x2F;existing public services also increase inequality in quite similar ways.<p>1. Traffic fines are still public. Still regressive.<p>2. Social Security is still public and still has a cap on taxes for &gt; 6 figure incomes.<p>3. Wage cuts (granted I think this gets worse when privatized) and benefits cuts are dealt to public employees all the time. Look at the many underfunded local pensions&#x2F;city budgets and how they&#x27;ve chosen to respond.<p>4. Private interests into parks and charters schools etc. This also happens to be an opportunity to give extra attention to the needs of poor individuals and families, and people of color. There is a debate ongoing, but many charter schools in poor neighborhoods have better funding&#x2F;facilities than a would-be public school there. This is not close to perfect or a panacea, but it has potential, attacking charter schools without nuanced research is imprudent.<p>This is a controversial topic. I am not taking sides. There are many complex&#x2F;taboo issues and few working solutions so far. Glad it is being discussed.

Simple thought experiment.<p>There are plenty of markets that are mostly private. All have some regulation, but some markets are mostly left alone.<p>Let&#x27;s pick one. How about pickles?<p>If my local government wanted each of it&#x27;s citizens to have a jar of pickles, what would be the best way to do that?<p>I&#x27;d argue that a gift card to Amazon for pickles handed out is probably the easiest way. They don&#x27;t get into the produce business, they don&#x27;t get into the warehousing or distribution business, they just hand out gift cards. Somebody else -- who is really good at that other stuff, by the way, handles the rest.<p>This is what every enterprise learns: stick to what you do best. Let everybody else to do the same.<p>So obviously strict product movement and provisioning, such as municipal water and electric services, are solved problems. There is no value added here based on who is doing what.<p>Social services, on the other hand, is a mess of nuance and policy. It&#x27;s not a solved, commoditized problem, so it doesn&#x27;t make sense to have somebody else do it. If your local government does their social services well, it&#x27;s something they&#x27;ve been tweaking for quite some time.<p>We don&#x27;t need to continue the thought experiment any further. &quot;privitization increases inequality&quot; is far too broad of a statement, since easy examples are found both supporting it and opposing it. Some further narrowing of terms is required for this to have enough meaning to discuss.

&gt; <i>Increased socioeconomic and racial segregation</i><p>I think progressive black activists are supporting racial segregation. One university even offers segregated housing.

Usually economic &#x27;equality&#x27; is at the expense of wealth creation. So you almost always end up in a situation where everyone&#x27;s equally as poor.

Why are all these think tanks named with such patriotic and nation building like names. It makes you look at it even more suspiciously, whatever they say.

Pando had an interesting piece a while back on the origins of privatization [1]. I guess that anyone buying into that would be unsurprised by the conclusions of the present article.<p><pre><code> 1: https:&#x2F;&#x2F;pando.com&#x2F;2014&#x2F;09&#x2F;25&#x2F;ferguson-is-our-libertarian-moment-but-not-in-the-way-some-libertarians-want-you-to-believe&#x2F;</code></pre>

Equality does not exist. It is an abstract concept.<p>What the best political philosophy gave us is the another concept - <i>the equality of rights</i> and liberties. Equality before the law. This means than no person could be discriminated, based on gender, racial, cultural or religious context.<p>There is no such thing as social or economic equality. This bullshit has been oversold to us by political demagogues and populists (as opposed to political philosophers).<p>Society means inequality. It means hierarchy. It is based on inequality, it is driven by inequality no matter what disconnected from reality pseudo-intellectuals would tell us.<p>Biology has precedence over physiology, psychology and sociology. Social inequality comes from genetic and economic inequality. Without the first there will be no human species, because there will be no evolution. Without the second there will be no human civilization, which is based upon trade and capital - resource allocation.<p>Competition for everything, not just survival and reproduction, but also social status is a part of reality of any complex ecosystem, including human societies. Capitalism is a &quot;natural&quot; system of resource allocation, based on partial rationality, greed and so-called human nature (which in turn is based on biological markers, psychological traits and social heuristics) that promotes competition (and also restricting monopolies and regulating markers) which is based on inequality, has inequality as its driving force.<p>Not a single attempt to go against physics, biology, against the laws of ecosystems (sociology) and so-called human nature would ever succeed, no matter what utopia naive human mind will produce and promote. Every single utopia that violates any single environmental constraint will fail. It happened with communism, it will happen with socialism. Economics is very real - as real as one of the main forces of natural selection (species has to balance their energy spending according to the constraints of the environment - this is what economy is).<p>Inequality is here and always will be, like beauty and ugliness, intelligence and stupidity, success and failure.

There will always be people who are poorer than others, but there’s nothing prohibiting poor people from working their way up the ladder beside government regulations.<p>Poor people are hurt most by government programs like welfare, and laws like minimum wage. Private enterprise allows people to make a living for themselves by providing services to people who need them. By working harder than others they can break out of poverty, instead of relying on the government to keep everybody down for the sake of &quot;equality”. This used to be a norm.<p>&quot;When governments directly provide a service, they often provide living wages and decent benefits to workers. When private companies take control, they often slash wages and benefits in an attempt to cut labor costs, replacing stable, middle class jobs with poverty-level jobs.”<p>This is so incredibly disingenuous. All this is saying is that it’s beneficial to the society that the government creates artificial jobs that can’t sustain themselves and gives immunity from market fluctuation to people who perform these jobs at the cost of regular taxpayers who aren’t immune, and have to train themselves in new fields, and change jobs. The government can’t just provide these benefits without negatively affecting the rest of the society.

I continue to suggest that inequality is an actively good thing.<p>Freeing 100 people from jail will increase their inequality; should we therefore oppose it?

I was studying the topic of derivatives for an exam.<p>It was interesting - the whole point of derivatives was to prevent the fact that markets are volatile. So its a way to &quot;Price Fix&quot;.<p>That is the entire point of markets ! to allow free floating of price.<p>I found the whole thing funny, that a market solution lead to the creation of something that was against the entire point of market.<p>What the modern neo-liberals and capitalists will learn - is that there is no perfect system.