photo by Andrew Crane
Privatization of America’s Public Institutions:
The Story of the American Sellout
The following is an excerpt from the introduction to a new book, to be published by Peter Lang in early summer 2019.
A veteran of wars in both Afghanistan and Iraq, Gregg (from Kentucky) enlisted in the army and was sent to the front lines of Iraq in 2005. According to Gregg, the private security contractors (PSCs) in Iraq were making almost ten times his salary. Not only did private security contractors make more money, they did not have to abide by the strictures of military law. Gregg said, “PSCs did what they wanted” and only answered to their leader, a “corporate guy” who was not a member of the U.S. military.
Michelle (from Florida) told the story of her sixteen-year-old son Derrick who had been caught drinking a beer at a high school football game for a second time. Derrick was expelled as per his school’s “zero tolerance” policy, and subsequently sentenced to a “for-profit” detention center located miles from home for six months. The juvenile detention center allowed a grand total of two hours of visitation time a week. Visitors had to show up between 7-8 p.m. on a Wednesday or Saturday evening.[1]Michelle worked on Wednesday nights, so she only got to see Derrick for an hour, once a week.
Susan and Jasmine (from Ohio) were recently hired teachers at a new charter school located in downtown Toledo, Ohio. Susan had an undergraduate degree in business and had previously worked as a secretary for a construction firm. Jasmine was a bartender with a degree in human resource management. Both had been hired to teach English. When I met them, they were scrambling to get ready for the first day of class. Neither had any formal preparation in English or education. Other than the occasional babysitting job, neither had previously worked with children.
Leland (from Michigan) was working at a public university when a member of the president’s staff alerted him that the president and provost were about to cut a deal with a private company to turn all of the master’s degree programs in his college into a series of quick, online courses. Leland alerted the faculty and they protested the surreptitious move, confronted the administration, and managed to stave off the takeover. The company subsequently took over several master’s degree programs of universities in an adjacent state.
Privatization continues to infiltrate American life, whether we desire it or not. Tireless lobbying efforts by well-funded special interest groups have promoted more corporate involvement in military affairs, schools, and prisons.[2]Future privatization targets include veterans’ affairs, air traffic control, environmental protection, water and sanitation, the national parks, and social security.[3]
Privatization is changing the nature of America’s public institutions and consequently, the character of the country. What is startling about privatization in America today is the immensity of its scale. Privatization is no longer an occasional strategy to help improve the efficiency of a particular public service. Privatization has become an automatic response to any perceived governmental inefficiency.[4]
In Iraq and Afghanistan thousands of mercenaries (paid for through U.S. tax dollars) patrolled war zones carrying weapons, giving orders, and executing corporate strategic plans. At times, private contractors in the Middle East outnumbered soldiers by a 3:1 margin.[5]In Florida, the state where sixteen-year-old Derrick was jailed for drinking beer, one hundred percent (100%) of juvenile detention facilities are run for-profit. A third or more of all online programs offered through public universities are outsourced and university faculty do not teach the courses.[6]In Texas, unqualified teachers enter classrooms with absolutely no vetting prior to the first day of class; unqualified teachers outnumber prepared teachers by wide margins.[7]
Harvard professor John Donahue has suggested that public and private sectors might be classified in terms of the kinds of payment received (collective or individual).[8]Table I.1 shows possible permutations of privatization with regard to the type of payment received.
Table I.1: Sectors and payments (adapted from Donahue).
Public sector/Collective payment
Quadrant 1. “The government.” Examples: the Federal Bureau of Investigation (FBI), state police departments, public schools
Public sector/Individual payment
Quadrant 2. “A public/private partnership.” Examples: U.S. postal service (individuals buy stamps, but the government also subsidizes the business), U.S. national parks (admission costs help pay the cost to maintain the parks, but only partially; the government also subsidizes the parks), charter schools
Private sector/Collective payment
Quadrant 3. “Business sells to the government.” Examples: Department of Defense buys from Lockheed-Martin, government officials purchase tickets for travel from American Airlines, voucher schools
Private sector/Individual payment
Quadrant 4. “Business sells to private customers.” Examples: Businesses involved in the sale of goods or services to individuals, such as restaurants, stores, car dealers, private schools
Quadrant 1 is the domain of what most Americans think of as “government work,” as employees in this quadrant act on behalf of the government and are paid by the government. For example, the Federal Bureau of Investigation is a governmental institution whose mission is to “protect the American people and uphold the Constitution of the United States.” The federal government pays the salaries of F.B.I. employees.
The post office is a government-sponsored agency, but it also sells goods, such as postage stamps to the public. The post office generates revenue, but it is also supported in a number of ways by the federal government. The post office is a public institution that utilizes individual payment—Quadrant 2.
Quadrant 3 pertains to private businesses selling goods to the government as one entity sells goods to another entity (as opposed to being in a partnership). For example, in 2016 Lockheed Martin made revenues of 43 billion dollars from selling goods and services to the U.S. Department of Defense.[10]
Quadrant 4 represents the realm of private-to-private transactions. A customer offers individual payment to a business for a particular good or service. A customer buys a candy bar or a new car from a business that sells those items.
What becomes apparent when attempting to delineate public from private is their intrinsic interconnectedness. For example, the F.B.I. (quadrant 1) is a public institution with collective payment that outsources much of its operation to private companies.[11]McDonald’s, a business with individual payment (quadrant 4), has its food inspected by the Federal Department of Agriculture and its restaurants evaluated by state-government-supported health inspectors.
As you progress through the chapters of this book, consider the implications for public institutions as they move from public service (quadrant 1) to other kinds of orientations and other quadrants. For example, traditional public schools reside in quadrant 1. They are open to all Americans and are paid for by federal, state, and local governments.
On the other hand, a charter school moves education into Quadrant 2, where public institutions pay businesses to manage aspects of their operations. Although charter schools still receive financial support from the government, aspects of their operations are free from governmental oversight. A voucher school moves education into Quadrant 3, where the government directly pays a private enterprise for services rendered. A private school offers an education for customers willing to pay the price of tuition. Private schools that receive no governmental funding and are free from governmental oversight operate in quadrant 4.
Collective payment implies consideration of the collective welfare just as individual payment implies the consideration of individual welfare. “The profit-seeker, in exchange for a price, agrees to deliver a product. The civil servant, in exchange for a wage, agrees to accept instructions.”[12]
Another useful metric for viewing privatization is the extent to which an activity may be construed as inputs-based or outputs-based. If a task allows for clear evaluation by results [outputs-based], then the bias should be towards turning that task over to profit-seekers. If a task is so delicate and so difficult to evaluate that the contracts that govern it must be layered with constraints and specified procedures [inputs-based], it may be better to abandon outside contracts and to set up a bureaucracy.[13]
Many cities have privatized sanitation services because results tend to be considered in terms of specific outputs.[14]Was trash picked up and disposed of promptly? How effective was the service? On the other hand, it may be more difficult to quantify the relative success of psychological counseling for a soldier suffering from post-traumatic stress disorder (PTSD). Of course, there could be indications of success, such as gainful employment, results from attitudinal surveys, and success on particular clinical tasks. But, other indicators may be more difficult to discern, such as resilience, mental stability, quality of relationships, future outlook, self-efficacy, and confidence.
In recent years, privatization has moved into areas that used to be considered the public domain, originally created to foster the well-being of society at-large. Most Americans want soldiers who not only protect and defend the country, but who also serve as exemplars of American values. Most parents want teachers who not only get academic results, but who also nurture their children. Most undergraduates want university courses that not only lead to a degree, but that also enlighten, stimulate, and enrich. Most citizens want a corrections system that not only punishes, but rehabilitates so that when prisoners are released, they can make a positive contribution to society.
Serving as a soldier in an occupied war zone; a teacher in a high-poverty, high-needs school; a professor in a financially struggling public university; a prison guard among a throng of criminals—none of these are easy jobs. Yet, privatization of these jobs has become widespread. Privatization has migrated to inputs-based jobs that revolve around intricacies of human life that are multi-faceted and difficult to measure.
A privatized United States runs the risk of becoming fundamentally different from the country that has been in existence for more than two hundred years—perhaps more like the kind of place that the country’s founders were fleeing than the place where they eventually settled.
References
[1]. Orange Regional Juvenile Detention Center (2018). Visitation days and hours. http://www.djj.state.fl.us/programs-facilities/detention-centers?detention-centers/detention-center-details/orange
[2]. Republican National Committee Communications. (2018). The 2016 Republican Party Platform.Washington, D.C.: RNC. https://www.gop.com/the-2016-republican-party-platform/
[3]. Ashbrook, J. (2018, September 4). Commentary: Republicans like privatization, often benefiting donors. The Statesman. https://www.statesman.com/news/20180904/commentary-republicans-like-privatization-often-benefiting-donors
[4]. Michaels, J. (2017). Constitutional coup: Privatization’s threat to the American Republic.Cambridge, MA: Harvard University.
[5]. Schwartz, M. (2011). The Department of Defense’s use of private security contractors in Iraq and Afghanistan: Background, analysis, and options for Congress. (CRS Report No. R40835). Washington, D.C.: Congressional Research Service.
[6]. The Campus Computing Project. (2015, October 29). The 2015 campus computing survey.https://www.campuscomputing.net/content/2015/10/29/the-2015-campus-computing-survey
[7]. Baines, L. (2010). The teachers we need vs. the teachers we have.Lanham, MD: Rowman & Littlefield.
[8]. Donahue, J. (1989). The privatization decision.New York, NY: Basic Books.
[9]. Shapiro, R. (2015). The basis and extent of the monopoly rights and subsidies claimed by the United States Postal Service. Washington, D.C.: Sonecon. http://www.sonecon.com/docs/studies/Study_of_USPS_Subsidies-Shapiro-Sonecon-March_25_2015.pdf
[10]. Federal Procurement Data System—Next Generation. (2017). Top 100 contractor’s reports.https://www.fpds.gov/fpdsng_cms/index.php/en/reports.html
[11]. National Crime Prevention and Privacy Compact Council. (2015). The outsourcing of noncriminal justice administrative functions guide for federal agencies.Washington, D.C.: NCPPCC. https://www.fbi.gov/file-repository/federal_outsourcing-guide.pdf
[12]. Donahue, J. (1989). The privatization decision.New York, NY: Basic Books, p. 39.
[13]. Donahue, J. (1989). The privatization decision.New York, NY: Basic Books, p. 83.
[14]. Sclar, E. (2000). You don’t always get what you pay for.Ithaca, NY: Century Foundation.
Michelle (from Florida) told the story of her sixteen-year-old son Derrick who had been caught drinking a beer at a high school football game for a second time. Derrick was expelled as per his school’s “zero tolerance” policy, and subsequently sentenced to a “for-profit” detention center located miles from home for six months. The juvenile detention center allowed a grand total of two hours of visitation time a week. Visitors had to show up between 7-8 p.m. on a Wednesday or Saturday evening.[1]Michelle worked on Wednesday nights, so she only got to see Derrick for an hour, once a week.
Susan and Jasmine (from Ohio) were recently hired teachers at a new charter school located in downtown Toledo, Ohio. Susan had an undergraduate degree in business and had previously worked as a secretary for a construction firm. Jasmine was a bartender with a degree in human resource management. Both had been hired to teach English. When I met them, they were scrambling to get ready for the first day of class. Neither had any formal preparation in English or education. Other than the occasional babysitting job, neither had previously worked with children.
Leland (from Michigan) was working at a public university when a member of the president’s staff alerted him that the president and provost were about to cut a deal with a private company to turn all of the master’s degree programs in his college into a series of quick, online courses. Leland alerted the faculty and they protested the surreptitious move, confronted the administration, and managed to stave off the takeover. The company subsequently took over several master’s degree programs of universities in an adjacent state.
- Mercenaries on the ground in the Middle East working for American corporations and being paid with tax dollars?
- Businesses turning a profit from the incarceration of American youth?
- Privatized schools hiring unqualified, inexperienced instructors to teach our children?
- Publicly funded state programs taken from faculty and turned into profit-centers?
Privatization continues to infiltrate American life, whether we desire it or not. Tireless lobbying efforts by well-funded special interest groups have promoted more corporate involvement in military affairs, schools, and prisons.[2]Future privatization targets include veterans’ affairs, air traffic control, environmental protection, water and sanitation, the national parks, and social security.[3]
Privatization is changing the nature of America’s public institutions and consequently, the character of the country. What is startling about privatization in America today is the immensity of its scale. Privatization is no longer an occasional strategy to help improve the efficiency of a particular public service. Privatization has become an automatic response to any perceived governmental inefficiency.[4]
In Iraq and Afghanistan thousands of mercenaries (paid for through U.S. tax dollars) patrolled war zones carrying weapons, giving orders, and executing corporate strategic plans. At times, private contractors in the Middle East outnumbered soldiers by a 3:1 margin.[5]In Florida, the state where sixteen-year-old Derrick was jailed for drinking beer, one hundred percent (100%) of juvenile detention facilities are run for-profit. A third or more of all online programs offered through public universities are outsourced and university faculty do not teach the courses.[6]In Texas, unqualified teachers enter classrooms with absolutely no vetting prior to the first day of class; unqualified teachers outnumber prepared teachers by wide margins.[7]
Harvard professor John Donahue has suggested that public and private sectors might be classified in terms of the kinds of payment received (collective or individual).[8]Table I.1 shows possible permutations of privatization with regard to the type of payment received.
Table I.1: Sectors and payments (adapted from Donahue).
Public sector/Collective payment
Quadrant 1. “The government.” Examples: the Federal Bureau of Investigation (FBI), state police departments, public schools
Public sector/Individual payment
Quadrant 2. “A public/private partnership.” Examples: U.S. postal service (individuals buy stamps, but the government also subsidizes the business), U.S. national parks (admission costs help pay the cost to maintain the parks, but only partially; the government also subsidizes the parks), charter schools
Private sector/Collective payment
Quadrant 3. “Business sells to the government.” Examples: Department of Defense buys from Lockheed-Martin, government officials purchase tickets for travel from American Airlines, voucher schools
Private sector/Individual payment
Quadrant 4. “Business sells to private customers.” Examples: Businesses involved in the sale of goods or services to individuals, such as restaurants, stores, car dealers, private schools
Quadrant 1 is the domain of what most Americans think of as “government work,” as employees in this quadrant act on behalf of the government and are paid by the government. For example, the Federal Bureau of Investigation is a governmental institution whose mission is to “protect the American people and uphold the Constitution of the United States.” The federal government pays the salaries of F.B.I. employees.
The post office is a government-sponsored agency, but it also sells goods, such as postage stamps to the public. The post office generates revenue, but it is also supported in a number of ways by the federal government. The post office is a public institution that utilizes individual payment—Quadrant 2.
Quadrant 3 pertains to private businesses selling goods to the government as one entity sells goods to another entity (as opposed to being in a partnership). For example, in 2016 Lockheed Martin made revenues of 43 billion dollars from selling goods and services to the U.S. Department of Defense.[10]
Quadrant 4 represents the realm of private-to-private transactions. A customer offers individual payment to a business for a particular good or service. A customer buys a candy bar or a new car from a business that sells those items.
What becomes apparent when attempting to delineate public from private is their intrinsic interconnectedness. For example, the F.B.I. (quadrant 1) is a public institution with collective payment that outsources much of its operation to private companies.[11]McDonald’s, a business with individual payment (quadrant 4), has its food inspected by the Federal Department of Agriculture and its restaurants evaluated by state-government-supported health inspectors.
As you progress through the chapters of this book, consider the implications for public institutions as they move from public service (quadrant 1) to other kinds of orientations and other quadrants. For example, traditional public schools reside in quadrant 1. They are open to all Americans and are paid for by federal, state, and local governments.
On the other hand, a charter school moves education into Quadrant 2, where public institutions pay businesses to manage aspects of their operations. Although charter schools still receive financial support from the government, aspects of their operations are free from governmental oversight. A voucher school moves education into Quadrant 3, where the government directly pays a private enterprise for services rendered. A private school offers an education for customers willing to pay the price of tuition. Private schools that receive no governmental funding and are free from governmental oversight operate in quadrant 4.
Collective payment implies consideration of the collective welfare just as individual payment implies the consideration of individual welfare. “The profit-seeker, in exchange for a price, agrees to deliver a product. The civil servant, in exchange for a wage, agrees to accept instructions.”[12]
Another useful metric for viewing privatization is the extent to which an activity may be construed as inputs-based or outputs-based. If a task allows for clear evaluation by results [outputs-based], then the bias should be towards turning that task over to profit-seekers. If a task is so delicate and so difficult to evaluate that the contracts that govern it must be layered with constraints and specified procedures [inputs-based], it may be better to abandon outside contracts and to set up a bureaucracy.[13]
Many cities have privatized sanitation services because results tend to be considered in terms of specific outputs.[14]Was trash picked up and disposed of promptly? How effective was the service? On the other hand, it may be more difficult to quantify the relative success of psychological counseling for a soldier suffering from post-traumatic stress disorder (PTSD). Of course, there could be indications of success, such as gainful employment, results from attitudinal surveys, and success on particular clinical tasks. But, other indicators may be more difficult to discern, such as resilience, mental stability, quality of relationships, future outlook, self-efficacy, and confidence.
In recent years, privatization has moved into areas that used to be considered the public domain, originally created to foster the well-being of society at-large. Most Americans want soldiers who not only protect and defend the country, but who also serve as exemplars of American values. Most parents want teachers who not only get academic results, but who also nurture their children. Most undergraduates want university courses that not only lead to a degree, but that also enlighten, stimulate, and enrich. Most citizens want a corrections system that not only punishes, but rehabilitates so that when prisoners are released, they can make a positive contribution to society.
Serving as a soldier in an occupied war zone; a teacher in a high-poverty, high-needs school; a professor in a financially struggling public university; a prison guard among a throng of criminals—none of these are easy jobs. Yet, privatization of these jobs has become widespread. Privatization has migrated to inputs-based jobs that revolve around intricacies of human life that are multi-faceted and difficult to measure.
A privatized United States runs the risk of becoming fundamentally different from the country that has been in existence for more than two hundred years—perhaps more like the kind of place that the country’s founders were fleeing than the place where they eventually settled.
References
[1]. Orange Regional Juvenile Detention Center (2018). Visitation days and hours. http://www.djj.state.fl.us/programs-facilities/detention-centers?detention-centers/detention-center-details/orange
[2]. Republican National Committee Communications. (2018). The 2016 Republican Party Platform.Washington, D.C.: RNC. https://www.gop.com/the-2016-republican-party-platform/
[3]. Ashbrook, J. (2018, September 4). Commentary: Republicans like privatization, often benefiting donors. The Statesman. https://www.statesman.com/news/20180904/commentary-republicans-like-privatization-often-benefiting-donors
[4]. Michaels, J. (2017). Constitutional coup: Privatization’s threat to the American Republic.Cambridge, MA: Harvard University.
[5]. Schwartz, M. (2011). The Department of Defense’s use of private security contractors in Iraq and Afghanistan: Background, analysis, and options for Congress. (CRS Report No. R40835). Washington, D.C.: Congressional Research Service.
[6]. The Campus Computing Project. (2015, October 29). The 2015 campus computing survey.https://www.campuscomputing.net/content/2015/10/29/the-2015-campus-computing-survey
[7]. Baines, L. (2010). The teachers we need vs. the teachers we have.Lanham, MD: Rowman & Littlefield.
[8]. Donahue, J. (1989). The privatization decision.New York, NY: Basic Books.
[9]. Shapiro, R. (2015). The basis and extent of the monopoly rights and subsidies claimed by the United States Postal Service. Washington, D.C.: Sonecon. http://www.sonecon.com/docs/studies/Study_of_USPS_Subsidies-Shapiro-Sonecon-March_25_2015.pdf
[10]. Federal Procurement Data System—Next Generation. (2017). Top 100 contractor’s reports.https://www.fpds.gov/fpdsng_cms/index.php/en/reports.html
[11]. National Crime Prevention and Privacy Compact Council. (2015). The outsourcing of noncriminal justice administrative functions guide for federal agencies.Washington, D.C.: NCPPCC. https://www.fbi.gov/file-repository/federal_outsourcing-guide.pdf
[12]. Donahue, J. (1989). The privatization decision.New York, NY: Basic Books, p. 39.
[13]. Donahue, J. (1989). The privatization decision.New York, NY: Basic Books, p. 83.
[14]. Sclar, E. (2000). You don’t always get what you pay for.Ithaca, NY: Century Foundation.