A Case Study in Privatization

Here is a story that Atrios has been covering for some time, which is a perfect parable of what privatization of government services is all about.

So, the Philadelphia school system was having trouble finding substitute teachers.  In fact, for the last year that they were doing this on their own, they were only able to fill 64% of their need.  Well naturally, we all know by now that government can do nothing but screw up, and that private enterprise and the free market are the answer to all of our problems.  So, the school system contracted with a private company, which they agreed to pay a couple of million dollars to take over the task.  The company promised that they would supply 75% of the need on their first day of operation, and quickly raise that number to 90%.

The actual numbers?  17% at the start, which they have now managed to raise to a sky-high 37%.  This, in return for those couple of million dollars to do a job that the school system was already doing far better.

But, of course, that is not the whole story.  If this private company was treating the substitutes the same as the school system does, there would be no reason why they could not have maintained the inadequate 67% figure, and presumably raised the number somewhat, through their recruiting expertise, which is what the school system was supposedly paying for.

However, that is not what they did.  They slashed the pay of substitute teachers, and eliminated unions, thus denying teachers not just money, but benefits and job security too,  Well, someone had to cough up the dough for the millions paid to the company's executives.

Let me digress.  My grandfather was a Chicago gangster back in the day.  He ran a lot of gambling operations.  Here is what he told us:  The house only pays out three quarters of what it takes in.  Consequently, his observation was that no one could win at gambling in the long run.  He always said that if he had to do it over again, he would have been a veterinarian, because the vet is the only person he ever saw walk away from the track with money in his pocket.

What does this have to do with anything?  How can anyone be so idiotic as to think that you can adopt a system where a large part of the money is skimmed off the top, and expect better results?  Yet that is exactly the preposterous basis for all calls for privatization, justified by the malicious falsehood that all government workers are mindless, lazy bureaucrats, while all corporate CEO's are altruists just looking for a way to make things better for everyone.  The whole thing is demented.  Of course, it is no more demented than supply side economics, austerity, or any other cant from the right, which has only one real purpose, and that is to justify taking money away from average people to give to the rich.  And since that is the only purpose of privatization, I guess we might as well admit that this example of it worked very well indeed.