||Volume 22, Number 7, May/June 2010
Privatization is the wrong word
By Kip Wood
There may be a compelling argument for privatization in our society. It could even be argued that there should be more privatization.
Privatization implies that a public service is being transformed into a private service. The dictionary defines “privatize” as follows: to transfer from public or government control or ownership to private enterprise.
In our society, it is clear that the process of privatization is not a complete transfer. It is always partial privatization. A better description of what is happening is a transfer of public wealth to private hands or, more bluntly, a redistribution of wealth from poor to rich. The redistribution of wealth from rich to poor is the fundamental purpose of taxation. Therefore, the modern version of privatization opposes the reason civilized societies tax their citizens.
Private schools all want to procure funds from government coffers to subsidize the tuitions they collect. Private clinics want public support. Private retirement homes charge $5,000 a month and still expect public money. And independent power projects sell power to BC Hydro at inflated prices. These are all examples of privately operated “for-profit” enterprises that are dependent on public funds. They are not truly private or independent.
The entrepreneurial spirit is a key ingredient of our economy and our society. The examples above do not embody an entrepreneurial spirit nor do they exemplify a free market. A better descriptor is organized theft. Privatization is the wrong word.
Proponents of these so called privatization schemes, sometimes called “public private partnerships” or P3s, argue that the private sector does a better job of providing these services. This is a valid argument. However, we may never be able to have this discussion because the private sector is not delivering these services without taxpayer dollars.
Like the massive bailouts following the financial meltdown in 2008, these hybrid services pervading our society enjoy the security of the public purse and the opportunities provided by the marketplace. The public assumes the risks; the corporation reaps the benefits. When things went south in 2008, the decoupling of risks and rewards was exposed in a devastating way through the socializing of losses and the privatizing of gains.
Warren Buffett, chairman of Berkshire Hathaway and one of the richest people in the world, claims to be in favour of welfare programs. Buffett also stated that the best welfare programs have been designed for rich people. Canadian politician David Lewis described the recipients of these generous handouts as “corporate welfare bums.”
BC Ferries is another example. Formerly a Crown Corporation accountable to the public, BC Ferries is now a private corporation with a profit motive. CEO David Hahn recently defended his million dollar annual salary by saying, “I’m not a public sector guy.” Hahn oversees a private company that gets over $150 million in tax money every year. Their financial books are concealed all year long; however, BC Ferries does make a point to announce their profits at year-end (over $50 million in 2009).
The practice of subsidizing independent schools has been a tradition in BC since 1977. These schools (351 in 2008 according to ministry figures) are obviously not independent when you consider that most of these schools receive 50% of the funding level provided to the public system. Social Credit governments advanced this wealth redistribution program until 1991 when the NDP was elected. Rather than reversing the welfare program for tuition schools, the NDP supported the policy of funding them.
Since 2001, corporate welfare under Gordon Campbell has become a religion. His government has condemned their “tax and spend” opponents while having a nine-year liquidation sale of the public commons. The mandate of governments in civilized societies is to tax its citizens in order to redistribute wealth in the form of accessible public services. Schemes erroneously called “privatization” also redistribute wealth, and in doing so, erode the public commons that we used to call the fabric of civilized society.
Kip Wood is president of the Nanaimo District Teachers’ Association.