Avedon's other weblog
Thursday, April 29, 2004

LatinAmericazation of the USA

It's pretty basic stuff. You soak the populace in taxes paid for services which will, for the most part, not actually be provided by the government.

Those services will be sold off to private enterprise or devalued altogether - by a government that claims to be giving you even better service! at even lower prices! but in fact is putting them into the hands of people who have been promised they will not be held accountable.

The private companies aren't even going to try to keep up the standard of service, but will raise prices considerably. A lot is usually said about all the nifty jobs that will be created by this wonderful modernizing project, but in fact productive staff will be cut and the new bosses will say they have no choice and anyway they have their obligations to their shareholders to think of (and obligations to no one else to even consider).

In most cases, the sale of utilities or other projects to private enterprise won't even have the benefits of an actual sale, since the government will continue to pay out taxpayers' money to subsidize the same projects. Extra layers of administration are laid on (at increased costs to you, of course), and the real deal is that the work has in essence been outsourced to a more expensive and less responsible provider. The private company mines profits from the bills you pay directly into their own pockets, while costs are returned to you through the government to be covered by your now increased taxes.

Of course, the government has to at least go through some cost-cutting motions, but they won't cut them at source. Instead, they will tearfully explain that we're just going to have to tighten our belts and get rid of some projects which, mysteriously, have now become inefficient and just plain too expensive - luxuries like a properly-trained police force, say, or public defenders, or medical care for indigent children.

So one year you were paying about $160 annually for your gas heating, and then it's privatized, and next year you pay around $20 for each monthly bill that is sent to you by the new gas company, but the government (i.e., your tax money) still has to cover costs for the inefficiencies that have been introduced. The trains, which now have fewer routes, and schedules that are becoming increasingly incomprehensible (not to mention a lot more serious accidents), seem to raise their ticket rates exponentially every year, and yet the government is still having to pay running costs.

Gee, the money has to come from somewhere, so... ah, we'll add 2% to the sales tax (which hits those in the lower income brackets the hardest).

Eventually, the current Prime Minister or President and their respective cabinet members will retire from public service to go into the private sector. What will they do? Well, Norman Tebbit, who sold off British Telecom, went on to run the privatized telephone service in Britain. See how it works out? Baby, you're a rich man!

Wait, he gave the phone company to himself? Doesn't this sound kind of...corrupt? How do they get away with it?

British Telecom is a lovely case study. The government ran BT, so they could decide to fund and operate it any way they wanted to. It was a simple matter to simply run the service down while crying poor. It's not that the money wasn't actually there, you understand, it's just that they chose not to put it where it was needed. Upgrades were seriously required, but they just weren't funded, and the system was limping along in the 1980s with the same technology they'd had since the '50s. Engineering was grossly understaffed, so you waited weeks, even months, after you called for service.

People were increasingly aware that Britain had the worst telephone service in the industrialized world, except for France. The crowning moment was when the country had a chance to upgrade to a new system - of British design - that would have made it exceptional. The Thatcher government turned it down. The French bought it. And then the French had the best telephone system in the industrialized world. (Imagine the humiliation! The French!)

The drumbeat for privatization became intense. Rhetoric flew high that the system was now unmanagible in its present form and only private industry could save it. So the government arranged a sale. What they didn't trumpet too loudly was the fact that part of the deal included a pile of sweeteners fattened with funding the upgrade we somehow couldn't afford before. And only some of the responsibility for running the system would go to private hands - so we'd still be paying for it, we'd just be paying for it twice. The profits, of course, would not be returned to us. But at least the phones were working a lot better, and we could finally get modular systems like they had everywhere else already.

Making the phone company the first experiment in privatization was a smart move, because it was the one that held out the most potential for actually working profitably. That was the thing that made it most attractive for private interests to buy, of course. Other utilities don't necessarily work the same way. So in this instance, privatization appeared to have worked.

But then, curiously, the railways started to be inefficient. (Actually, they weren't all that inefficient, but Tories kept saying they were.) Mysteriously, rush-hour trains started to be less and less reliable. There were problems. The drums got louder. The rails were privatized. And cost more. And were less efficient. And had lots of accidents.

It is rather amazing, when you think about it, that people can so easily overlook the simple fact that no private company would have any interest in buying a public utility unless it was profitable. Think about that: Why would someone want to buy the phone company if it weren't profitable? They wouldn't. So either it is profitable, which means there is no advantage to the public in selling it off, or it's not going to be worth buying. If it can't be run without public subsidy, they aren't going to buy it - unless they can still get the public subsidy.

If a service cannot be provided efficiently to the public by the government at a profit, it can't be provided any more efficiently to the public at a profit by the private sector. And because the private sector must make a profit, you can be sure that privatization will be more expensive and still be less efficient. All over the world, this has been proven again and again. It's not in question; it can't work any other way.

Privatizers try to convince the public that the market is magic. They do this, largely, by lying. They tell you that a government-run service doesn't work, even when it has always worked. They make people paranoid about costs and convince them to allow legislators to tinker with the system until it starts to break. Then they claim they can fix it by privatizing it. The privatized system never runs as well or as cheaply as it did before, but by then it's too late - it's a lot harder to re-nationalize a service once it has been in the hands of the private sector.

Just look at American healthcare, among the worst and most expensive in the industrialized world. Oh, you hadn't heard? Isn't American healthcare - because it is a commercial system - the best there is?

Well, no. First of all, it's not an entirely commercial system. The government funds a great deal of it. Most of the significant research is performed by the National Institutes of Health and government-funded university programs. The commercial sector reaps the benefits, but it doesn't pay for them, because you already have. And a considerable part of the overall running cost of hospitals is also paid for by the government.

So first you pay for it in taxes, and then you pay your middleman in the insurance industry and then you pay for immediate treatment. You pay several different entities for healthcare, and most of them are profit-making entities, which means you don't just pay what is necessary, you also pay an additional premium that exists to make other people rich. That means that a huge proportion of your payout is never put toward maintaining your health; it goes directly toward maintaining someone else's wealth. (Then, of course, there are the drugs....)

In Britain - and here we are talking about fully "socialized" medicine, not single-payer - residents do not pay these additional wealth-maintenance costs. Britain spends less money to provide free-at-source healthcare to everyone in the country than America pays for healthcare you still have to pay for at source.

And, despite some meddling by "modernizers", Britain still gets pretty good healthcare. I know enough to make the comparison, because I grew up in Montgomery County, Maryland, at the time the wealthiest county in the wealthiest country in the world. And now I live in a working-class neighborhood in London.

You hear horror stories about the NHS, of course - waiting lists and such. But most of that didn't exist before the Thatcher government decided to "fix" the system. Even so, enough has been retained that it still compares favorably with American healthcare. Yes, we have access to the same equipment, the same medicines. We have at least as much control of what doctors we see as anyone in an American HMO does. We get immediate treatment when we need it, and we get non-vital treatment in reasonable time.

And we never have to ask ourselves if we can afford it. (And private care, and private insurance, are still available if you want the pricier standard in the style of the USA - which means the furniture is better, but not the medical care. We already have good medical care.)

Oh, you say, what about those high taxes? Well, my social security and other taxes on my paycheck come to 20% of income above the personal allowance. (Equivalent to a "standard deduction". I think about five grand - sterling - at the moment, though I haven't looked lately, and it could be more. That's, what, $8,000?) There are no additional state and local taxes taken out of my pay. One member of any married couple (by default, the husband - you have to hassle them if you want the wife to get it) gets to take another deduction, I think called "the married person's allowance".

Taxes actually got higher as "modernization" started to kick in. It's interesting, isn't it, that "cost-cutting" always seems to make things more expensive? It was, naturally, Conservatives who doubled the sales tax.

The "fiscally conservative" "free-market" program of modern "conservatives" is a scam, pure and simple. It isn't based on any serious economic analysis. It's piracy that takes your tax money and hands it over to privateers who don't care whether you are getting what you think you're paying for. And it's not just hurting the poor; it can destroy the middle-class, while a small handful of rich people learn that they can spend your money on...a lot of expensive shoes.

Meanwhile, your jobs become less and less secure, and lower-paid, with fewer benefits - and what benefits you do get (like healthcare) are so vital that you don't dare leave the company, no matter how badly you are treated. You're still paying taxes, but everything they are supposed to cover gets privatized and now you are having to pay for them again. Soon you can't pay for them because you just don't have the money, and your neighborhood starts to look like a slum, your streets fill up with crime, and if the police do come, they harass you and all your neighbors.

What separates you from all those teeming masses of Latin American laborors who struggle while their leaders live in luxury, sucking up the nation's wealth into their foreign bank accounts? Some people just assume that it can never happen in America, but that's magical thinking. It can happen. It has happened, everywhere, at one time or another, and that includes America. We are not so far from 1929.

[This article was orginally published on 12 February 2004 at DailyNewsOnline.]



Avedon (12:45 AM) permalink




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