Saturday, July 2, 2016

The Costs of Privatization

The Private Abuse of the Public Interest: Market Myths and Policy Muddles, by Lawrence D. Brown and Lawrence R. Jacobs


These are two interesting books. In the first one, above, the professors show how privatization increases the costs by two to three times.  

From the back cover:

Despite George W. Bush’s professed opposition to big government, federal spending has increased under his watch more quickly than it did during the Clinton administration, and demands on government have continued to grow. Why? Lawrence Brown and Lawrence Jacobs show that conservative efforts to expand markets and shrink government often have the ironic effect of expanding government’s reach by creating problems that force legislators to enact new rules and regulations. Dismantling the flawed reasoning behind these attempts to cast markets and public power in opposing roles, The Private Abuse of the Public Interest urges citizens and policy makers to recognize that properly functioning markets presuppose the government’s ability to create, sustain, and repair them over time.

The authors support their pragmatic approach with evidence drawn from in-depth analyses of education, transportation, and health care policies. In each policy area, initiatives such as school choice, deregulation of airlines and other carriers, and the promotion of managed care have introduced or enlarged the role of market forces with the aim of eliminating bureaucratic inefficiency. But in each case, the authors show, reality proved to be much more complex than market models predicted. This complexity has resulted in a political cycle—strikingly consistent across policy spheres—that culminates in public interventions to sustain markets while protecting citizens from their undesirable effects. Situating these case studies in the context of more than two hundred years of debate about the role of markets in society, Brown and Jacobs call for a renewed focus on public-private partnerships that recognize and respect each sector’s vital—and fundamentally complementary—role.

Contents:

1 A Return to Realism
2 Markets and Policy: From Pragmatic Realism to Dogmatic Utopianism
3 Cycles of Reform: Formulation and Ratification of Market Utopianism
4 Cycles of Reform: Institutional Reality and the Dystopia of Markets
5 The Democratic Disconnect and the Growth of Government
6 Pragmatic Policy in the Marketplace of Ideas
                                                                         
                                                                       ***

In the UK the accountants Professor Warwick Funnell, Robert Jupe, and Jane Andrew have written a similar book:

In Government We Trust: Market Failure and the Delusions of Privatization. 


From the back cover:

Neoliberalism has had a huge impact on our lives over the past three decades, convincing governments in liberal democratic states to transform themselves and society according to the values and practices of the market. In Government We Trust examines these promises within the context of market failures in services relinquished to the private sector by governments. Using prominent examples such as the collapse of Railtrack in the UK, the energy crisis in the US and the Sydney water treatment scandal in Australia, it exposes the level of risk which remains with government after privatisation, requiring them to resume responsibility when the private sector fails. The authors show how these failures reveal the benefits of government intervention and the dangers of unfettered markets. They argue that these problems confirm that there are some things only governments can and should do.

Note: This is my new writing style, more copy and paste with only a light commentary. Essays used to take far too long to write anyway, and we can all argue it out with civility in the comments section below. 

Kevin

4 comments:

Tom Hickey said...

There's a reason that neoliberalism is favored by business and finance. It's capital-friendly and good for rent extraction, which is the chief means of gain in a neoliberal regime.

Thus, neoliberalism, characterized as "free markets, trade, and capital flows" really means free from government intervention. Free markets, trade and capital flows = economic liberalization, deregulation, and privatization.

The cost of neoliberalism as economic liberalization, deregulation and privatization is rent extraction that is parasitic on circular flow and the rent is extracted by capital (ownership) from labor (workers).

Neoliberalism is based on the assumption that the private sector and government are antithetical and oppositional, whereas in reality the private sector and government are complementary.

Bob said...

Neoliberalism is based on the assumption that the private sector and government are antithetical and oppositional, whereas in reality the private sector and government are complementary.

Well that would not be an assumption, but a deception.
Just like the assumption *cough* deception *cough* that everything the government does is inefficient.

Bob said...

Labour and capital are antithetical and oppositional, according to Marx and most observers.

Tom Hickey said...

Labour and capital are antithetical and oppositional, according to Marx and most observers.

This is also the view of capital and labor, and the evidence is the ongoing tussle over capital/labor share, where capital is almost always winning.