How privatization is fueling historic inequality

Johnny Cash was a man of colorful stories, and “One Piece At a Time” is no exception. In the 1976 song, Cash works a Detroit assembly line making Cadillacs that he can’t afford. “Every day I’d watch them beauties roll by and sometimes I’d hang my head and cry,” he sings.

So Cash comes up with a plan. He’ll “steal” a car by taking one part home each day in his lunchbox. For twenty-five years he steals parts one by one without the factory owner noticing. By the end of the song he has a transmission from 1953 and an engine from two decades later, but altogether he has a fully functioning Cadillac, a beauty of his own.

{mosads}A similar story can be told about American government.

For decades, parts of government at all levels, federal, state, and local, have been handed over one by one to the private sector. As public budgets have tightened, crucial public goods and services like education and transit have been outsourced in the name of efficiency and cost savings.

Everyone benefits when government creates and supports goods and services designed to deliver widespread prosperity. But privatization, a key pillar of recent political attacks on government, has slowly weakened welfare programs, infrastructure, and much more.

All the while we’ve hardly noticed what we’ve lost.

In public education, school bus divers and cafeteria workers have been outsourced and a new form of privatized education has proliferated. Charter schools, which are publicly funded but privately operated, are threatening the financial stability of school districts from Los Angeles to Massachusetts.

In infrastructure, corporations have raised water rates and bad deals have complicated transit policy. Who could forget Chicago’s notorious parking meter debacle, in which the city leased their meters to banking giant Morgan Stanley for $1 billion under value? The deal has made it much harder for the city to make environmentally sustainable changes to transit planning, like bike or bus lanes, for the length of the lease—a whopping 75 years.

In social services like food assistance and Medicaid, handing control over to the private sector has shifted the burden to the backs of the most vulnerable families, while corporations like Xerox and Lockheed Martin skim profits off the top.

And across many sectors, from emergency services to the criminal justice system, Wall Street banks and private equity firms have found ways to syphon taxpayer dollars into the pockets of investors.

Like the owners of the Cadillac factory, we’ve missed the bigger picture as we’ve lost control of government piece by piece.  

But the cost has been much more than one missing car. Our analysis, published in the report, “How privatization is increasing inequality,” shows that privatization is helping fuel America’s historic inequality, the defining issue of our time.

Public sector work long offered a stable, middle class life. But many public workers employed by private contractors have plunged into poverty because of declining wages and benefits. Outsourcing has been particularly harmful to women and people of color, as nearly 60 percent of public sector jobs are held by women and one in five black workers are public workers.

Privatization has also impacted the public at large. Governments, strapped for cash, have increasingly allowed private contractors to charge fees to subsidize or completely fund a good or service. “Offender funded” electronic monitoring, in which a person awaiting trial or on house arrest or probation must pay for their own ankle monitor, is a tragic example of this growing practice. In 49 states and the District of Columbia, the cost of an ankle monitor—as high as $40 a day—can be passed along to the person ordered to wear it. When people fall behind on payments, the company providing the monitor can charge them late fees, and those who can’t afford to pay can even be sent back to prison or jail. If the mission of our criminal justice system is to reduce crime, trapping people in cycles of fees and debt isn’t the way to do it. 

The dismantling of government has also perpetuated racial segregation. One glaring example tells the story. Schools in Minnesota’s Twin Cities metropolitan area, which were once some of the most desegregated in the country due to strong state civil rights laws, are now being resegregated. Charter schools, which are exempt from many Minnesota state laws including those concerning integration, have exacerbated this dangerous trend.

All of these dynamics add up to a disturbing reality. As public money has dwindled, privatization in its many forms has often appeared as a solution. A charter school here, a privately operated public bus system there. But taken as a whole, the decades-long experiment with privatization has intensified a misguided distrust in government and increased inequality.

Public goods and services, by bringing economic and social value to everyone, especially the most vulnerable, ensure a healthy and just society. It’s high time we invest in them and take them back. 

Cohen is the founder and executive director of In the Public Interest, a national research and policy nonprofit advocating for transparency and shared prosperity in the provision of public goods and services. 

The views expressed by authors are their own and not the views of The Hill.


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