]LoL[Harm
03-18-2010, 12:39 PM
Corporations Part III – Privatization
And now to the conclusion of my lengthy rant on corporate America.“One aspect of modern life which has gone far to stifle men is the rapid growth of tremendous corporations. Enormous spiritual sacrifices are made in the transformation of shopkeepers into employees. . . . The disappearance of free enterprise has led to a submergence of the individual in the impersonal corporation in much the same manner as he has been submerged in the state in other lands.” – William Orville DouglasPrivatization, when stated by people in this country, is defined as the act of transitioning a non-corporate entity into a corporate entity. Non-corporate entities are usually government or publicly owned.
One of the most dangerous things I see in our country today is the glorification and the sovereignty that is given to the corporate model. Because of its effectiveness it is seen as the solution for any economic problem. Social security got you down, privatize it. Medicaid bankrupting society, privatize it. Privatization is at its root, a war on socialism and/or federalization. Put simply, it is putting power into the hands of a business, instead of that of the government or people. And I have no issue with the idea of privatization, because a business may be the solution to some of our issues. When someone states they feel that something is better privatized, they are stating exactly this: I trust a business over that of people and that of government. Even though not one of the three deserve our trust more than an other, as all three have to be tempered. The public with civil and criminal laws, the government with our Constitution and business with regulation.
The free market, at its most ideal, is an open forum where businesses compete for customers through quality of product and service that is driven by healthy competition. In this forum, innovation is rewarded through new products or heightened service that are better than a competitor’s. This however is purely ideological and the term “free market” cannot be taken literally. A fully free, unregulated corporate market works actively to eliminate competition and to dominate the market to the point where it controls as many aspects of it as possible in order to maximize profits. If a corporation is permitted to take control of a market, innovation is no longer required, which saves a large amount of money that would normally be put towards research and development. We can easily see how corporations will gladly eliminate innovation even in the face of competition, which can be seen in the auto industry. The basic reason behind their unwillingness to innovate is that the risks inherent in seeking innovation often do not make profit and is logically shunned by the corporate business model which survives on profit and avoids all things counter to that goal.
Therefore all markets, free or otherwise, need regulations, and incentives to take risks, to some degree. Laws that cover fraud and abuse have to exist in a society that supports the well-being of its populace. But there is a balance to be struck, too heavy of a hand in regulation stifles business, too much money provided to drive innovation creates a corporate welfare state, and the more bureaucracy the higher cost of entry for new businesses, which limits competition. The point here is that some other force must be present in order to make a corporate business model function for the betterment of not just the business itself, but to better the business so that it in turns provides benefit for the consumers and the communities they operate in.
You can point at any market today and you will see a great sickness in it that may be caused by too much or too little government involvement. Some may argue that eliminating all government meddling in the markets will allow the markets themselves to work out the issues, but this is a sick dream spread through talking-points and completely ignores reality. Because corporations don’t want competition, they don’t want to have the need to innovate; they just want to maximize profits.
Corporations at heart are just like a person. You give it stuff for free, it gets lazy. If it doesn’t have to do something to achieve its goals, it won’t. Mostly because a corporation is run by people, people with a very defined set of priorities. And it is precisely those priorities, which were outlined at the beginning of this discussion, that cause me the largest amount of concern when talking about privatization. Because you are shifting power into the hands of a group of people whose priorities do not align with that of the public.
When people talk about socialized this or that, they fail to look at what is currently socialized and why it’s necessary to have it that way. Our public servants are all socialized, from firefighters, police men, to our armed forces. In fact our military is the most expensive program we have in our country and it is socialized, but not fully any more, as can be seen in our latest wars, more and more private companies are getting into warfare. However is that where we want to go? Do we want companies vying to put out fires, and if you can’t pay they just let your house burn down? How about if a crime is being committed in your neighborhood? If the privatized police are run like the health insurers the first time a crime is committed you may never receive any police aid at all, they may just refuse to give you their services, they may deem you too high of a risk to their profit margins.
The idea that the health insurance business model works is a testament to how broken our markets are. You would think that only in some fantasy world could you imagine paying someone for something and then when it comes time to collect that service they refuse to provide it and you never see your money again. Applying basic common sense shows this as outright theft, but in the corporate world it is a risk versus profit calculation and it just happens you came out on the risk side too heavily for them to warrant you as a valid customer and all previous monies you gave them are forfeit.
Could our fire departments be privatized? Sure, I truly believe they could! But only with heavy amounts of regulation, which is something that those who seek privatization are commonly against in unison with their privatization goals. The thing is that regulation in regards to privatization is on a sliding scale. The more impact a “market”, be it my hypothesized privatized fire protection or any existing one, impacts the citizens of the nation, the more regulation required to protect those citizens from corporate priorities. The less impact the market has on the populace, the less amount of regulation required. So those who shout out with little care that all things should be on the “free market” and that all things should be unregulated are not thinking, they are just shouting out ideological dribble.
So when privatization comes out as a suggested solution for some problem, for example schooling, always ask yourself who it truly benefits. Private schools have been studied, many times in many different settings comparing them to public ones and test scores and academic achievements are mostly equal (Source 1 (http://nces.ed.gov/nationsreportcard/pdf/studies/2006461.pdf), 2 (http://www.sciencedaily.com/releases/2009/02/090226093423.htm), 3 (http://education-portal.com/articles/Public_Schools_vs._Private_Schools%3A_New_Study_Sa ys_There_is_No_Difference.html)) with one major difference. Private schools cost more to operate and yet teachers make less (though private sector has been gaining in some regards to matching that of public teachers pay). One of those reasons is that the corporate business model needs to make profit and salaries impact that bottom line. Also, a single large entity (the government run schools) have better buying and bargaining power than smaller, individual private schools. There are of course many other questions that underlie the decision to make our nations education fully privatized. The government is by law required to be transparent, private business, if you recall, have all of our rights, they therefore have the right of privacy and unwarranted search and seizure, therefore records, curriculum and other information cannot be attained easily by anyone, including parents. And you don’t get to elect the people who oversee the curriculum. It takes the power away from the community and places it in the hands of a company, in which the community has no say in, except through, you got it, regulations.
Privatization works, but just like everything, each circumstance is unique. So privatization can be the answer, but only if the results of using privatization benefits our nations citizens first and businesses second, which given our assumptions can only be guaranteed through regulation.
As a side note there are alternatives to the corporate model. A model that I find extremely intriguing and one I would love to work under is the worker cooperative. You can read more about that business model here: http://en.wikipedia.org/wiki/Workers_cooperative
And now to the conclusion of my lengthy rant on corporate America.“One aspect of modern life which has gone far to stifle men is the rapid growth of tremendous corporations. Enormous spiritual sacrifices are made in the transformation of shopkeepers into employees. . . . The disappearance of free enterprise has led to a submergence of the individual in the impersonal corporation in much the same manner as he has been submerged in the state in other lands.” – William Orville DouglasPrivatization, when stated by people in this country, is defined as the act of transitioning a non-corporate entity into a corporate entity. Non-corporate entities are usually government or publicly owned.
One of the most dangerous things I see in our country today is the glorification and the sovereignty that is given to the corporate model. Because of its effectiveness it is seen as the solution for any economic problem. Social security got you down, privatize it. Medicaid bankrupting society, privatize it. Privatization is at its root, a war on socialism and/or federalization. Put simply, it is putting power into the hands of a business, instead of that of the government or people. And I have no issue with the idea of privatization, because a business may be the solution to some of our issues. When someone states they feel that something is better privatized, they are stating exactly this: I trust a business over that of people and that of government. Even though not one of the three deserve our trust more than an other, as all three have to be tempered. The public with civil and criminal laws, the government with our Constitution and business with regulation.
The free market, at its most ideal, is an open forum where businesses compete for customers through quality of product and service that is driven by healthy competition. In this forum, innovation is rewarded through new products or heightened service that are better than a competitor’s. This however is purely ideological and the term “free market” cannot be taken literally. A fully free, unregulated corporate market works actively to eliminate competition and to dominate the market to the point where it controls as many aspects of it as possible in order to maximize profits. If a corporation is permitted to take control of a market, innovation is no longer required, which saves a large amount of money that would normally be put towards research and development. We can easily see how corporations will gladly eliminate innovation even in the face of competition, which can be seen in the auto industry. The basic reason behind their unwillingness to innovate is that the risks inherent in seeking innovation often do not make profit and is logically shunned by the corporate business model which survives on profit and avoids all things counter to that goal.
Therefore all markets, free or otherwise, need regulations, and incentives to take risks, to some degree. Laws that cover fraud and abuse have to exist in a society that supports the well-being of its populace. But there is a balance to be struck, too heavy of a hand in regulation stifles business, too much money provided to drive innovation creates a corporate welfare state, and the more bureaucracy the higher cost of entry for new businesses, which limits competition. The point here is that some other force must be present in order to make a corporate business model function for the betterment of not just the business itself, but to better the business so that it in turns provides benefit for the consumers and the communities they operate in.
You can point at any market today and you will see a great sickness in it that may be caused by too much or too little government involvement. Some may argue that eliminating all government meddling in the markets will allow the markets themselves to work out the issues, but this is a sick dream spread through talking-points and completely ignores reality. Because corporations don’t want competition, they don’t want to have the need to innovate; they just want to maximize profits.
Corporations at heart are just like a person. You give it stuff for free, it gets lazy. If it doesn’t have to do something to achieve its goals, it won’t. Mostly because a corporation is run by people, people with a very defined set of priorities. And it is precisely those priorities, which were outlined at the beginning of this discussion, that cause me the largest amount of concern when talking about privatization. Because you are shifting power into the hands of a group of people whose priorities do not align with that of the public.
When people talk about socialized this or that, they fail to look at what is currently socialized and why it’s necessary to have it that way. Our public servants are all socialized, from firefighters, police men, to our armed forces. In fact our military is the most expensive program we have in our country and it is socialized, but not fully any more, as can be seen in our latest wars, more and more private companies are getting into warfare. However is that where we want to go? Do we want companies vying to put out fires, and if you can’t pay they just let your house burn down? How about if a crime is being committed in your neighborhood? If the privatized police are run like the health insurers the first time a crime is committed you may never receive any police aid at all, they may just refuse to give you their services, they may deem you too high of a risk to their profit margins.
The idea that the health insurance business model works is a testament to how broken our markets are. You would think that only in some fantasy world could you imagine paying someone for something and then when it comes time to collect that service they refuse to provide it and you never see your money again. Applying basic common sense shows this as outright theft, but in the corporate world it is a risk versus profit calculation and it just happens you came out on the risk side too heavily for them to warrant you as a valid customer and all previous monies you gave them are forfeit.
Could our fire departments be privatized? Sure, I truly believe they could! But only with heavy amounts of regulation, which is something that those who seek privatization are commonly against in unison with their privatization goals. The thing is that regulation in regards to privatization is on a sliding scale. The more impact a “market”, be it my hypothesized privatized fire protection or any existing one, impacts the citizens of the nation, the more regulation required to protect those citizens from corporate priorities. The less impact the market has on the populace, the less amount of regulation required. So those who shout out with little care that all things should be on the “free market” and that all things should be unregulated are not thinking, they are just shouting out ideological dribble.
So when privatization comes out as a suggested solution for some problem, for example schooling, always ask yourself who it truly benefits. Private schools have been studied, many times in many different settings comparing them to public ones and test scores and academic achievements are mostly equal (Source 1 (http://nces.ed.gov/nationsreportcard/pdf/studies/2006461.pdf), 2 (http://www.sciencedaily.com/releases/2009/02/090226093423.htm), 3 (http://education-portal.com/articles/Public_Schools_vs._Private_Schools%3A_New_Study_Sa ys_There_is_No_Difference.html)) with one major difference. Private schools cost more to operate and yet teachers make less (though private sector has been gaining in some regards to matching that of public teachers pay). One of those reasons is that the corporate business model needs to make profit and salaries impact that bottom line. Also, a single large entity (the government run schools) have better buying and bargaining power than smaller, individual private schools. There are of course many other questions that underlie the decision to make our nations education fully privatized. The government is by law required to be transparent, private business, if you recall, have all of our rights, they therefore have the right of privacy and unwarranted search and seizure, therefore records, curriculum and other information cannot be attained easily by anyone, including parents. And you don’t get to elect the people who oversee the curriculum. It takes the power away from the community and places it in the hands of a company, in which the community has no say in, except through, you got it, regulations.
Privatization works, but just like everything, each circumstance is unique. So privatization can be the answer, but only if the results of using privatization benefits our nations citizens first and businesses second, which given our assumptions can only be guaranteed through regulation.
As a side note there are alternatives to the corporate model. A model that I find extremely intriguing and one I would love to work under is the worker cooperative. You can read more about that business model here: http://en.wikipedia.org/wiki/Workers_cooperative