Public bad Private good – A myth that won’t die

The Privatisation myth lives on

One of the cornerstones of neoliberal dogma is privatisation of public assets and services.
PRIVATISATION. Sell state-owned enterprises, goods and services to private investors. This includes banks, key industries, railroads, toll highways, electricity, schools, hospitals and even fresh water. Although usually done in the name of greater efficiency, which is often needed, privatisation has mainly had the effect of concentrating wealth even more in a few hands and making the public pay even more for its needs.

The claim by the neoliberal zealots that privatisation leads to greater efficiency and cost savings is not supported by any evidence but just a matter of faith. No number of myth busters seems to be able to debunk it.


The Truth is that there is no advantage of private over public whatsoever rather the opposite. Just take a glimpse at the New Zealand’s public health system in comparison with the US private healthcare system. For good measure throw in Cuba where I also marvelled at the American old-timer cars from the 1950-ies.


The list of failings of private corporations is endless and still replenished every day. It is the public having to pick up the pieces. The latest headlines are about Serco. A company, which starts its website with the words:

With rising service expectations, finite resources and budget deficits find out how Serco helps governments across the world deliver better services for less.”

This sentence is a prime example of indoctrination and corporate spin and warrants a whole essay on its own. However I want to draw your attention just to the last four words.
This bit is classic alchemist stuff straight from the Middle Ages. Those days gullible people were relieved of their money by investing in some alchemist scheme with the promise to make gold out of (mostly) lead. Today the promise is the same impossibility to “deliver better services for less”. This has been a con-artist’s trick forever and greedy  people fall for the “more for less” trick every time.

Money for nothing

It is always the same sales pitch from the neoliberal prophets. We somehow will get something for nothing if only we privatise because public ownership makes a bad job of it and private corporations and the market will do better.
Remember the selling of our power companies and creation of an electricity “market” with the promise of lower power prices. The result was a disaster not only for the government’s coffers but for the power consumers who were meant to benefit.

The strategy is always the same :


And even if things are still working and are the envy of the rest of the world like New Zealand’s Accident Compensation Corporation (ACC) the government tries to  undermine the organisation as it wants to privatise ACC. A crisis was invented to make the case for privatisation. A couple of years back our government tried to tell us that the ACC was broke by just changing the accounting rules for no other reason. Now after we dodged the bullet and the ACC is still ours the organisation recently had to lower its levies because it is swimming in cash.

Back to the money for nothing pitch in another example, public private partnership toll roads. They are sold to us with the same argument of getting something for nothing either cheaper or sooner. This is to be achieved only by involving the private sector and create a totally new industry in New Zealand: toll collectors.
What we are not told is that motorists end up paying for this extravagance. The costs are 40% to 50% higher compared to what it would cost being run by the Transport Agency itself and financed by a (regional) petrol tax increase of a couple of cents. This stems from the simple fact, acknowledged by the Land Transport Agency, that out of every dollar collected by toll only 60 cent go towards the road. The rest are collection costs (new industry). A petrol tax increase on the other hand comes without any extra costs.

The true cost of Privatisation

The true cost of most of the privatisation folly is however not even monetary. It is the hurt and suffering it inflicts on our fellow human beings.

In the case of the private prison company Serco it is the cost of live and limb. Inmates in their prisons are pushed of balconies or entertain themselves with organised fight clubs as they are bored stiff with little to no activities in understaffed prisons. Cutting costs and corners is their only way of making money. Their biggest cost are staff. So that is where the cuts are.

Serco as an international corporation has developed into a form of Über-government dealing with all the waste of our capitalist system from nuclear to human like refugees, prisoners and the mentally ill. Consequently they are in line for the next government privatisation project the so called “mental health bonds” (see my previous blog: Government experiment on the mentally ill without Ethics Committee approval). Imagine the damage they will do to the most vulnerable in society. The increase of suicides by people pushed of the benefit into inappropriate work just for the bonus Serco will be paid for doing the pushing.

Important to note that all over the neoliberal capitalist world governments have singled out the most vulnerable of society refugees, children, patients, prisoners, the mentally ill for the Serco treatment. These are the people who have no voice, no vote, no way to resist or fight back.

Just google Serco and find headlines like “Serco’s Fiona Stanley Hospital sterilisation contract terminated after failures” (ABC) or “Serco is failing, but is kept afloat thanks to Australia’s refugee policy” (Guardian) while in New Zealand you still see headlines like this “Anne Tolley still happy for Serco to run social services for children” (Stuff). or go to the Serco Watch facebook page to follow the international horror story, which is Serco.

The moral cost

Our capitalist model is of course amoral. It exists in an ethics free realm beyond any moral consideration and is ironically still believed to deliver positive results.


However after 30 years of neoliberal rampage I am happy to report that there are still some moral people in New Zealand. To quote just one letter to yesterday’s NZ Herald :

To hand these people (prisoners) over to an overseas company whose sole aim is to make money out of them is an appalling denial of human rights and shows a lack of concern by the government for the welfare of those it locks up. It is both morally and socially indefensible. (thanks A.J.MacKenzie)

Even Finance Minister Bill English conceded in 2011 that prisons were a “moral and fiscal failure“. His morality however faded when it comes to letting overseas corporations make money from the most deprived in society. Then neoliberal dogma “greed is good” rules over any morals.

The myth of public bad vs private good does not want to die.

by  Dr. Hans B. Grueber

PS. Sorry for all the memes being black today. Sadly the subject is black.

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