Why Are Private Firms Better?

Terry H. Schwadron

Feb. 24, 2018

New York City bus drivers are my idea of what best to expect from government employees: They do a job many would hate, remain in general good cheer, try hard to make all stops on time, and go out of their way to help the vulnerable — older or wheelchair-bound riders who need an extra hand. And they get paid for driving, not for “performance” of arriving early at the bus stop or the terminal.

I point this out as President Trump and Republicans generally are giving federal employees — from scientists to environmental analysts — the back of their hand, insisting that counterparts in private companies magically are more efficient, more enterprising, more interested in bringing positive change that benefit all Americans. In part, that’s why they want to reward their employers with enticements and huge tax cuts, that’s why the president increasingly wants to privatize federal services and big projects, like what is passing as interest in infrastructure.

Specifically, through the National Labor Relations Board, he wants to eliminate more worker protections and drop federal employment either through resignation or outright reductions, and to replace raises with performance bonuses.

Recently, we learned that the Trump administration wants to privatize the International Space Station, and have private companies operate it after 2024. Not only would it save the government money, but I have to believe that the White House sees private entrepreneurs as better thinkers about how to turn space operations profitable.

After all, we have the recent, fantastic launch of a solar rocket, the world’s biggest, by Elon Musk and the private Space X company he owns. From launch with a cheeky Tesla in its payload section blaring David Bowie music to the televised synchronous twin booster rockets landing, the Musk effort was a perfect statement of private vs. public efforts.

Of course, with all due bows to Musk, Space X has its goals in being the leader in commercial transport in space. At a different time, presumably the White House would have heralded Howard Hughes for advances in aircraft, or Henty Ford for creating the Model A, the Model T and the manufacturing assembly line.

As part of his proposed federal budget released yesterday, Trump proposed that Americans return to the moon, but that NASA do so with less taxpayer money and more private investment.

So, Coca-Cola would want to own the space station for its public service project? Or Raytheon? Or even Space X? Like a highway, what may look to be a chance to off-load expenses will turn out to be more costly in the long run; in the case of the highway, we will be paying tolls to a private company for the rest of our lives for the privilege of not putting up the front money.

By contrast, the White House doesn’t talk much about places like tiny Maywood, Ca., which found itself bankrupt and corrupted in 2010, and had to turn over all city services to the private or public world. Hmmm, where did they end up? The Los Angeles County Sheriff’s Department handles police services, the county runs the library, and the neighboring city of Bell tried and failed to maintain various other municipal services.

I think there is an allure about ceding government services to private companies, but then much regret later on when it turns out that private companies were only interested in keeping the profitable parts of the enterprise without serving the full needs. We’ve seen such developments in education, privatized prisons, and even in the military.

Tthe White House finally has unveiled its approach to infrastructure. As the still-broad strokes show, the government wants $1.5 trillion worth of infrastructure built quickly by ponying up only $200 billion in cash. The bulk of the cost is being pushed either to states and cities or to private contractors who would end up owning the project or service. Oh, and this is all tied to reducing federal reviews that might slow development and construction projects.

We’ve seen lots of this approach before too.

Every city, county or public entity that has built a stadium to keep or attract a local sports team has found itself drowning in a sea of unpaid bonds, with yet new demands from team owners for luxury boxes or renovations or domes or any of other contracted services that would otherwise draw from their project. The country is littered with unused stadiums that we taxpayers are still supporting.

Or let’s try airports instead of an international space station. The TSA services reflect lots of problems, so, there have been proposals to privatize the service. What guarantees are there that Amazon would frisk and x-ray passengers more efficiently — and remain aware of civil rights issues, passengers with special needs and other more-work-less-profit issues? We depend on airlines now to handle ticketing, seating and overcharging for luggage, and that doesn’t go much more smoothly just because they are private companies.

In fact, if the president truly believes in these principles, why not have the government put up 10% of the costs for a border Wall and turn it over to private contractors for the rest, and let the contractors run border security?

You can look to a private health insurance industry that will leave millions uninsured, or a pharmaceutical industry that has yet to hear that drugs are supposed to be affordable, or that banks are not supposed to be opening millions of accounts for unsuspecting customers. What is it about private companies that automatically makes them better to deliver public services unless there is a specific profit motive?

A NASA document explained that “the decision to end direct federal support for the ISS (space station) in 2025 does not imply that the platform itself will be deorbited at that time — it is possible that industry could continue to operate certain elements or capabilities of the ISS as part of a future commercial platform. NASA will expand international and commercial partnerships over the next seven years in order to ensure continued human access to and presence in low Earth orbit.”

The plan to privatize the station is likely to run into opposition after having spent nearly $100 billion in tax money to build and operate it. Sen. Ted Cruz (R-Tex.) told The Washington Post he hoped recent reports of NASA’s decision to end funding of the station “prove as unfounded as Bigfoot.” He said the decision was the result of “numskulls” at the Office of Management and Budget.

Some, including space-oriented executives, questioned who would want to take over the station. “The ISS is built for science and human exploration, it’s not built for profit seeking,” said one. Another noted that other countries may have something to say about an international space station operation. A spokesman for Boeing, which operates the station for NASA, said

“walking away from the International Space Station now would be a mistake, threatening American leadership and hurting the commercial market as well as the scientific community.”

In a statement on Sunday, he said that “handing over a rare national asset to commercial enterprises before the private sector is ready to support it could have disastrous consequences for American leadership in space and for the chances of building space-focused private enterprise.”

More generally, the announced infrastructure plan drew mostly catcalls across the board, and seems as if it is going nowhere. Conservatives think it is too much money, Democrats think it is not enough, and no one understands how states, inheritors of federal cutbacks in medical care funds, are going to be able to pay for local big infrastructure projects.



Journalist, musician, community volunteer