Stories like this one underscore why privatization is not the cure-all its proponents claim.
I'll be the first to admit that capitalism is a great system. When it's doing what it does best, it's incomparable.
But, as with all isms it carries the seeds of its own failures within its strengths.
Private companies that seek government contracts resort to scratching the back of public officials, and if they're lucky, they may get a president who supports their efforts with no bid contracts.
The upshot is this: When private companies gain government favor without the necessary competition of the marketplace, then we get a system not unlike that of the Third Reich---corporatism. A corporatist state is one where corporate interests become one and the same with the state and mutual backscratching for business is the norm rather than the exception. Here's a lengthy definition of corporatism.
Privatization of government functions is, to be punny, tricky business. Some government functions should never be privatized because they involve such heavy policy matters that direct government oversight is necessary to insure that the sovereign (read: the people) has a say.
Capitalism is great, but when business seeks favor through patronage rather than through competition, then we're not dealing with capitalism anymore---it becomes corporativism. That's nothing more than a polite way to say fascism.
2 comments:
Tim, this is an excellent post, and many people are sadly deadened to the implications of fascism by its rampant overuse (for other examples, see nearly every other "-ism" under the sun). If I may add my own comments and quibble a little...
Corporatism, being properly understood as the most common economic component of fascism or its equally evil twin, national socialism, can not by the same turn be properly understood as what many economists define as capitalism while remaining intellectually honest.
The definition of capitalism I'm using is, of course, an Austrian or Chicago definition; as per von Mises, von Hayek, Rothbard, Friedman, etc. The very interference and propping-up by the state is anathema to capitalism as I (and many others) define and understand it. Hence the separate label of corporatism. You may associate it more with the definition (and coinage) provided by Marx, but I, along with the Austrian/Chicago school, would regard this as what it is called, corporatism. And its inevitable child, fascism.
The US certainly exhibits many aspects of fascism as practiced by Mussolini, Franco, Salazar and, in South America, by Vargas. Their intellectual heirs were, of course, cemented in philosophy by Hegel and in economics by Giovanni Gentile and later echoed in the works of Keynes and Galbraith (very un-PC to admit, of course, but intellectually honest and consistent, nonetheless). It's absolutely no wonder that FDR instituted the first immensely overbearing social control laws (such as the prohibition of "marihuana") and economic policies, the disastrous effects have been slowly realized over the course of the past 60-odd years. Friedman, etc. were right. It's too bad nobody listened or understood the cross discipline approach necessary to understanding the concepts of private property (rising, naturally, from the individual and not coming down from the state) in relation to both + and - rights in general. Even Foucauld recommended reading von Hayek and Mises at the end of his life, when he abandoned socialism. It's really the only proper pomo result I can conceive (thus far, I could be completely wrong and normatized by some insidious patriarchal capitalist culture, natch).
Finally, it's extremely understandable that corporatism/fascism is encroaching on the US in ways never dreamed of when people openly called themselves fascists in the early 20th century: it masturbates the sense of us vs. them that so many people feel, and whether it's Ay-rabs or Mex-icuhns they are clearly not with the state; i.e., against "us". That monolithic, imaginary "us".
Er, let me edit a bit: I realize you made the distinction later in your post, but the body of the post seemed to lack distinction. On a reread, I see I was a bit harsh. Sorry, man. The other points still stand quite fervently, though, and capitalism should not be conflated with corporatism. Ever. Nor should true laissez faire be conflated with a Keynesian mixed system as we have now, which is running parallel to corporatism/fascism.
Again, sorry for jumping the gun, though it doesn't invalidate my other points.
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