The End Of Democracy Brought to You by Thatcher, Reagan and Trump

The corruption of small D democracy, the corruption of human rights, the corruption of civil rights, the destruction, actually, of civil and human rights, the destruction of the public sphere, the the deconstruction of government - or as Steve Bannon famously said, the deconstruction of the administrative state, in other words taking apart government.

Trump came into office promising to destroy the United States government, or at least, Steve Bannon was essentially saying that we're going to deconstruct the administrative state. And Trump is doing it. Look at all of the people who haven't been appointed to jobs, and the people who have been appointed to jobs who are aggressively doing things like taking apart the EPA, taking apart the CDC. The woman who was running the CDC was investing in tobacco stocks at the same time she was supposed to run the campaign to stop smoking. Maybe she decided to dial back the campaign and buy tobacco stocks. So there's that.

But the bigger issue is the one of privatization. And this is this is something that really started picking up steam under Ronald Reagan. Reagan fully embraced the idea that any job being done by a government bureaucrat could be done better by a corporate bureaucrat, so let's just replace all the government bureaucrats with corporate bureaucrats, right? And Reagan wasn't the first. Margaret Thatcher started this in 1978 in Great Britain and started outsourcing things, started privatizing industries that were owned by the government - the rails for example.

Kimiko de Freytas-Tamura wrote in The New York Times recently the headline "Britain Was a Pioneer in Outsourcing Services. Now, the Model Is 'Broken'." And she starts out telling this story of the Millbrow Care Home. It had been privatized years ago and it's run by the second largest company that runs these these giant nursing homes in England or in Britain. And she tells the story:

"The residents of the Millbrow Care Home were already frail with old age and illness when they started losing weight at alarming speed.

The reason: They were being neglected, an investigation revealed. For over a year, they had been deprived of food and drink for hours on end. They were not being given the medication they had been prescribed. There were outbreaks of vomiting and diarrhea, and outdated food in the kitchen. No one was in charge of preventing the spread of infections, and managers rarely made an appearance."

The company that owns Millbrow is Four Seasons Health Care, Britain's second largest provider and they're owned by Terra Firma, which is like one of Mitt Romney's companies - it's a private equity group. So they're not interested in caring for old people, they're interested in making a profit.

Now, the story that Thatcher and Reagan told us that they got from Milton Friedman in the Chicago School back in the 50s and 60s was that because the marketplace is driven by greed and profit it is always going to seek to maximize profits, which means reducing prices and costs to the bare minimum. So, if you're aggressively reducing prices and costs to the bare minimum, then in theory you should be able to offer services cheaper than a government agency that is not quite so fanatically interested in reducing costs, but is more committed to providing high quality services.

That was the theory, that private enterprise, because of the profit motive, would do it better.

Now, if the rest of us - and by the rest of us I mean most rational economists like Paul Krugman and Richard Wolff, were standing around saying, "wait a minute, you're going to take a for-profit entity that wants to make ten or twenty percent off this, plus has to pay the salaries of its CEOs and its marketing people, and it has to produce a dividend to give to its stockholders, etcetera, etcetera, that they're going to be able to provide the services cheaper with all this overhead associated with being a for-profit company?

Medicare has run for years and years and years on less than 3% of total cost. There's not a for-profit health insurance company in the United States right now that is even capable of running on less than 20% of cost, because they've got to pay the CEOs their multi-million dollar salaries, they've got to pay all the executives. United Health Care has over 100 who make over a million dollars a year, if reports are true.

So now we get to the bottom line here. This from the New York Times story:

"A report by the government's National Audit Office shows that taxpayers are expected to pay nearly $285 billion to private contractors for projects and services over the next 25 years. The agency also found that with changing economics, schools could cost 40 percent more, and hospitals 70 percent more, when undertaken through private-finance initiatives rather than though the government."

You get that? The British government coming right out and saying here's our official assessment, if you are going to run a hospital for profit, it's going to cost you 70 percent more than if the government runs it. And you're probably going to get worse service, given what happened in the UK.

And if you're going to run a school for profit, it's going to cost forty percent more.

Somebody needs to wake up Betsy DeVos.

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