Skip to content
Ralph Nader > In the Public Interest > Perils of Privatization

Ronald Reagan, whose sea of red ink has broken world records for government deficits, is moving once again to sell an old idea. Why not sell government (meaning taxpayer) assets to help reduce the deficit? In his first term, Mr. Reagan floated the idea of selling the Tennessee Valley Authority and the Bonneville Dam. He dropped those fantasies when public uproars in those regions registered in Washington.
Presently, his aides are making lists of your assets to unload. A large naval petroleum reserve in California, the U.S. Weather Service, and others have been mentioned. History lessons mean little to these Reaganite ideologues even when they plague the present. The chief example of privatization is the Pentagon’s contracting out to corporations that build the weapons. Ships, missiles, artillery and aircraft could be built by the government. Many naval ships were built in U.S. Navy shipyards before the vast bulk of this business was privatized, to the chagrin of that tough manager, the late Admiral Hyman Rickover.

Military equipment privatization has produced a tidal wave of enormous waste, fraud, corruption and poor quality. A cynic could say, in light of the numerous failures of weapons and weapons systems, that military contracting to private corporations represents the nation’s leading disarmament movement. From tanks, to microchips, to anti-aircraft guns, to giant cargo planes, to B-1 and other more secret bombers, the record is dismal. And don’t we all remember the $450 simple hammers, the $1700 toilet seat covers and $7500 coffee makers.

None of this is slowing down the zeal of the privatizers led by the Heritage Foundation and its heavy business backers.

True, they and their daily allies in the Reagan regime have given up, for the time being, their desire to sell large sectors of the public lands in the West and Alaska. It is not sufficiently satisfying to them that Mr. Reagan has leased enormous public wealth in oil, gas and other leaseholds at bargain basement prices to large corporations. They have always wanted to privatize our public lands outright.

These privatizers believe that greater efficiencies associate with their plans. The taxpayer is relieved, they believe. Many of those inventions and pharmaceuticals which your taxpayer monies supported through research and development are in the stores at quite high prices. But taxpayers do not share in the corporate profits they made possible. They just pay twice, as taxpayers and later as consumers.

Reagan has set up a Privatization Council to breed more of these good ideas. The government employee unions predictably are against the transfer of government work to private companies. They do not believe that private janitorial firms cleaning government buildings at night represent good news either for secure jobs or the taxpayer.

They also add that contracting out means bidding procedures that are very vulnerable to collusion, scandal and political favoritism. Lots of faded newspaper clippings from cities around the country can testify to the validity of these concerns.

Recently, even the Reaganites were embarrassed. They set up something called the Federal Asset Disposition Association — a kind of quasi-private arm of the Federal Home Loan Bank Board to dispose of loans and real estate from failed savings banks. To attract expert and motivated executives to run this unit, they created a special pay system.

The chief executive received $250,000 and another $75,000 in bonus last year. She was ousted last month for serious managerial inadequacies. Apparently, being paid more than the President, who receives $200,000 a year, did not quite tap the proper marketplace for talent to run an agency that is now a recognized debacle.

On the same day that this event was reported, New York City police arrested thirty-three employees — almost the entire crew — of a company which collects the money from the City’s parking meters. Apparently, once again, city employees were not considered efficient at this task. Privatization was the preferred way.

These private meter collectors were efficient alright; they raked off for themselves 10 percent of the city’s revenue from 56,000 parking meters. So loaded were they with quarters, representing their estimated $3 million loot in one year, they occasionally took them to casinos in Atlantic City to exchange them for bills.

There is no substitute for having government do government work with procedures, audits and public disclosure that enable vigilant citizens to monitor and challenge. It is time that we think more of the idea of “taxpayer assets” and demand both the service and the fruits of what millions of citizens are paying for in the billions of dollars.