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Why Privatize New Jersey Government?

By Peter Montague
Last evening at the statewide meeting of the New Jersey Environmental Justice Alliance (NJEJA), we had a brief discussion of the NJ Department of Environmental Protection’s (DEP’s) “Licensed Site Remediation Professional” or LSRP program.  This program allows private contractors to oversee cleanup of the state’s 16,000 contaminated sites — which tend to cluster in communities of low-income and communities of color.  (See this large PDF report.)  Site remediation used to be overseen by public employees within NJ DEP.  Now those government jobs have been privatized.
Why would Governor Christie want to privatize government?
Here (below) is a short piece by New York Times columnist (and Nobel-prize-winning economist) Paul Krugman explaining what people like Mr. Christie gain by privatizing government.  But even Krugman’s essay misses some key points.
Krugman fails to mention that privatizing government programs also serves a second important function for the “powers that be” — eliminating an important source of good jobs for people of color.   Private industry has little trouble discriminating against Blacks and Hispanics.  Government has much less leeway to exclude people of color.   So privatization is a good way to throw Blacks and Hispanics out of good jobs with full benefits, reducing the economic (thus, political)  power of the Black middle class — who tend to vote, and who tend to vote overwhelmingly Democratic.
Anyone examining the LSRP program should be asking, (a) Has it actually saved taxpayer’s any money, as it was supposed to do?  (b) Has is made information about toxic chemicals more difficult for the public to get its hands on?  (c) Has it cleaned up — REALLY cleaned up — more toxic waste sites than government employees were able to do?  (d) Are the pay, benefits and anti-discrimination hiring policies of LSRP contractors being carefully scrutinized — with what results? (e) Have any of the LSRP contractors made political contributions to help re-elect the privatizers?

Governor Christie at the beach
Governor Christie at the beach

Now, here is Krugman:
New York Times June 12, 2012
Prisons, Privatization, Patronage
By Paul Krugman
Over the past few days, The New York Times has published several terrifying reports about New Jersey’s system of halfway houses — privately run adjuncts to the regular system of prisons. The series is a model of investigative reporting, which everyone should read. But it should also be seen in context. The horrors described are part of a broader pattern in which essential functions of government are being both privatized and degraded.
First of all, about those halfway houses: In 2010, Chris Christie, the state’s governor — who has close personal ties to Community Education Centers, the largest operator of these facilities, and who once worked as a lobbyist for the firm — described the company’s operations as “representing the very best of the human spirit.” But The Times’s reports instead portray something closer to hell on earth — an understaffed, poorly run system, with a demoralized work force, from which the most dangerous individuals often escape to wreak havoc, while relatively mild offenders face terror and abuse at the hands of other inmates.
It’s a terrible story. But, as I said, you really need to see it in the broader context of a nationwide drive on the part of America’s right to privatize government functions, very much including the operation of prisons. What’s behind this drive?
You might be tempted to say that it reflects conservative belief in the magic of the marketplace, in the superiority of free-market competition over government planning. And that’s certainly the way right-wing politicians like to frame the issue.
But if you think about it even for a minute, you realize that the one thing the companies that make up the prison-industrial complex — companies like Community Education or the private-prison giant Corrections Corporation of America — are definitely not doing is competing in a free market. They are, instead, living off government contracts. There isn’t any market here, and there is, therefore, no reason to expect any magical gains in efficiency.
And, sure enough, despite many promises that prison privatization will lead to big cost savings, such savings — as a comprehensive study by the Bureau of Justice Assistance, part of the U.S. Department of Justice, concluded — “have simply not materialized.” To the extent that private prison operators do manage to save money, they do so through “reductions in staffing patterns, fringe benefits, and other labor-related costs.”
So let’s see: Privatized prisons save money by employing fewer guards and other workers, and by paying them badly. And then we get horror stories about how these prisons are run. What a surprise!
So what’s really behind the drive to privatize prisons, and just about everything else?
One answer is that privatization can serve as a stealth form of government borrowing, in which governments avoid recording upfront expenses (or even raise money by selling existing facilities) while raising their long-run costs in ways taxpayers can’t see. We hear a lot about the hidden debts that states have incurred in the form of pension liabilities; we don’t hear much about the hidden debts now being accumulated in the form of long-term contracts with private companies hired to operate prisons, schools and more.
Another answer is that privatization is a way of getting rid of public employees, who do have a habit of unionizing and tend to lean Democratic in any case.
But the main answer, surely, is to follow the money. Never mind what privatization does or doesn’t do to state budgets; think instead of what it does for both the campaign coffers and the personal finances of politicians and their friends. As more and more government functions get privatized, states become pay-to-play paradises, in which both political contributions and contracts for friends and relatives become a quid pro quo for getting government business. Are the corporations capturing the politicians, or the politicians capturing the corporations? Does it matter?
Now, someone will surely point out that non-privatized government has its own problems of undue influence, that prison guards and teachers’ unions also have political clout, and this clout sometimes distorts public policy. Fair enough. But such influence tends to be relatively transparent. Everyone knows about those arguably excessive public pensions; it took an investigation by The Times over several months to bring the account of New Jersey’s halfway-house-hell to light.
The point, then, is that you shouldn’t imagine that what The Times discovered about prison privatization in New Jersey is an isolated instance of bad behavior. It is, instead, almost surely a glimpse of a pervasive and growing reality, of a corrupt nexus of privatization and patronage that is undermining government across much of our nation.

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