privatization

The following opinion piece of mine was published by Al Jazeera English on April 26, 2020, and is re-published here with AJE's permission.

When astronaut Neil Armstrong landed on the moon in 1969, it was seen as an idealistic leap into the cosmos – a “giant leap for mankind.” A few weeks ago, the real estate developer who improbably became US President has legally declared that he sees the Moon in far less elevated terms. He signed an executive order that authorizes private, commercial uses of the Moon and other “off-Earth” “resources” like Mars and meteors. Heavenly bodies are now seen as underleveraged assets meant to generate profits. 

Invoking competitive threats from Russia and China, US Commerce Secretary Wilbur Ross has called on government to support budding space businesses by rolling back regulations and coordinating government aid. He highlighted the gee-whiz possibilities of space tourism (a “Trump Tower Moon,” perhaps?) and the idea of converting solid ice on the dark side of the Moon into hydrogen and oxygen that could be used  as fuel propellant for rockets bound for Mars. It would amount to “turning the moon into a kind of gas station for outer space,” Ross said.

The Trump administration is also exploring the feasibility of “the large-scale economic development of space,” including “private lunar landers staking out de facto ‘property rights’ for Americans on the Moon, by 2020,” as well as the right to mine asteroids for precious metals. If it all sounds like the film 2001: A Space Odyssey, said Ross with evident self-congratulation, well, that vision “is coming closer to reality sooner than you may have ever thought possible.”

Since Donald Trump’s career has been built on claims of “truthful hyperbole,” skeptics might reasonably see this space fantasy as the empty bravado of the Huckster in Chief. Still, we need to ask a fundamental question: Who owns the Moon, anyway?

After the binge of privatization of municipal water systems in the 1980s and 1990s, citizens and city governments are starting to realize what a big mistake they made.  Privatization resulted in higher rates and lower water quality, service and public accountability.  As William Harless describes in the Wall Street Journal (August 19), many municipalities are now mounting lawsuits and ballot measures to try to regain control over systems that they had ceded to private companies.

In Ojai, residents will vote next week on whether to buy back their water system from Golden State Water Co., a move that the company opposes.  A lawsuit in Worchester, Massachusetts, is trying to regain public control over the city’s water system, which had been sold.  And in Connecticut, some towns are objecting to higher rates that have resulted after their systems were acquired by Aquarian Water Co. of Bridgeport, Connecticut, which consolidated the rates for the towns it serves. 

It is satisfying to see the glittering promises about privatization exposed for what they are: glittering promises.  For more on this theme, check out the work of a group called In the Public Interest, one of the most aggressive Washington, D.C.-based policy opponents of privatization in the US.  The group's website has lots of materials explaining how and why privatization of public resources is a bad deal for taxpayers and citizens.   

Now that the City of Detroit has declared bankruptcy, one of the most critical questions will be what assets will be put on the table to pay creditors – and what assets, if any, will remain inalienable, that is, not capable of being sold.  You see, there are moves afoot to sell off priceless paintings and artworks from the Detroit Institute of Arts to pay off the city’s debts.  The stash of assets include works by Bruegel, Caravaggio, Rembrandt and van Gogh. 

Normally the market value of large art collections is not calculated except as needed for blanket insurance policies.  But now that a pack of hungry creditors wants to be made whole, many people are starting to look yearningly at the estimated $2 billion that could come from liquidating the museum’s collection, or substantial portions of it.

The whole scenario is of a piece with other enclosures driven by finance capitalism.  The investor class has gone way beyond privatization; now it wants to use the debt crisis to gain outright ownership of public assets and start charging for the use of them.  As economist Michael Hudson has put it, cities are selling sidewalks and citizens have to start paying to walk on them. 

The fate of the Detroit Institute of Arts’ collection will say a great deal about how far we Americans are willing to go in monetizing our cultural heritage.  Museums are supposed to act as permanent trustees of a community’s priceless heritage.  Donors are willing to give works to museums only because they believe that the works will be there forever, and not sold off to satisfy some unrelated financial claim against the city.   In other words, the artworks held in trust for the public by a museum are supposed to be treated as the priceless heritage of the citizenry, beyond any market valuation. That principle may be breached very soon.

Chicago residents are on the frontlines of a dangerous new trend – the privatization of their shared resources orchestrated through “private/public partnerships” and the new mayor, Rahm Emanuel.  Already Chicago has sold off the Skyway Bridge connecting Chicago to Indiana, and it has sold off downtown parking garages to private owners.  It has sold off the management of parking meters to a private company, which has resulted in higher rates, worse service and public outrage.  The City of Chicago has even attempted to sell Midway Airport, and it is now pushing privatization of schools and the water system.

Chicago educator, organizer and activist Tom Tresser is trying to mount a concerted citizen response.  His new project, Public Assets, is trying to recruit people to step up and become “public defenders” of the commons.  Tresser was the Green Party candidate for Cook County Board President in 2010.  The year before, he was a co-leader of No Games Chicago, which successfully opposed the city’s bid for the 2016 Olympics.

Tresser got wind of the city's new ambitions to privatize even more city assets when he attended a June 2011 conference called “It’s Not Privatization: Implementing Partnerships in Illinois.”  Organized by The National Council for Public-Private Partnerships and the Chicagoland Chamber of Commerce with assistance from the Metropolitan Planning Council, the event revealed an emerging collusion among the city government, corporations, labor and mainstream citizen organizations to accelerate privatization and "re-brand” it because of its negative public image. 

Finally, a bit of great news:  California Governor Jerry Brown is courageously bucking a national trend by refusing to sell off state buildings and then lease them back.  This trend has been the budget subterfuge of choice among many of the nation's governors.  Lease-backs of state assets are a backdoor way of getting a quick hit of money for troubled state budgets (in California's case, $1.2 billion) while saddling future taxpayers with huge additional expenditures (in California, $6 billion over 35 years).

Yes, welcome to the next frontier in the business campaign against government.  First it was the fight against regulation and public-sector spending, both largely successful.  Now business is vying to own the equity assets of government through arcane lease-back and securitization deals. 

These strategies not only hurt us as taxpayers and citizens (through higher expenditures for less value, and through reduced public discretion over public assets).  They fling open the doors to all sorts of other investor schemes to buy and privatize public assets.  Next stop:  the withering of the State and the arrival of the Total Market Order.