Privatizing Government

AP photo



Sami Jamil Jadallah

I wrote in an earlier article about the issue of “deconstruction of the state”, reducing and streamlining its administrative bureaucracy, reducing the “red tape” and reducing its role in the daily lives of all Americans. So far so good.

Deconstruction is one thing; privatization of government services is totally another. And if we are to take “deconstruction” to its logical conclusion then “privatization” is the answer.

Yes, and true, governments and administration resort to “privatization” to show they are doing something for the taxpayers, reducing the budget and taking different departments or agencies off the books as a favor to the taxpayer. No, it is not a favor to the taxpayers.

On the contrary, all “privatization” programs have proven a “windfall” for the private sector, to Wall Street, to hedge fund managers who through investing in these companies that provide services on behalf of government make a ton of money. The taxpayers end up paying double and triple for the services government used to provide. Of course, taxpayers do not feel it as a tax, but they do pay it directly from the disposable little income they have.

By chance, while preparing for this article, I watched a very interesting program on NPR “Frontline” titled “Poverty Politics and Profit“, an investigative report that “examines two of the government’s key affordable rental housing Programs-Section 8 rental assistance, and the low-income housing tax credit.” The program is not only about segregations that lasted for 80 years but the windfall for the developers, the banks, and the brokers all benefiting from a very expensive program for the government, with minor benefits for the targeted beneficiaries.

Think of it this way. The government decides to privatize a department or agency that provides Medicare and Medicaid or Social Security or even “motor vehicles offices”. First, the CEO will be making a million or two in place of federal bureaucrats whose salary might reach $170,000 at most. Then add to that the return on investment for hedge funds and the banks. When you add up all those who will benefit from such “privatization” the taxpayers end up paying three or four times the original costs in out of pocket costs.

I, like you, do think that our government became too large, too bureaucratic and too difficult to navigate all the rules and regulations. But then think if the same government agency became a private corporation, self-serving and answerable only to shareholders, who will protect the rights of citizens? And how much we will pay?

As we have seen from the days of President Reagan who began the process of “privatization” and “deregulation” process, costs to shareholders were over a trillion in losses (Pan Am, TWA) and over $400 billion to the taxpayers in the Savings and Loan Association fiasco, and the story continues.

Let us hope that President Trump will now give serious attention to the needs to “deregulate” the “regulations” but not privatize key government services such as Social Security, the Veterans Administration, Housing and Urban Development, and Department of Education but make these key agencies more responsive to the needs of people.

Privatizing public schools is the last thing America needs. The majority of the taxpayers “White” middle class and blue collar workers that voted for President Trump are the key beneficiaries of public schools and of course Blacks and Latino. The school voucher system while being marketed as cost effective in reality is creating a windfall for investors who are reaping billions of this system while not producing the quality education governments and parents are paying for. In fact, the “voucher system” is for the benefits of those communities where education is driven by “political or religious” ideology not by science and math and language. It is one way to deprive those who voted for Mr. Trump the right to demand improvement and investment in our public school, responsive to local school boards, not to Wall Street.

It is so ironic that in a country that is losing its industrial base, losing its edge in vocational and technical schools, with wide disparity between schools in affluent Zip codes and poor Zip codes, ‘education” is not a constitutional right, leaving it to counties and school districts to fund public schools through property tax resulting in a wide gap between public schools in Hollywood and one in the South Side of Chicago.

Most Americans, you, like me, attended public schools (same with my children) where we got a decent education without having to cough up thousands of dollars for private schools, which are in reality “For Profit” schools generating tens of millions of dollars to their shareholders at the expense of taxpayers.

Yes, they tell you it’s “voucher” and they tell you “school choices” when in fact it is taking tax dollars out of public schools and shifting it to owners of “charter schools”. There is no other way to explain it. Tax dollars being shifted to investors in “charter schools” rather than keeping the money in public schools, affordable and with badly needed investment and improvement. Of course let us also not dismiss the “unspoken” reasons for killing public schools because they now serve the poor White and the Blacks.

Here in rich Fairfax Country, we have some of the best schools in the country with top performance and all the schools in the country are of the same standards, these not set based on the ZIP code. Will this change, most likely.

It is a big mistake and it is a crime against “White” Middle and Working Class taxpayers to abandon public education, when in fact, we should be investing more and more in public education to make sure that we have a well-qualified labor force for the future, providing our children with the tools they need for the future.

It is not so surprising that the biggest investors in ‘charter schools” are hedge fund managers and real estate developers. The same group of people who are ripping the government off in public housing programs.

These wealthy investors get a 39% tax credit and more than double their return on investments with “seven years”. As explained by Juan Gonzalez, “Big Banks Making a Bundle on New Construction as Schools Bear the Costs” on Democracy Now, “it is a tax credit on money they are lending, so they’re collecting interests on the loans as well as getting the 39 percent tax credit,” with real estate investors getting rent exceeding 20% of the annual budget, some even reaching 43% of the school budget. What is left for real education?

No, we do not have to imagine that the CEO of United Health makes $60 million annually (he does make $60 million annually) only for the company to manage the insurance paperwork. Imagine if the government goes ahead and privatizes the Veterans Administration and gives it to companies that robbed the government out of billions of dollars in fraudulent charges. I am sure you remember Rick Scott; the Florida governor whose company HCA defrauded the government out of billions of dollars resulting in 14 criminal convictions (no one went to jail) and HCA forfeited $1.7 billion in fines over fraudulent Medicare overpayments.

Should we really trust Wall Street and the private sector to manage the Veterans Administration and its hospitals? Just think what the salary and benefits of the CEO will be? Perhaps $200 million annually!

Over the last 40 years, we have seen the ugly face of Wall Street and the fraudulent face of business run by crooks and shysters. Yes, we do need to “deregulate” the many “regulations” that are a big burden on businesses delivering services and products to consumers but we also need to keep the quality, service, and products delivered to consumers and taxpayers at the most cost efficient price.

If we are to “deregulate” government, let us start with “deregulating” and privatizing the self-serving Congress that costs too much to operate, a Congress loyal and subservient to business and lobbies and indifferent to the needs of citizens and taxpayers. The main question is do we need a Congress of “professional politicians” or do we go back to citizen’s legislatures as envisioned in the early days of the nation. Let us formalize Congress as a publicly traded company, which it is and dispense with voting for members of Congress. Your feedback is welcomed.











Sami Jamil Jadallah

Sami Jamil Jadallah, is a Palestinian-America, a Veteran of the US Army (66-66) he holds a BA (72), MPA/School of Public and Environmental Affairs and Doctor of Jurisprudence (77) from Indiana University.

With over 35 years of international legal and business experience with wide range of responsibilities from legal associate as on the major Wall Street law firm, to general counsel for one the largest civil and electro-mechanical construction company in Saudi Arabia, to director of a defense and marketing company in Switzerland to owner representative of major hotel project in Tangier to managing director of a major airline agency in Morocco and founder, trustee and managing director of a major conservation foundation in Morocco.

Sami also has experience with technology holder of two US patents for the use of smart card technology for tracking operation and maintenance of machine and founder of a start up company and continue to consult for international organizations and clients.

Sami is engaged on Pro-Bono work for the New Arab Foundation and its initiative the Arab Peace Corps and the Veterans Housing & Education Foundation, both are not for profit, tax-exempt organization. He lives in Fairfax, VA.


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