Private VS Public (Crony) Sector

September 23, 2013

By: Kelly Diamond, Publisher

The claims against the private sector are horrendous.  Not because the private sector isn’t culpable for its own misconduct, but rather what constitutes “private sector” in the eyes of a dyed in the wool socialist.

Simply having a registered corporate name, and not having a “.gov” as the suffix of your website isn’t enough to say the organization is “private”. 

Private vs Public (Crony) SectorLockheed Martin, Boeing, Halliburton are all “private” companies.  So is the Federal Reserve.  But please do not expect me to even entertain the notion that corporations whose ONLY client is the government are actually PRIVATE.

Here is a simple litmus test for whether a company is private or fascistic: would the company still exist if the government was no longer there as a client?  Can the company sustain itself on the revenues generated by private citizens or other non-government businesses?  If it cannot exist without some government entity patronizing it, then it’s not a “private” corporation.  It is a crony corporation.  It is a fascistic corporation.  But what it is NOT is PRIVATE.

A bigger question requisite in this conversation is whether government should be involved at all when it comes to certain things.  For example: should any level of government be involved in the funding of convention centers or stadiums?  Should government be involved in trash collection? 

Bearing these two questions in mind, allow me to introduce you to a socialist’s view on privatization:  “A little analysis reveals that privatization doesn’t seem to work in any of the areas vital to the American public.”  To which I say, “And a little MORE analysis laced with facts, proves your surface observations are as shallow as your intellect!”

WARNING: When you see the eight sectors where privatization has failed us and their respective headings, you will feel the need to hurt yourself just to numb the mental pain imposed by Paul Buchheit.  Therefore, I recommend reading this in a soft place with lots of foam and pillows.

Healthcare

Paul Buchheit compares the out-of-pocket costs of Medicare/Medicaid to the costs of private insurance.  He insists our costs are the highest in the developed world.  Perhaps he is right on that point, but what he just totally ignores, is tort, the abuse of private insurance, AND the mandates imposed by the Medicare/Medicaid systems. 

How do you begin to address cost without looking at those three things!?  Here’s an example of how tort totally screws the individual: Child birth.  There is a documentary called “The Business of Being Born”.  It’s quite eye-opening.  But brass tacks: giving birth in a hospital, with a doctor and their staff, natural and uncomplicated runs between $12,000 and $15,000.  If I were to give birth at a midwife birthing center, it would cost between $5,000 and $7,000.  If I were to give birth at home with a midwife, it would cost between $3,000 and $5,000.  SAME BIRTH.  TEN THOUSAND DOLLARS DIFFERENCE.

There’s your ass-covering tort for ya.  Places like Germany have a loser-pay system, which keeps the litigious activity quite low. We don’t.

Look at states like New Hampshire that don’t require car insurance at all.  Low accident occurrences.  Lower than in states that DO require car insurance.  Why?  Because no one wants to pay for accidents, but they also don’t want to pay for insurance.  So people drive more defensively.  You don’t even have to wear a seatbelt in New Hampshire.  The images of twisted steel and carnage you would expect from such a lack of laws don’t exist.

One of the major differences between health vs car insurance is that the costs are socialized across ALL customers.  If I’m an awesome driver, I get all sorts of discounts and credits.  If I suck on the road, my premiums go up and I could potentially lose my policy.  Some insurance, like homeowners’ insurance, is so sensitive to claims that after your first claim you could potentially lose your policy.  In the case of car and homeowner insurance, the policy holders do everything in their power to avoid making claims! 

Not with health insurance though.  You have everything from parents rushing into emergency rooms for strep throat and fevers (something that is easily treatable with some Tylenol and lozenges) to elective C-Sections.  People can’t claim enough! 

If we were to engage in such practices with our car or homeowners’ insurance, NO ONE would have a damn policy!

When Austria was forced during WW2 to socialize its medical care, there weren’t enough doctors for the patients!  It wasn’t because people were all of a sudden struck with some plague.  It was because it was free, so why not?

Canada suffers a severe shortage of general practice doctors, and America is also heading in that direction.  Which leads to the price fixing imposed by government programs like Medicare and Medicaid.  They just decide how much a certain procedure or check-up should be.  I don’t even know what their figures are based on since they are so far removed from real-worlds costs.  IF our socialized programs were SO in tune with real world costs of healthcare, then why are there doctors who refuse to accept patients on those programs?  Interestingly enough, they don’t refuse them outright, they refuse their insurance, and either negotiate private free care through a clinic they run or a payment plan.

The costs associated with staffing required to process Medicare and Medicaid claims alone warrant a higher price than what they are willing to pay.  If you look at centers like Elliot Urgent Care in New Hampshire, for example, they offer a 25% discount to those who don’t have insurance.  Why?  Because they don’t have to process a claim nor do they have to wait for the insurance companies to pay out.  The same is very true of doctors.  If you go directly to a doctor and either offer to process the claims yourself or simply tell them you have no insurance, they are often quite agreeable to work with you on price.

The private sector hasn’t failed.  The public is abusive and litigious and the government is delusional to expect such low costs while imposing such onerous tort requirements.

Water

Buchheit compares tap water to bottled water services.  Silly man… tap water is filtered by the local municipalities and offered through a common sewer system.  What this man is doing is comparing single serving water services to general water services.  No question, bottled water is overrated and quite frankly overpriced.  But you pay for portability and a LOWER metallic taste.

Here’s where he gets it wrong (mainly because he is refusing to look at the price fixing associated with city monopolies): what would the cost be for each private entity to purchase a water filtration system of their own whereby filtering their own water?  It’s true that if I relied on bottled water for all my water needs it would cost more than for me to simply subscribe to city water.  But it would not be the case if I were to filter my own water.

This is becoming a rather popular thing since tap water is only a few units away from being flammable!  Private companies like Culligan and Easy Water sell a wide range of water filtration devices.  They are affixed to the main water line in the house and everything from your kitchen water to your shower water is beautifully soft, clean, filtered water.  You have one upfront cost (which can be paid out over several months) and then maintenance on the device, but the quality exceeds city water by leaps and bounds. 

It’s quite affordable, really.  Many restaurants and cafes already contract with them such as Olive Garden and Starbucks.  You pay for it everywhere you go anyway.

He also claims that these private water companies charge their customers to clean the very water they pollute.  How is that different from the city?  They add all sorts of nasty stuff to our water, fluoride being one of the biggest contributions.

Internet, TV and Phone

So it would seem that we are behind when it comes to internet costs and speeds.  The disappointment is that AT&T and Verizon all but own the cell phone industry, while Time-Warner and Comcast dominate the cable industry.

AT&T and Verizon offer their phones for practically nothing, and make their money off the plans.  If you buy your phone outright, and then buy the minutes and the data plans you use, the pricing is quite different.  There are problems with packaging because where there are times when money can be saved, there are also times when all that is reduced is the up-front costs.

I have to wonder what regulations prevent others from joining in the competition.   But there are also satellite companies coming into the picture because it is so restrictive in the cable universe.  Evidently if you won’t let us compete terrestrially, then we shall do it through space!  Obviously, satellite companies can’t offer internet and phone packages, but their cable packages are impressive!

If you are still intent on having a land-line (goodness only knows WHY), you can get internet phone services for a fraction of the cost of regular landlines.  Look at Lingo.  They offer unlimited calling domestically and to several other countries for as little as $25/month!  As for mobile phone services, you can get phones and then buy cards for the time on it.  That can cost about $50/month for a smart phone.  Still cheaper than Verizon or AT&T which cost nearly twice as much. 

I will say that I paid $15 per month less in New Hampshire than I do here in Texas for high speed internet services, neither of which were Comcast or Time-Warner.  So I have to wonder who’s prices he was comparing and what services he was comparing other than Time-Warner and Comcast.

Still, the cell phone companies made landlines virtually obsolete, and soon, internet based communications will render cell phones obsolete.  All that will be left is data plans.  The free market has done wonders to not only offer new technologies in the telcom industry, but he is misguided and misleading to only use the big names to compare pricing in other countries, when in fact we are not beholden to the four companies he restricted his argument to. 

Transportation

Anyone who knows their American history knows about the collusion between the auto and oil industries and the government to eliminate the rail systems here.  PLEASE do NOT try to sell me this line of crap that the private sector fails us when it comes to a rail system.  I won’t hear it until this man is willing to face facts: Eisenhower picked a winner in the transportation ring and it was indubitably going to be in favor of auto and oil.  It was HIS dream to have a fully built out interstate road system.  Prior to the inception of his utopian shit trails, ALL THE ROADS WERE PRIVATELY RUN. 

He didn’t institute this initiative because private industry wasn’t maintaining the road systems.  He instituted it because he had cronies.  In fact, the congress didn’t have the budget for such an undertaking so he colluded with the private road companies to help him in this endeavor.

What he essentially did was make it impossible for rail to compete.  Rail was an abandoned notion.  Rail was supposed to be the market competition that kept the auto and oil industries in check!  When government picks winners and losers, you can’t have market checks and balances anymore, now can you?! 

England and Brazil lament privatization of their rail systems?  That’s odd, because in Norway, I was left waiting for a public train for nearly three freakin’ hours!!!  But the private rail that I wound up taking to the airport was right on time, totally air conditioned and had very comfortable seats.  The Nor-Rail pass is the biggest waste of money in the West!  I paid $600 to ride trains that were totally dilapidated and late!  I wound up paying separately for efficient transportation from the private companies because I only had one week and I didn’t want to spend it at one damn bus stop!

And before we get all uppity about public transport not wanting to go into rural areas, we should also acknowledge its reluctance to go into the ghettos where there are dense populations of working class individuals.  This man is arguing against private transport services, when in fact there are plenty of black market services which actually do service the inner cities and ghettos for a very affordable price.

Do you want to know why the private sector sucks when it comes to transportation?  It’s due to regulations and licensing laws.  The Institute for Justice has a litany of cases they represent where people want to offer taxi services, chauffer services, bus services and they can’t.  Why?  Because the cost prohibitive nature of breaking into that line of work imposed by none other than the regulation nation we live in.

Banking

HAAAAAAAAAAAAAAAAAAAHAHAHAHAHAHAHAHAHAHAHAHA!!!!  Banking is private?!  Really?  I challenge ANYONE to prove to me that banking is a private sector industry.  I did a whole piece on the revolving door of the SEC.  Look at the bail outs that industry has received.  Holy crap on a stick, look at the Federal Reserve!!!  THAT, dear friends, is NOT anywhere NEAR private.  Look at Fannie Mae and Freddie Mac!  How the HELL anyone could say this is the “private sector” is well beyond my comprehension.

Here’s the litmus test I mentioned earlier:  If the government didn’t exist, would the Federal Reserve exist?  No.  Then it is NOT private.  If the government didn’t exist, would any of these major banks like Citigroup, Bank of America, or Wells Fargo exist?  No.  Would Lehman Brothers or Goldman Sachs exist?  What about AIG?  NO!  THEY WOULD NOT!  Because without the government, the private and very FREE market would’ve kicked them to the curb!  They would’ve been allowed to fail!  If the Federal Reserve didn’t exist, banks would have to compete with currency and have to be more accountable and responsible.  Plain and simple. 

Prisons

Is this man serious?  Two questions: could private prisons exist if government didn’t exist as their only customer?  Clearly not.  The fact that government launders money from the taxpayers and funnels it to a privately held entity does not make the service private.  It’s an arm of government. 

Here is a VERY telling story of how “private prisons” are anything BUT private.  There are minimums set for occupancy which is why we have one of the highest incarceration levels in the world.  Government literally creates laws that make it virtually impossible for anyone to be innocent just so that they can meet minimums for prison occupancy!  Please click that link.  Taxpayers pay these “private” companies money to cage people.  Taxpayers pay fines and fees if we don’t meet the minimums for occupancy!

Anyone who thinks there is virtue in these “private prisons” is a sociopath.  Anyone who thinks these are really private has their heads up their asses.

What is the difference between someone killing for money (i.e. a mercenary) and someone making a profit off the incarceration of someone?  NONE!  This is sick people!  There shouldn’t be a financial incentive to put someone else in a cage any more than there should be a financial incentive to kill people… and that incentive sure as hell shouldn’t be coming from taxpayer dollars via the government!

IF there were to be a detention center, it would first have to be privately funded as well.  Publicly funded private corporations are still public.  They are the very essence of fascism. 

Education

We rank second in spending per student in the world.  Switzerland is the only country that spends more per student than we do.  BUT they actually produce a decent product.  We, on the other hand, produce lackluster idiots who are basically indoctrinated with useless crap like the pledge and recycling mantras.  I mean, that’s sweet n’ all, but that nonsense doesn’t exactly pay the damn bills, now does it?

America’s public school system is such a joke, our friends from the “private” prison systems visit them regularly to determine how many more prisons to build in anticipation for future generations of residents.

Private school students fair better, and they cost less than public schools.  For example, in Texas, they spend approximately $12,000/student on average per year.  Texas also consistently ranks in the bottom three every year when it comes to aptitude tests.  We spend over $40 million dollars a year to find out our kids are still stupid.  Private schools out here cost anywhere from $7,000 to $9,000 per year.  They crank out kids who are competitive and often go off to higher education.  They can write coherent sentences and perform basic math even!

Home schooled kids perform even better than private school kids!  They cost $600/year in supplies per student.  It would seem that the less socialized the education program, the better the performance of the kid!

One of the issues Bachheit addresses is the “low” qualifications of charter school teachers, lower benefit packages for teachers, and the higher turnover rate.  Parents are homeschooling with no credentials at all.  Private schools don’t require state credentials at all and generate better results.  Parents who homeschool don’t get compensated at all!  State credentialed teachers aren’t all that great.  I am a product of the public schools system, and every teacher I had proved it requires nothing more than opposable thumbs and a pulse to get a teaching credential.  It also introduced me to a group of adults who chose to work with children for the sole purpose of getting an authority fix.  Nothing like being able to tell little impressionable people what to do, chastising them for challenging you, and leveraging a call to their parents the entire time.

Private school teachers accept their jobs knowing full well they are paid less and receive a lower benefits package, and STILL take the jobs anyway.  Why?  Why do parents who have already paid through taxes for public school still home school if public schools offer such a benefit to their kids?

And a turnover rate?  Thank goodness!  Public school teachers have a thing called tenure which makes them virtually unimpeachable and above reproach!  In New York, there is a thing called a rubber room.  It’s full of “teachers” who have been charged with misconduct, awaiting a trial.  They can’t teach or be in a school setting because some have been charged with sexual harassment or violence against a student.  So they receive their full salaries, show up to this rubber room, and do nothing.  Some have actually written books while waiting.

As for university tuitions, that is a racket.  A racket that is perpetuated by none other than the government.  Gordon Haave did a marvelous write up on this.  The bubble is being created by the bottomless pit of unaccountable lending extended to college students to major in Environmental Studies.   If the money is available and the demand is there, the universities will absolutely exploit that.  And it doesn’t matter if they are public or private: all of them do it. 

Consumer Protection

Buchheit sites the fertilizer explosion in Texas, saying OSHA failed to inspect it for over 25 years.  Whose fault is that?  This is a failure of regulation actually working, not a failure of the private sector.  I don’t deny that the private sector is responsible for bad things happening.  It has its fair share of violent offenders both on an individual level and on a corporate level.  But, there are also accidents that will happen, and no amount of regulations will prevent that NOR will it prevent deliberate misconduct.

Here’s an example: I used to work for a coffeehouse.  There were things everyone KNEW were part of the health inspection codes.  I assure you, the milk temperature was rarely checked at the condiment station, the pH levels were not ever checked in the rag bins, and I never saw anyone use the three sinks in the back to wash dishes.  We handled money, then we handled food.  All the time.  They still do.  When the inspector came, for the next hour or so, we did everything by the book, got our 95% ranking, and went right back to the lax conditions before they showed up.  We NEVER received a single complaint.

Walter Block offers a wonderful free market solution to corporate polluting: injunctions and putting an end to government land leasing.  Turns out renters don’t take care of property as well as owners.  Go figure.  If the government sold the land to drillers and foresters, they would treat it better and in a more sustainable way because they need a return on the investment.  But we don’t sell it.  We lease it out.  And so they treat it like a renter.  They clear cut the forest, they dump a bunch of toxins, all without compunction because it’s not their land.  They don’t need it to hold any value.

 

He defends FEMA.  The same agency that bought a bunch of toxic trailers that couldn’t be used in a time of tragedy?  Here’s a LIST of failures on the part of FEMA, and this is JUST regarding Katrina. 

Buchheit apparently is going to ignore the failures of the SEC and FDA right?  He would have to make any claims of there being legitimate protections offered by government agencies to the general public.  The FDA is the same entity that approves countless vaccines and pharmaceuticals while denying any medicinal benefits of marijuana.  They also staged a 6 month stakeout on an Amish family who was selling raw milk.  This is what they are doing to “protect all of us”.

How many charities have been adversely affected in delivering much needed aid to the needy because of over-regulation?  Check out one charity that had to destroy $8,000 (1,600 pounds) of venison because the state declared it unsafe.  Because it’s safer for homeless people to dive in a dumpster for their food right?

Buchheit laments the cutting of firefighters and their budgets and the insufficient numbers to service a fire in Arizona.  Why isn’t there a volunteer fire service?  Texas has it.  New Hampshire has it.  They have a fire commissioner and a chief who are on the payroll, but the fire fighters themselves are volunteer.  You know what fire fighters don’t do?  Patrol the streets to see if anyone is operating a Zippo unsafely or if someone is frying a turkey properly or barbequing their meat using appropriate safety equipment.

Are there fires?  Yes.  Would a fire patrolman have been able to prevent them?  No.  Just like police officers don’t stop crime.  Bad things will happen.  And no amount of laws, regulations and paramilitary officers are going to stop them. 

The funniest item in this article is his admonishment of Monsanto!  Monsanto made claims that Agent Orange was “not the cause of any serious long-term health effects” as late as 2004.  Now the president of that company is the head of the FDA!  Check out the revolving door of folks from Monsanto to our FDA and USDA!

“Most high-level FDA employees have a background in either medicine or law, but one of the largest private-sector sources is the Monsanto Company. Over the past decades, at least seven high-ranking employees in the FDA have an employment history with the Monsanto Company,” writes Edward Bonnet of the Independent Voter Network.

John Stossel started his career advocating for more consumer protections.  He would do these exposes on businesses that would rip off consumers and operate unscrupulously.  He realized that the regulations didn’t really offer much recourse and these guys didn’t lose anything but a little time.

You want real private sector consumer regulation?  Angie’s List and Yelp.  They have to be the most incredible market regulators in America.  People aren’t as concerned about State certificates and ratings.  They are very concerned with what “Suzie B. from Knoxville” has to say about a contractor or doctor she used. 

He blames deregulation, but he is, again, misguided.  The problem is the lack of competition.  So the question has to be: why aren’t there more competitors?  Regulations, restrictions, fascistic collaborations, cost-prohibitive licensing fees, tort, etc. 

The private sector has not let us down.  It thrives DESPITE efforts to quell it.  It seeps through cracks in the system where it can.  But it’s been distorted by regulators and over-zealous socialists who think rules and regulations will make everything perfect. 

The answer is simply, government does NOT belong in any of these eight sectors.  They should be left alone entirely by the government and allowed to operate freely before being charged with criminal intent or action.  Socialists like Paul Buchheit have no idea what a true free market looks like or what real deregulation looks like.  His gripe is with fascism, as is mine.  But he thinks we suffer from a lack of government intervention, and I think the facts indicate that we suffer from any and all government intervention.

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Comments

  1. Thank you for your article. I love it. As an American, who happens to be Black, i am very concerned about asset protection and minimizing governmental intrusion. Your article reaffirms my concerns and validates my conservative views regarding the topics mentioned in your article. I am a small business owner that is not funded by the government. While it would be easier to get government money to help with my expenses, I don’t want them telling me how to allocate my funds. I appreciate what you do. Thank you for being a voice for people like me. I wish more Americans, especially Black Americans, would wake up before it’s too late.

    • Kelly Diamond says:

      The strings attached to government “help” aren’t worth it for someone who deliberately decided to start their own business to be their OWN boss. Look at all the advertising and campaigning government has to do for its programs! If their ideas are so great, why do they need to be sold? Why do they need to be forced down our throats?

      Any entity that can mismanage such an industrious and lucrative economy to the point of being $16 BILLION in the hole is not one I trust to “lend” me money, “subsidize” me, or in any way shape or form get their hands on my business.

      Way to stand your ground! Thank you for reading and taking the time to offer your comments!

  2. Good article Kelly! Yous hit da nail on da head.

    • Kelly Diamond says:

      thank you!!! I get sick of people conflating cronyism or corporatism and real free market capitalism! Thanks for reading!

  3. Michael Ponzani says:

    You forgot Underwriter’s Laboratory. Companies fight for that symbol.

    I’m storing this in Favorites

    A good analogy for government growth is to watch an oak tree grow. There’s one by my house. It has gotten so big over the years, I fear it will destroy my house. Sad to say, it’s growth is almost imperceptable from year to year!

    • Kelly Diamond says:

      And to bounce off your analogy, the most threatening part of an overgrown oak isn’t the branches on the outside… it’s the roots you don’t see: slowly tearing up your foundation, your plumbing, your sprinklers, your sidewalk… Same goes for government: it’s not the stuff out in the open that scares me so much as what those things are symptomatic of. The stuff growing out of our sight is the scary stuff.

      Thank you for reading!

  4. Government is not “delusional.” For over a century, government has been taking over the private sector, one industry at a time, using a formula that works perfectly. First, invent a problem. Then, institute regulations to combat the non-problem. When those regulations make the industry they affect non-viable, step in and take over the industry. Rail transport, urban mass transportation…. and now medicine.

    • Kelly Diamond says:

      Fair point. The article I was specifically responding to, however, totally ignores your line of reasoning as well. He was very selective on how he made his arguments, being sure not to address any of the real problems inherent in government-run programs. The way his article reads, you’d think that every business owner just conspired to create all the world’s problems, and only government can save us!

  5. Excellent post. Keep writing such kind of info onn your blog.
    Im really impressed by yoour blog.
    Hey there, You’ve performed an incredible job.
    I will certainly digg it and for my part suggest to my friends.
    I am confident they will be benefited from this web site.

  6. Hello
    Your article is so right on the money. I use to be a small building contractor with a 5 man crew. Regulations and insurance put me out of business because of the cost and time to comply to the regulations. Now I just do jobs by myself and have to refuse work because it would require me to hire and that i will not do.

    • Kelly Diamond says:

      That’s just ridiculous. If you don’t play their game by their ever-changing rules, then you can’t even hire! Well, you technically CAN, but what incentive is there?!

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