Not Privatization

Matt Yglesias made a great point the other day about the New Jersey privatized halfway house scandal, namely that the current policy moves to “privatize” government services is not really privatizing things at all.  Instead what we are seeing is a giant shift of money that instead of going to government departments is being diverted to private firms in the form of contracts.  As Matt points out, to “privatize” a halfway house would be to sell it to someone or a company and thus allow it to be turned into luxury condos or a regular single family home if the owner wanted.  What he we see instead is a form of wealth capture that just funnels tax dollars to a few lucky ducks that get rich.  Oftentimes with Halliburton “no bid” style contracts.  The same thing is starting to happen in Louisiana, with a new “school reform” scheme being set up by Governor Bobby Jindal that looks like its set up to shrink the public education system, and Mitt Romney has already embraced this form of “privatized” education.

These types of policies are often sold to the media and public through the language of free market utopianism that has come to dominate the way we see the world.  After all, who would favor the calcified old system of government bureaucracy when we could have something “free” or “dynamic”?  The language itself sells these concepts more than any actually policy improvement might.  The problem is that this is not a “free market” at all, it is something totally different that looks much more like an armaments firm from pre-World War One Europe than any form of “privatization”.  And I think we will see more and more of this kind of thing in the future.