Privatization
The Empires Domestic Model
Privatization is the transfer of government services or assets to the private sector. Essentially, it strips away government services allowing corporate entities to make a profit off of what was once a free or low-cost programs, that serve as a public good, for the general welfare of the people.
Pro-corporate lobbyists would say that privatization is a good thing. That it makes things more “efficient” and that it “eliminates” the “free rider problem,” where the “burden on a shared resource that is created by its use or overuse by people who aren't paying their fair share.” That said, we all know who don't pay their “fare share”. Those who have more money than they know what to do with.
The reality of privatization is that it is purely a profit driven model of capitalism and works to destroy the social safety net of a country. Public schools to private schools. Free or low cost college, into needing to take out massive student loans to get an education. Single payer healthcare opposed to private health insurance.
Healthcare, along with social security, and other social safety net programs are services people not only deeply care about but also truly need the most. Those that make up the “uniparty” corporate owned government love to talk about how the funding for these essential programs will “run out!” However, that is simply not true. Frankly, it is a whopper of a lie that we are constantly told but It’s not how economics works.
All money is created and spent by the federal government into existence and is taxed out of existence. Taxes don't fund spending. The Federal government just creates money by passing a bill into law. That’s it. “Taxes for revenue are obsolete.” (1)
On October 6th, 2023 the Real Progressives YouTube channel released an episode titled: “Inside A Failed State with Michael Hudson,” Professor Hudson discusses a variety of topics. This show served as a Q&A from attendees who listened to the “Macro N Cheese” podcast with Steve Grumbine and Michael Hudson.
Written in the videos description:
“The US is a failed state with a paralyzed economy. We’re in a debt deflation and economic polarization that is transferring wealth and income away from labor, away from industry, and into the financial sector, or FIRE (finance, insurance, real estate). “
(Edited from the show's transcript.)
Speaking on how to “fund” single payer healthcare Huson said:
“Already in the 19th century the idea of public healthcare was a conservative idea. Benjamin Disraeli (Former UK Prime Minister in the late 1800”s) said ‘Health, all is health’ and he realized that if the government would provide Healthcare at public expense labor would be much healthier, its productivity would go up, and the industrial capitalists of England would have to pay less money on balance for healthy labor, than unhealthy labor.
(The…) same thing that happened in the United States. It was protectionists, and the Republicans that backed public investment in health [through the] ...public sector … then the private investors, the capitalists, would not have to pay for health care and the workers would not have to pay for healthcare.
Privatizing healthcare means that both the corporate sector and the employers have to pay for the health care and that raises the minimum wage that employers have to pay and the fact that healthcare is 18% of America's GDP helps price America out of the World Market.
What Americans pay in healthcare is larger than labor in many African or Latin American, or Asian countries get paid and there is no way that the United States can re-industrialize as long as it's leaving healthcare, education, and other basic needs as privatized to be paid out of the labor budget instead of by the government.
So then we get to the question that you raised; ‘how does the government do it?’ Well, governments can finance healthcare in the same way that they finance Wars. They can simply print the money.
If they borrow money from wealthy investors or from banks simply creating credit on their keyboards, the government then has to pay interest, but just like banks can create a loan credit on a keyboard when you go into a bank, the government can do the same thing… just as the government of America financed a Civil War by printing greenbacks it can print the money to pay for health care… and in fact it was first Dick Cheney and then Donald Trump that said; ‘deficits don't matter’ Cheney and Trump said; ‘We can pay as much as we want for the military budget simply by monetizing it, by having the Federal Reserve create money.’
We at UMKC (University of Missouri–Kansas City) have suggested the treasury could simply print a coin … of platinum and say this coin is worth a trillion dollars, we're depositing it in the Fed to draw on and all of a sudden… you have a trillion dollars borrowing power.
That in effect, is what the US already has been doing under the Bush tax cuts, and the Trump tax cuts, and the Biden Democrats that said we have to keep the tax cuts that the Republicans do or else voters won't support us. It's basically the Democrats that have been fighting against the idea that you can simply print the money.
If you're the government, just like a Commercial Bank creates credit, and the problem is right now you have the Democrat, at least President Biden, saying ‘we're going to have to vastly increase the military budget in order to replace all of the armament(s) that have been used up in the war against Russia in Ukraine’... and because this is going to increase military spending we've got to cut back [ on ] social spending.
That basically is the Democratic platform and it's completely unnecessary. It's a pretense that the country can afford armament(s), can afford tax cuts for the wealthiest families but it cannot afford any kind of social spending for people who have less wealth than the top 10% of the population.
…you're going to have this September all of the suspension of debt service for student loans end and you're all of a sudden going to have a huge burden on families that have already been strapped for debt with their credit card debt, their mortgage debt, their automobile loans, their medical payments. Now they're going to have to all of a sudden resume paying the student loans that President Biden took the lead in making sure that these loans could not be wiped out in bankruptcy, unlike all other loans
The debts to the United States under President Biden's leadership in the early 2000s are treated as sacrosanct and this really shows you that without a change in the monetary philosophy, how is money created, you're going to make the country a failed State because there's no way that America can re-industrialize and at the same time make labor pay these added expenses for healthcare, education and other basic social needs…” (2)
So what is privatization? It is corporate theft from the public good. It is that simple. All so they can exploit people further and cut corners with public health and safety ( what they call “efficiency”) usually causing disasters because of it. Think… Flint, Michigan’s toxic levels of lead in their tap water. That’s just one of many examples, however.
In a report by Public Citizen titled; “Top 10 Reasons to Oppose Water Privatization.”
It reads, “The World Bank has predicted that by the year 2025, two-thirds of the world’s population will run short of fresh drinking water. Given such a grim future, it comes as little surprise that Fortune magazine recently defined water as “the oil of the 21st century”
1.Privatization Leads to Rate Increases
2.Privatization Undermines Water Quality
3.Companies are Accountable to Shareholders, not Consumers
4.Privatization Fosters Corruption
5.Privatization Reduces Local Control and Public Rights
6.Private Financing Costs More Than Government Financing
7.Privatization Leads to Job Losses
8.Privatization is Difficult to Reverse
9.Privatization Can Leave the Poor With No Access to Clean Water
10.Privatization Would Open the Door to Bulk Water Exports (3)
For over 200 years the United States has privatized its water and of course the effects are obvious to anyone who pays attention.
But wait! If we don’t privatize… won’t the government have to “borrow more money, like from China or go broke?!?” Well, no. As Hudson said, “The federal government just prints (or creates) money” We don’t actually “borrow money from any country or corporations, or commercial banks. The federal government creates it.
Any sovereign country with its own sovereign currency creates its own money supply. For every dollar, a reserve is created. The reserves cover the commercial banks.
So, what is the “national debt” and who do we “borrow” money from? Well, the US government “borrows” money from itself and since the US government is the only one who can create money, it can simply pass a bill to pay off its debt. We are indebted to ourselves!
The federal government can never go broke. The US dollar is the global reserve currency which means all trade with us must be paid in US dollars. Since other countries have their own currencies they have to convert it into dollars to trade with us.
If that country, say China, trades with the United States and has a “surplus” of US dollars, (balance of trade deficit) they invest those dollars into the Federal Reserve ( the US central bank) in bonds because they have no use for US dollars otherwise. Those bonds collect interest but can only be paid back in the US dollar. To pay off the “debt” the federal government just needs to pass a bill and the Fed hits a few numbers on their keyboard to pay them back.
(The interest rate hike by the Fed is actually flooding our own economy with cash but that is all consolidated to the most wealthy and the banks, credit card companies, etc.)
So that is what is meant by “borrowing and debt.” They are misleading terms to confuse the public into thinking the government is insolvent, used by the very people in government who want us to believe the lie that your federal taxes fund federal spending. They don’t.
Or as Professor Hudson would say, “You wouldn’t say you were ‘borrowing’ money from your bank if it’s your personal bank account.” It’s your money.
So the terms are purposely misleading to give people the sense that the economic system is a “tax and spend” economy when nothing could be further from the truth. Think about it. If the federal government creates money out of thin-air …why would they need your taxes to fund themselves? It makes no sense.
Macro-economics doesn’t work like personal finance. It doesn’t work like states, cities or towns that need your tax revenue to fund projects, etc. The federal government has all the power because it is the currency issuer. They, and they alone, create money. Even commercial banks are only allowed by the federal government to create “credit” under law.
But like we have seen in the past during the 2008-9 “Subprime Mortgage Crisis” the federal government will always bail out certain banks because let's face facts, the federal government is run by the very same corporations and banks it is meant to “regulate”. It is a revolving door between big business, Wall Street, the war industry, corporate media and government.
The US government is not “for the people and by the people, it never truly was. It is openly just a “for-profit funding scheme” at the expense of whatever is left of our constantly eroding ”democracy”.
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