Wednesday, June 8, 2011

Why you can't privatize regulation.

Recently, I was engaged in yet another back and forth with a staunch conservative over "big government" and the "socialist dystopia" Obama is clearly leading us into with "Obamacare."  Now, this is nothing new.  Conservatives love to talk about what a radical piece of socialist engineering Obama's health care reform plan is.  What made this conversation blog-post-inspiration worthy was the fact that the person I was debating with said that we would be "about a billion times better off" if all regulatory agencies currently run by the government were run by private companies instead.  Agencies such as the FDA, FCC, FAA, EPA, ATF, medicare, social security, the Post Office, all the cabinet positions, such as dept. of transportation, interior, HUD, etc.  Everything except the military and (oddly) road and rail maintenance.  She was convinced that this would generate billions, create countless jobs, reduce taxes to almost zero and "save America!"  At this point, we had gone back and forth for a while, I was running out of the energy/desire to keep pointing out why I thought she was wrong, I wasn't really all that upset or vested in the subject to keep beating the same dead horse over and over anyway and really, I just wanted to wrap it up so I could go watch Rachel Maddow and wish I was a lesbian.  However, the one thing that stuck with me from that conversation was the whole point she made about how completely privatizing all of our nation's regulatory industries would somehow "save America."  It kept popping up in my mind, like the image of a nipple with an eyeball in it.  Oh, and in case you were about to say "That image never keeps popping in my mind..."  Now it will!

Anyway, here's why she's wrong.

Private industry is about one thing and one thing only - profit - and regulatory industries are not.

Simply, I could end my entire argument there, because if you understand capitalism and the profit motive and how the two are related and the effect that they have on things like product quality and quality of service, among other things, you would already know how privatizing an industry responsible for regulating private industries is a disaster waiting to happen.

However, if you don't understand, or think you can still come up with an argument to prove me wrong, here is my argument.

Private industries, as I just said, operate solely in the interest of the profit motive.  This means that making a profit takes precedence over all else.  It's more important than quality of service, it's more important that quality of product, it's more important than employees.  It's more important than safety, accountability and concern of any kind for anything other than what will increase profits even further.

Put a private industry in charge of the post office, and you will see the post office divided and absorbed by UPS and Fed Ex.  You will see first class mail handled by separate carriers with independently contracted local delivery services, so that people in some areas get their mail within 2-3 days and before noon and other's might not get theirs for 2-3 weeks and not until late afternoon.  Now, if you're waiting for a social security, disability, unemployment or other kind of benefit check (which, you won't be getting now anyway, so moot point I guess) a 2-3 week delay might matter to you.  Likewise, if you still get and pay your bills by mail, like a caveman, it might matter if it takes a full extra month to get and return a paid bill to, say, your utility provider.  Especially now that they're fully privatized and will shut your ass off in a hot minute if you don't pay that bill.

Put a private industry in charge of social security.  It will be an investment house, like Morgan Stanley, Fidelity, etc.  They will take your money and invest it in a low risk growth fund, just like how they handle 401k's and IRA's and stuff now.  Now, so far you're thinking "Hey, that's great!  401k's and IRA's are awesome retirement vehicles, what's the problem?"  The problem is 2008, and if you retired 2 years before it, during it or 3-5 years after it.  The problem with investing on the open market is that the market, especially in the absence of government regulation, is extremely volatile and manipulatable.  The odds of the market becoming a non-stop boom and bust bubble economy in the total absence of regulation is a certainty.  You literally will have an up and down cycle where, if you retire in this 5-year span, you'll be ok, but if you retire in the next 5 years, you're broke and completely fucked.  And of course, if you want to put your money back into the bank to gain interest and whatnot while you take a small chunk every month, you're just keeping your chips on the table and a crap out is right around the bend.

Who's gonna regulate the market, if not the government?  A private company?  Oh, so they can "merge" with AIG and Goldman Sachs and create the largest investment house/bank/market regulatory agency in the world?  Because that's what private industry that controls its own private regulation means.  It means the inmates can own the prison and get to keep the keys to their cells.

Are you going to privatize the EPA?  So Exxon/Mobil can absorb it, in a joint effort with Shell Oil?  Again, I must stress, regulatory agencies do not generate profit, that's not why they exist.  They exist to make rules and enforce them, and there's no money in that, unless you try to profit from fines, and what good does that do when you are a private industry and would just get bought out by your biggest offenders, because that would be cheaper than paying your fines?

The ATF would be bought by the Coors family, Phillip Morris and Smith & Wesson and divided 3 ways.  The FDA would be bought by the big 5 food producers and the top 5 pharmaceutical companies and likewise divided.  The FCC would be bought by Clearchannel and Viacom, with a smaller controlling interest given to AOLTimeWarner.  NewsCorp would strike a proxy deal that would allow them to continue broadcasting in the US, but exclude them from all US ethics regulations because they're a foreign-owned company.

The FAA would be dismantled.  All airline schedules would be traded on the open market, allowing speculators to gamble on which airlines would end up with the sweetest flight schedules and times.  This would drive ticket prices for some airlines through the roof, bankrupt other airlines, allowing the bigger companies to continue growing through absorption.  "Route monopolies" would be enforced.  Because, the answer to making sure planes don't fly into each other in a world where the non-profitable FAA no longer exists, is to simply stake claim to travel routes and flying times and settle all violations of those agreements in court.  Luckily, we would still have a judicial branch of government!  Could you imagine the legal system being privatized?  Oh no, you broke a law in the Walmart district!  You're getting the chair!  "But wait!  This is just a misdemeanor in Target's jurisdiction!?"  Sorry, punk, Walmart don't fuck around, we beat everyone's prices AND legal repercussions.  Watch out for falling civil rights!

Again and again I can post examples of how regulatory agencies simply wouldn't exist, or just be bought by the very companies they were created to regulate, because there's just no money to be made through regulation.  Regulatory agencies don't generate profits, that's the whole reason the government runs them in the first place.  Besides just the fact that privatizing them would create every worse-case conflict of interest scenario you can think of.  You just can't privatize an industry that doesn't generate profit, it's like spinning straw into gold, you can try and try, but unless you're a magical imp named Rumplestiltskin, it ain't gonna work.

Would you want the agency that controls how clean your drinking water can be controlled by companies that dump toxic waste into your lakes and rivers?  Would you want your food safety regulated by the beef, poultry and pesticide industries?  Would you want your fuel efficiency regulated by the automotive and oil industries?  Would you want your safety regulated by people who are only concerned about what they can get out of your pockets?  Would you want your retirement safety net handled by the people responsible for the S&L, and housing bubbles?  Would you want your medicare handled by Kaiser?  Would you want to be 65 and have to "re-qualify" for medical care?  Remember, with no government interference, there's no more "Obamacare" with it's guarantee that you can't be disqualified for having a pre-existing condition, so good luck being 65 and not having any pre-existing medical conditions.  Hell, being 65 IS a pre-existing medical condition...

Like it or not, we need government to do the dirty work of making sure private industry plays fair and treats us like... well... human beings.  To think that, in a capitalistic society, private industry will ever do anything because it's the right thing to do rather than the profitable thing is to be willfully naive.  To think that private industry can handle enforcing rules better than the government, when private industries literally hire teams of experts to find loopholes and ways around those rules is foolish.  It's like putting child molesters in charge of day care centers.  It's like putting drug dealers in charge of rehab centers.  It's like putting insurance companies in charge of medicare...

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