The Hidden Human Cost of Privatization

By Joshua Pugh/Progress Michiigan

Michigan’s Republican lawmakers have been using the down economy as an excuse for destroying the role of the public sector in the state, and one of their favorite magic bullets is privatization.  They are determined to convince people that corporations have your best interests in mind, and have goals other than attempting to maximize profits at any cost. This year, with total control of Lansing, Governor Snyder set out to pass a sweeping legislative agenda. He put himself in a hole to start the year with a massive tax cut for businesses that doubled an existing $1.8 billion budget shortfall, giving himself leverage to extract even more concessions out of public employees, pass new taxes on pensions, and kick families off welfare. But he wasn’t done - he decided to make privatization a top priority of his administration.

An outrageous example of the private sector’s failure to deliver services to Michiganders is the Grand Rapids Home for Veterans, where more than 600 veterans from all over the state live and receive care. Private contract workers there who undergo insufficient training are directly responsible for injuries to veterans and have a much higher turnover rate than state employees working alongside them. The high turnover rate and abuses suffered by veterans drive costs even higher, erasing any hope of cost savings. These abuses include a veteran falling and breaking his neck, while in another case a private aide violated feeding instructions, causing a resident to need surgery. Thankfully, a judge recently stopped this disaster from proceeding after a class action lawsuit was filed by one of the veterans at the home.

Focusing on privatization admits an assumption by Lansing Republicans that cheaper is always better, which directly contradicts the way that Gov. Snyder likes to talk about government being like a business that should deliver a better product to taxpayers. Arguing that cuts to government services will improve those services defies logic, and expecting the market to weed out inferior services is impossible when these private companies are signing contracts with no transparency and no competing bids. 

In Michigan prisons, a Tennessee-based company called Prison Health Services provides healthcare services via a contract that costs taxpayers roughly $100 million every year. This company has been engulfed in scandals in many other states, but what should be even more concerning to free market conservatives is that they will soon be acquired by their only major competitor, resulting in a near-monopoly over privatized prison healthcare services.

In May Rep. Dave Agema tipped his hand when he introduced a bill that would require schools to outsource food, custodial and transportation services - before a substitute was later introduced that merely required schools to accept bids from private companies for these services. The substitute was passed after a House Fiscal Agency analysis of the original bill suggested that forcing schools to privatize these services would actually increase costs for local school districts. Republicans in the legislature were dismayed, because they weren’t actually interested in cutting costs or allowing school districts to make decisions for themselves - only in kneecapping unions by making decisions in Lansing that are best left to Michigan communities. They have since proposed legislation that would privatize teachers by employing them from for-profit companies.

Privatization is being pushed as a solution to a contrived problem - inefficient local government services. Local governments in Michigan are able to successfully provide services to taxpayers for a per capita average of $617 - well below the average cost of local government in this country, $887 per capita. Lansing needs to maintain or increase support for these successful local entities rather than encouraging cuts or passing ridiculous mandates. Attacking public services and the employees who perform them works well as a rhetorical trick to pander to an extremist base, but is mostly done disingenuously and undermines the ability of government to deliver on its promises. Making these lies all the more egregious, they are perpetuated through talking points peddled by groups like the Mackinac Center for Public Policy, a free market research group that takes millions in donations from powerful corporate interests - and freely alternates favoring the status quo with demanding reform based on which particular donor comes knocking on which particular day of the week.