APWU: Public Service + Profits: They Don’t Add Up

apwudefault4(This article first appeared in the July-August 2015 issue of The American Postal Worker magazine.)

Every day we hear that government doesn’t work and that it costs too much. Business, we’re told, is more efficient and more effective.

We’re told this is true of the Postal Service as well. Companies like FedEx and UPS could do it better, we continually hear.

But the truth is that corporate CEOs are salivating over the thought of carving up the profitable parts of postal operations and leaving the unprofitable service obligations to whatever is left of the Postal Service.

They are using familiar arguments: Private corporations can do the Postal Service’s job more efficiently and generate a profit.

Perils of Privatization

But horror stories about privatization should serve as a warning about what could happen.

A December 2013 report by In the Public Interest, a nonprofit watchdog, offers a look into the real effects of privatization – from sick nuns to broken roads to beaten foster children.

  • For 10 years, Los Angeles County renewed its $3 million per year contract with a firm called Wings of Refuge to place foster children despite numerous reports that the program put kids in homes where they were beaten and locked away for days on end.
  • After Indiana hired IBM to run its food stamp and Medicaid programs, the company dumped thousands of residents from the rolls – including an elderly nun who was denied food stamps because she missed a recertification interview while she was hospitalized for cancer.
  • School-cafeteria workers in New Jersey saw their hourly wages cut nearly in half – from $10 an hour to $6 – after their jobs were privatized.
  • After Denver signed a 99-year contract with a Portuguese firm to run a toll-road, the company prevented the construction of a free road nearby. The city is unable to build any new roads nearby for a century, unless it richly compensates the toll-road operator for lost revenue.
  • During a 2008 flood emergency in Indiana, tolls on turnpikes were suspended for travelers. The company running the toll roads billed state taxpayers $447,000 for the lost revenue.
  • A company that contracted with the city of Truth or Consequences, NM, to tape city commission meetings refused to make the tapes available to the public, claiming they were “private property.”
  • For-profit companies that contracted to run the bus and train systems in San Diego County failed to give required training to their security guards, failed to complete drug and alcohol testing of bus drivers, and failed to pick up disabled passengers in a timely manner.
  • Two-thirds of Florida’s privatized prisons failed to meet the legal requirement to run at least 7 percent more cheaply than state-run jails. Half were actually more expensive to run but the state never established a mechanism for punishing them.
  • Sixty-five percent of private prisons require the states and cities they work with to meet inmate quotas, forcing governments to find inmates to keep the jails filled to a profitable capacity.
  • A Texas contract allows a private company to build and operate toll lanes on a major highway and forces taxpayers to pay the company if too many carpoolers use the high occupancy lanes because it would adversely affect the contractor’s revenues.

Speed Cameras

Here’s another common privatization pitfall: The speed- and red-light cameras many cities are installing are usually owned and run by private companies.

Cities sign contracts that promise hundreds of thousands of dollars of income to both parties from the fines collected from motorists.

The contracts often guarantee the companies a return on their investment, so if they don’t generate sufficient profits for the companies, the companies may remove the cameras or increase the number of cameras to boost revenue.

Instead of using the cameras to control traffic and improve public safety, they’re being used to enrich private businesses.

Many of these privatization contracts were negotiated by lobbyists and politicians. Politicians who can be influenced by corporate campaign contributions rather than public need cannot be relied upon to do the right thing.

That is why a strong, public Postal Service is crucial to providing universal postal services to all and why local governments should control essential services to their citizens.

Some basic services should never be provided on a for-profit basis, including water, utilities, infrastructure, social services, prisons, and, of course, postal services.

When corporations run public services, their accountability is to their stockholders and the profit that can be made, not to the public. Publically-owned services require the employees and management to answer to the public, not shareholders. Keeping universal postal services means challenging the myths about privatization.

Source: Public Service + Profits: They Don’t Add Up | APWU