[lbo-talk] London Underground's Privatization Experiment Dead as Remaining PPP is Bought Out

Gail Brock gbrock_dca at yahoo.com
Wed May 12 13:20:37 PDT 2010


WS: "I can see that in highly diversified labor-intensive areas, such as human services, PPP can offer advantages, but in capital intensive transportation projects? "

GB: Government employees are not necessarily well paid, but virtually without exception, they make more than minimum wage and get paid vacation, sick leave, health insurance, and retirement. Furthermore, the government is virtually always going to have complaint procedures. Private corporations usually pay the majority of workers in a labor-intensive area less than similarly placed government workers and include minimal benefits. Required credentials for workers are lower -- I think credentialing has gotten out of hand in the U.S., but I think mental health assistants probably ought to have the equivalent of a high school diploma or sufficient supervised on-the-job training to assure some level of competence. There's lots more turnover in the private sector, and thus the level of experience is lower.

Government also generally has significant grievance procedures. Private companies can blow off employees or customers who feel mistreated. The extent to which government programs have layers to insure equal protection to citizens does in fact add cost.

So, yeah, if lower costs attributable directly to the project is an advantage, private corporations frequently offer it (though not always, because of profiteering, high management costs, and employee problems). However, there's frequently a big cost to the community in workers who are worse off and people who are worse served.

Most recent example in posts to this list -- charter schools.

________________________________________________________ [WS:] Interesting piece, thanks for posting.

Private Public Partnerships (PPP) are of course nothing new in the EU and the US. However, I have been suspicious about their economic and political rationale. The typical argument for is that private providers - either for-profit or non-profit - are more efficient than government agencies and thus PPP guarantees better public services at lower costs. An additional argument is that nonprofits boost "civil society," and since PPP boost nonprofits, they also boost civil society, which is supposed to be a good thing.

However, the purported greater efficiency of the private sector is a neo-liberal article of faith, if not a myth, in dire need of empirical corroboration. At the very least, it all depends on the details of a particular endeavor. Government operation are not concerned with private profits and executive salaries, and can benefit for economies of scale - so they can obtain lower operating costs than private for profit operators, at least in principle. Governments can also obtain capital at significantly lower cost than private parties, so additional saving can be realized in capital expenditures.

I can see that in highly diversified labor-intensive areas, such as human services, PPP can offer advantages, but in capital intensive transportation projects? Gimme a break.

Wojtek

On Wed, May 12, 2010 at 2:53 PM, Jordan Hayes <jmhayes at j-o-r-d-a-n.com> wrote:


> "Former London Mayor Ken Livingstone sued the government twice in
> the early 2000s to prevent the full-scale contracting out of
> maintenance and work on the London Underground, which then-Chancellor
> of the Exchequer and soon-to-be-former Prime Minister Gordon Brown
> imposed on to the city beginning in 2003."
>
> [...]
>
> "One of the largest forays into re-privatization of a public transportation
> entity in the West has come to an end, less than a third of the way into
> what was supposed to be a thirty-year commitment."
>
> [ ... more at ... ]
>
>
> http://www.thetransportpolitic.com/2010/05/11/london-undergrounds-privatization-experiment-dead-as-remaining-ppp-is-bought-out/
> ___________________________________
> http://mailman.lbo-talk.org/mailman/listinfo/lbo-talk
>
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