Selling Back to the Public What It Already Owned: “Public-Private Partnership” Shark Bait

By Mercedes Schneider | From Mercedes Schneider’s EduBlog | 2017 | Follow Mercedes Schneider in Twitter  @deutsch29blog | Syndication made possible through Patreon.

By Mercedes Schneider

I find myself increasingly encountering the term, “public-private partnership.”

Today, I read two articles centered on this idea, both of which concerned Vice President Mike Pence– and one that concerned Pence’s role in the aftermath of Hurricane Katrina.

One article also included a sprinkling of US secretary of [privatized] education, Betsy DeVos.

A major goal of corporate education reform is to hand over public education to private entities (corporations, or even nonprofits, but don’t think that an entity termed “nonprofit” cannot be a handsome money dispenser for those running the nonprofit and doling out contracts). However, the extreme-right-Republican aim does not end with public education but with handing over the operation of the entire American infrastructure to private entities.

In the end, what this entails is having private corporations front money to state and local governments in order to lease back to the public what the public already owns.

It’s similar what already happens in the case of some charter schools. The school owns property, which it “sells” to a private corporation or third-party nonprofit and then leases back from that entity– often at extreme rates– thereby milking public funds to pay the lease, which was the point. (I wrote about this practice in my book, School Choice: The End of Public Education?.)

The third-party landlord is the one who can really make some money by throwing an initial, tempting sum of cash at the would-be former owner (in the case of public works, the tempting cash is given to a public board, for example) in exchange for major– often ridiculous, balloon-payment-styled– future profits.

Think predatory loans. I saw a commercial years ago for one of those quick-cash businesses that preys on lower-income individuals, and I was able to read the minuscule fine print at the bottom of the screen as I was hearing how I deserved to give myself a break by getting cash when I needed it.

The interest exceeded 300 percent. So, on the back end of the deal, the one who sells his birthright for a bowl of stew feels the sting.

Think of Chicago’s parking meter fiasco. From the May 23, 2016, Chicago Sun-Times:

Chicago’s parking-meter system took in $121.7 million last year, while four underground city-owned garages reaped another $34.7 million — with not a penny of that money going to the cash-strapped city government.

Instead, the $156.3 million pot of parking cash went to private investors who control the meters and garages under deals cut by former Mayor Richard M. Daley and rubber-stamped by the City Council. …

Chicago Parking Meters — formed by banking giant Morgan Stanley and other financial partners — paid the city $1.15 billion to manage the meter system and pocket the money fed into it for the next 75 years.

The city took in $23.8 million from the meters in 2008, the last year before CPM took over the system.

In the seven years since, the meter company has reported a total of $778.6 million in revenues.

In the public-private partnership, the private entity rakes it in– and the public is thrown into crisis.

But let us return to VP Mike Pence.

On June 08, 2017, Donald Cohen of In the Public Interest published this post about Pence’ canceling a PBS interview “out of the blue.” It just so happens that a failed public-private partnership connected to Pence was hitting the news at the time. As Cohen writes:

On Wednesday, Vice President Mike Pence cancelled an interview with PBS out of the blue, provoking speculation. The growing controversy around former FBI director James Comey must’ve gotten to the man known for having a stone face.

But there may have been another reason.

On Monday, the state of Indiana announced it would take control of a troubled highway construction project, Interstate 69, between Bloomington and Martinsville. The contractor, the Spanish firm Insolux Corsan, is facing bankruptcy and had been missing deadlines for months.

Who brought Insolux Corsan to the state? Pence. As governor, he signed a 35-year public-private partnership with the firm in 2014 to finance, construct, and maintain a section of the highway. Pence said it would provide “better value for taxpayers” than if the state used the traditional — and cheaper — method of public financing. But with only half the project completed and taxpayers left cleaning up the mess, one wonders what he’d say now.

Monday also happened to be the kickoff of a weeklong rollout of the Trump administration’s infrastructure plan, which would rely heavily on public-private partnerships. On PBS, Pence was supposed to talk infrastructure — drawing attention to his failed project wouldn’t have been good for business.

In January 2017, Naomi Klein wrote this Intercept article tying Pence with the aftermath of Hurricane Katrina– and with the public-private-partnership concept:

Ten years ago, I published “The Shock Doctrine,” a history of the ways in which crises have been systematically exploited over the last half century to further a radical pro-corporate agenda. The book begins and ends with the response to Hurricane Katrina, because it stands as such a harrowing blueprint for disaster capitalism.

That’s relevant because of the central, if little-recalled role played by the man who is now the U.S. vice president, Mike Pence. At the time Katrina hit New Orleans, Pence was chairman of the powerful and highly ideological Republican Study Committee. …

Under Pence’s leadership, the group came up with a list of “Pro-Free-Market Ideas for Responding to Hurricane Katrina and High Gas Prices” — 32 policies in all, each one straight out of the disaster capitalism playbook. …

The first three items on the RSC list are “automatically suspend Davis-Bacon prevailing wage laws in disaster areas,” a reference to the law that required federal contractors to pay a living wage; “make the entire affected area a flat-tax free-enterprise zone”; and “make the entire region an economic competitiveness zone (comprehensive tax incentives and waiving of regulations).”

Another demand called for giving parents vouchers to use at charter schools, a move perfectly in line with the vision held by Trump’s pick for education secretary, Betsy DeVos. …

Even more striking was the company that FEMA paid $5.2 million to perform the crucial role of building a base camp for emergency workers in St. Bernard Parish, a suburb of New Orleans. The camp construction fell behind schedule and was never completed. When the contractor was investigated, it emerged that the company, Lighthouse Disaster Relief, was actually a religious group. “About the closest thing I have done to this is just organize a youth camp with my church,” confessed Lighthouse’s director, Pastor Gary Heldreth.

After all the layers of subcontractors had taken their cut, there was next to nothing left for the people doing the work. For instance, the author Mike Davis tracked the way FEMA paid Shaw $175 a square foot to install blue tarps on damaged roofs, even though the tarps themselves were provided by the government. Once all the subcontractors took their share, the workers who actually hammered in the tarps were paid as little as $2 a square foot. “Every level of the contracting food chain, in other words, is grotesquely overfed except the bottom rung,” Davis wrote, “where the actual work is carried out.”

In Mississippi, a class-action lawsuit forced several companies to pay hundreds of thousands of dollars in back wages to immigrant workers. Some were not paid at all. …

This corruption and abuse is particularly relevant because of Trump’s stated plan to contract out much of his infrastructure spending to private players in so-called public-private partnerships.

What could be more lucrative than using crisis (or manufacturing crisis, if necessary) and combining that atmosphere of chaos and fear with a little front-end cash in order to beef up corporate profits by exploiting the public?

That, my friends, is all that a public-private partnership is.

We see it transpiring in American public education under the slogans of “failing American education, ” “school choice” and “parental empowerment.” However, those who would exploit the public in such a manner do not intend to stop with public education.

In fact, the American Legislative Exchange Council (ALEC)– which actively encourages public-private partnerships, including offering model legislation (see hereand here and here and here)– will have stalwart voucher promoter, Betsy DeVos, as a featured speaker at its Denver conference in July 2017.

Heads up, America: The sharks are eyeing your public infrastructure.

Related: Garn Press Education Books

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