The Privatisation of America

Paul Raven @ 02-03-2010

Key West conch republic bumper stickerJohn Robb has just re-posted USA Inc.“, a speculative future-history essay he wrote back in 2007, meant to be read as if “written from the perspective of a think tank that’s operating in support of the status quo economic elites in 2025.” He saw the recession coming, predicted an increasing entrenchment of US forces in unwinnable open-source guerrilla conflicts, and riffed on these themes to predict a future where massive government debt leads to the privatisation of… well, pretty much everything. [image by szlea]

Roads, waterworks, military bases, schools, parks, and much more were quickly sold at appropriate prices. Attempts by government’s to retain ownership and rent them as multi-year leases were initially successful, but as the crisis deepened the market cooled to these schemes. Within a year of the start of what is incorrectly but popularly termed “The Great Theft,” outright sales of assets to global investment funds, corporations and individuals were by far more common. The speed of this transfer in ownership has been unmatched by any example prior or since. By 2015, less than three years after the panic began, upwards of 60% of all public assets from the national to the local levels were formally in private hands.

Note that Robb says this is not a future he desires or advocates, but that it seems nonetheless more plausible as events develop; for extra chewiness, compare and contrast with Tim Maly’s “The Free Freeways” Futurismic essay about the seccession of the US highway system.

I think I can safely predict that a lot of you will say Robb’s USA Inc. could never happen, and those of you who are American citizens would be better qualified to make that judgemnet than I… but I’d be very interested to hear your reasoning. Is Robb’s style of doomsaying just a symptom of the inherently self-critical character of American politics, and hence an indication that the problems he’s flagging up are already being grappled with at a subliminal level?

Or is the feeling that it couldn’t happen merely a form of knee-jerk wishful thinking and denial – “too big to fail” scaled up to a whole nation?

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9 Responses to “The Privatisation of America”

  1. Chad says:

    This could easily happen in the U.S. In reality it is already happening. The Department of Homeland Security has more contractors than full time employees. We openly used mercenaries in Iraq and Afghanistan, with Blackwater being the most famous. A significant number of jails are already privatized.

    If you tie this in with massive governmental failures (banking regulation, SEC missing Madoff, hurricane Katrina failure, etc.), a prevailing wisdom among the populace that government can not do anything right, and one of the two major parties, Republicans, believing all government is bad and all business is good, you have a recipe for government to be almost completely privatized.

    Plus, it doesn’t hurt that most of the politicians can find a way to profit off privatization.

  2. Dave says:

    Actually, because the federal government is (still) viewed as a good credit risk, the government sector has probably grown in this crisis, instead of shrinking.

    State governments — for legal and financial reasons — are finding it much harder to raise money, and may see spending shrink. But whether that will lead to significant privatization is unclear.

    Personally, I have not seen any good argument that the government sector has to be a third of the economy (as it is now). Rich countries have high government spending not because of any enlightened consensus, but because the stationary bandit can reap higher returns from a rich economy without causing a collapse. Accordingly, privatization-panic is one of the forms of panic to which I am pretty resistant.

  3. Dave says:

    Not that there’s anything wrong with stationary bandits.

  4. docduke says:

    There are many private hands capable of managing the bulk of American resources. It is unclear whether the political and legal elites will voluntarily permit such a change. They are the most powerful “rent seekers” in the process. The politicians have directly caused the present crisis (e.g., Rowley and Smith: Economic Contractions in the United States), so they do not wish to lose control and potentially be prosecuted for their actions. They have control of the national defense, and they have recently changed the laws so that it can be directed inward, if they deem it necessary. If things are “privatized”, the legal system would be required to enforce the relevant contracts, and the lawyers, who are symbiotic with the politicians, have control of the direction of that enforcement. The primary pacifier of the populace is through control of the financial system. The politicians can thereby give the people the means of obtaining both bread and circuses, and the lawyers can tax it away, when desired. The breakpoint may come relatively soon with hyperinflation (http://voxday.blogspot.com/2010/02/interview-with-john-williams.html). In that event, the central government will be dramatically weakened, and the populace will have to negotiate its own rules and enforce them. For finance, it may be easier than one would expect (Selgin: Good Money). I would like to see privatization. I suspect anarchy is more likely.

  5. Paul Raven says:

    Dave – interesting link, I need to find out more about that guy. Also, the term “stationary bandit” is brilliant, and might well end up becoming a band name some time soon. 🙂

    Doc – you had me intrigued right up until you linked to Vox Day… this may be the exception that proves the rule, but that guy has some serious religio-political axes to grind, and as such I struggle to take anything he says or approves of without a metric tonne of salt. I’ll look up Williams elsewhere and see what I find. 🙂

    Either way, though, thanks for the feedback. I think there’s little to no fear of privatised government here in the UK, but the two countries differ in so many ways that it’s hardly surprising.

  6. docduke says:

    I linked to Vox because he has the only interview of John Williams I am aware of. The author of Shadow Government Statistics (http://www.shadowstats.com/) is a very credible analyst of U.S. economics. In U.K. terms, think of him as a one-man Shadow Cabinet for Treasury. For a clear indication of where the U.S. economy is headed, take a look at the chart on the lower-right side of the shadowstats home page titled “St. Louis Fed Adj. Monetary Base” and if you have time, read http://www.shadowstats.com/article/hyperinflation-2010 as an illustration of what is happening here, and how fast it may spin out of control.

    As a general rule, I don’t shoot messengers (like Vox), especially after one has taken the time to expand and document his economic analysis as “The Return of the Great Depression.” 🙂

  7. Paul McElroy says:

    Well, I for one hope that the vast majority of illogically public property (General Motors, for example) finds it’s way back into the private sector.

    It can be seen consistently that large governments do a much poorer job of managing pretty much everything. Everything is more expensive because of them and everyone is better off if they shrink. No contest.

  8. khannea says:

    ‘it won’t and can’t happen here’

    As in – armed revolution. The poor butchering the rich. Bloody uprising and bloody backlash. Yet it happened all over the world. The US is still a fantastic realm of manifest destiny. I do not share that assessment and I fully expect to see civil war in the US in my lifetime once it grows an undercaste that is acutely aware that it isn’t going anywhere but back to the favelas after slave labour.

    Problem is that with robotization the rich will need less carmenchitas and romeros to mow the lawn. That will deflate the value of the useless poor in the US to a small part of minimum wages. The US will be predosposed to holding welfare in contempt, for at least a decade, but I expect the balance of attitudes to snap back into human defaults hard and very painful. Remember – with rapidly advancing automatic and robotics (and surveillance ha ha) the pain you’d have in violent uprising would be bigger too. But then again, did we ever have an uprising with so may guns, so many people and so many high tech resources?

    Part of me remains very affraid that those in power will increasingly self-validate – “I worked for it dammit” and find contrived excuses to label progress to be wicked. Glenn Beck is doing that already, on the most corrupt and self-prostituting arguments ever. I am affraid that by 2030, 2040 we can in fact have a super-bootstrapped minority of under 5% of humans in the western world achieving some kind of pre-singular take off – and following their primal genetic programming to make sure no one else will. Which in my world view means genocidal strategies.

    Again, nobody is listening when I claim that wealth disparies are in fact an existential risk. When I make the claim I have been labeled stormcrow, hysteric, nutter or socialist demagogue. But isn’t the tide shifting?

  9. Dave says:

    1. The tide is not shifting.

    2. I worked for it, dammit.

    3. You should not be surprised that labeling a social problem an “existential risk” is viewed as hysterical. It is possible to conceive of stories in which rising inequality leads to extinction, or the end of civilization, or similar. That does not mean those risks are likely enough to pass the laugh test.

    I’m reminded of the trend in competitive high-school debate to argue every subject in terms of the existential risk posed. Whatever position your opponents took, you could get up and argue that they were leading the way to a planet-shattering nuclear war. Other side’s argument forgot to account for women’s issues –> sexism –> nuclear war, and so on. (This doomsday obsession, together with debaters’ rapid-fire delivery, was the inspiration for REM’s “The end of the world as we know it.”)

    There are plenty of bad things you can say about social inequality, but you run down your credibility when you suggest that it is threatening to kill everyone.