privatization

By Keith Leslie - Socialist Action, October 26, 2017

“The only thing we need now is a hurricane.” These were the words of a financial advisor in Puerto Rico this summer, anticipating the business opportunities the devastation of a hurricane would produce.

This framework—which understands disaster as an opportunity for profit—is not unusual. As Naomi Klein showed in her famous book, “The Shock Doctrine,” capitalism exploits both natural and manmade disasters as a chance to tear down social reforms, privatize public services, and implement neoliberal economic policies.

From the Pinochet dictatorship in Chile to post-Katrina New Orleans, we have seen the program and tactics of disaster capitalism persist and expand. Today, we can see the same forces seeking to bring disaster capitalism to Puerto Rico in the aftermath of Hurricanes Irma and Maria.

The most immediate disaster capitalist proposals for privatization came after Hurricane Irma. The storm did not hit Puerto Rico directly, but knocked out power to more than a million people. The executive leadership of the Puerto Rico Electric Power Authority, PREPA, warned that the island might face power outages for six months or more. This immediately prompted calls for the privatization of PREPA on the grounds that it was inefficient and incompetent. In fact, PREPA was able to restore power for most of its customers within a few weeks.

PREPA’s current executive leadership was installed through an agreement with its creditors after the previous, anti-privatization administration was ousted. Four of the board’s seven members had signed a letter in June calling for PREPA’s privatization. The Electrical Industry and Irrigation Workers Union, which represents PREPA’s workers, accused the leadership of exaggerating its estimates and delaying the deployment of available workers to promote the prospects of privatization.

Hurricane Maria, with a far more devastating impact on Puerto Rico, has likewise intensified the disaster capitalist pressure. The calls for PREPA’s privatization have intensified. They have also been joined by the likes of Elon Musk, the CEO of Tesla, who has attempted to put a green veneer on this push by proposing to build a renewable grid in Puerto Rico—but on a privatized basis.

One of the key objectives of advocates of PREPA privatization is the breaking of the electrical workers’ union. Musk has a history of opposing union drives at Tesla and elsewhere. The fiscal control board installed in Puerto Rico by Washington has invoked a legal provision that would allow it to approve public-private partnerships with almost no public or environmental review.

Of course, Hurricanes Irma and Maria were not the start of austerity and privatization programs in Puerto Rico. Even before the hurricanes, Puerto Rico faced a debt of $74 billion—more than 70% of its GDP—as well as nearly $50 billion in unfunded pension liabilities.

In 2016, the U.S. Congress passed the Puerto Rico Oversight, Management, and Economic Stability Act, or PROMESA. PROMESA established a fiscal control board with broad authority over Puerto Rican finances and over its elected government.

The main causes of this debt crisis include massive tax breaks for corporations and wealthy individuals in Puerto Rico. Restrictions on the Puerto Rican government and economy due to its status as a U.S. colony have also contributed. This includes the Jones Act, which restricts non-U.S.-flagged ships’ ability to ship goods to Puerto Rico but also extends beyond it: when Puerto Rico attempted to raise taxes on large corporations that imported goods, Walmart successfully sued to block the tax in a U.S. federal court on the basis of federal law.

Nonetheless, the austerity program in Puerto Rico has fallen squarely on the poorest and most vulnerable: the fiscal control board has cut public health spending by a third, lowered the minimum wage for workers below the age of 24 to $4.25 an hour, raised utility bills, cut the public pension system, and closed public schools.

The hurricanes, however, have enabled the intensification of this ruling-class offensive. Demands for the cancellation of Puerto Rico’s debt by the U.S. Congress have been bluntly rejected. In fact, the majority of the disaster relief allocated to Puerto Rico by the House is in additional loans of more than $5 billion, rather than grants, as is typical for disaster relief to U.S. states. In the same bill, the House cancelled $16 billion in loans for the National Flood Insurance Program—but not a dollar of Puerto Rico’s debt. Such “disaster aid” will only indebt Puerto Rico further and expand the austerity demands from the fiscal control board.

By Roy Morrison - CounterPunch, October 25, 2017

Lights, cell service, sewer and water treatment plants came back on quickly in Florida and Houston after hurricane Maria. But Puerto Rico still remains largely in the dark one month later, with power restored to only 20% of the island.

Mutual aid from the nation’s utilities saved the day in Texas and Florida. 5,000 utility workers rushed in to restore power. Under mutual aid, workers earn normal wages, around $1,300 a week ($70,000 a year) plus expenses for linemen, the costs to be repaid from rates collected by the local utility that was helped. The system worked spectacularly well in Houston and Florida.

But in Puerto Rico little has been accomplished so far. PREPA (Puerto Rico Electric Power Authority) rejected the offers for mutual aid stating that as a bankrupt company it could not guarantee repayment to helping utilities. Instead, PREPA signed a $300 million dollar contract with Whitefish Energy, an unknown two person firm from Whitefish Montana to restore much of Puerto Rico’s power. Whitefish Montana, by coincidence, is also the home of Secretary of Interior Ryan Zinke. One of Zinke’s sons reportedly worked for Whitefish Energy as a summer flagger.

What’s most interesting are the labor rates to be charged by Whitefish for the 300 lineman it plans to bring to Puerto Rico to work as sub-contractors disclosed in a Oct. 23, Washington Post story. Lineman will be paid $319 an hour, and nightly accommodation fees of $332 a worker ,plus $80 food allowance. This should mean over one million dollars a year per lineman (if they work ten hours a day for six days a week with two weeks vacation) just for wages.This means $300 million for 300 lineman.

Mutual aid, in contrast would mean lineman would be paid $70,000 a year, plus $30,000 living allowance or $100,000 a year. $300 million should pay for 3,000 mutual aid lineman, not 300 lineman under the gold plated Whitefish Contract.

Something smells really fishy about this deal.

Meanwhile Americans in Puerto Rico remain without lights, without water, without sewage treatment, without cell service, without proper medical care while the owners of tiny Whitefish Energy become very rich men indeed.

By Johanna Bozuwa - Common Dreams, October 23, 2017

“The whole of Puerto Rico is like this. I don’t think we are the only ones like this… We will survive,” Jose Torres, a resident of Puerto Rico, told an NPR reporter in late September. As a diabetic without access to medicine, he’s been working hard to keep up his blood sugar levels. Not an easy task when his fridge and stove don’t have power.

It has been almost a month since Maria devastated Puerto Rico. Since then, most of the island’s 3.4 million residents have been without electricity or running water. The power grid was effectively destroyed, with only 7 percent back online to date. This means that the entire system, from generation to distribution, will need to be rebuilt. The question now is: how?

While the unfolding human catastrophe on the island takes precedence, in the longer-term Puerto Rico has the opportunity to revolutionize their electricity system. Powered by renewables, a resilient and sustainable system can be built that genuinely puts the Puerto Rican people in charge of their energy. But, instead, the government is threatening to privatize electricity and bring in mainland investor-owned utilities to do the job. Elon Musk’s proposal for Tesla to power the island with renewables could be just the accelerant privatization needs.

Maria hits a Puerto Rico already in Crisis

Lackluster relief efforts in the wake of Maria are indicative of the United States’ treatment of the commonwealth as a second-class citizen. In direct contrast with aid packages to Texas and Florida that got equally pummelled by recent storms, Puerto Rico’s aid has been slow and relatively ineffectual so far. President Trump even blamed Puerto Rico for its inability to rebuild and threatened to cut off aid.

For one hundred years Puerto Ricans have had an uneasy relationship with the United States—while citizens, they lack any voting power in Congress and the US has effectively pushed the island into a state of economic depression through unfair trading rules, limited self-governance, and lack of access to the same benefits as other Americans. For decades, Puerto Rico mostly survived off tax breaks that brought American corporations onto the island to avoid federal corporate taxes. In the ‘90s, President Clinton got rid of those tax breaks. With it came the mass exodus of mainland corporations. This has contributed to a situation where the commonwealth is $70 billion dollars in debt and 45 percent of its residents live in poverty.

Trade rules effectively limit the island from buying goods not from the US mainland. During the New Deal, that meant  79 cents out of each dollar paid in wages was spent importing food, clothing, fuel, and other goods, effectively sending all the injected cash right back to the mainland corporations. During Maria, it meant other countries were stopped from shipping aid that the country so desperately needed for days. This included one of the major things they needed: fuel.

Puerto Rico relies almost totally on imported oil, which is one of the most polluting, least efficient fuel types. Only 2 percent of all electricity is generated from renewables. Electricity is also prohibitively expensive, costing 21.4 cents/kWh in comparison to 11 cents/kWh on the mainland. Much of this difference is because so much energy needs to be imported. It also means that when the island is cut off from shipments, it doesn’t have access to its fuel source.

By Lance Selfa - Socialist Worker, September 26, 2017

THE SOCIALIST German playwright Bertolt Brecht once wrote that "famines do not simply occur; they are organized by the grain trade."

A similar observation could be made about Puerto Rico today. Replace "famine" with "natural disaster," and the "grain trade" with "U.S. colonialism," and you have a succinct summation of the human disaster that is unfolding on the island today.

Puerto Rico is reeling in the aftermath of landfalls by two huge hurricanes, Irma and Maria, in the space of a few weeks. As this article was being written, most of the island remained without electricity, and 70,000 residents could be in danger if the damaged Guajataca Dam failed. People all over the island are contending with flooding and food shortages--malnutrition and outbreaks of disease are real possibilities.

Any area that suffered the blows of two powerful hurricanes in succession would face major challenges.

But Puerto Rico isn't just any area. It is a colony of the United States--its oldest, in fact.

Over the last two decades, Puerto Rico's economy has been systematically degraded while Wall Street and European capital loaded up its public sector with more than $70 billion of unpayable debt.

As a result, the basic infrastructure of the island--its health care, water and power systems--were already in the grips of a desperate crisis before the hurricanes hit. For ordinary Puerto Ricans, life under successive austerity regimes had become increasingly intolerable--and it will only become more so now.

By Maria Paradia - Occupy.com, June 25, 2017

By staff - Rabble.Ca, June 23, 2017

A gentle revolution is underway in Barcelona, Spain. Until recently, prevailing wisdom has been that efficient, quality and cheap services are best provided by handing everything over to the private sector. These days are gone. From energy supply to kindergartens to funeral services, the municipality is providing more and more of the basic needs of its citizens at affordable and transparent prices. Following a city council motion in December 2016, Barcelona is now aiming to municipalize its water service. Since the progressive coalition Barcelona en Comú gained power in the Catalan capital, the city has introduced a wide-ranging policy of remunicipalizing outsourced public services and creating new ones.

Barcelona is not unique in this respect. Thousands of public officials, workers, unions and social movements are working to create effective public services that address the basic needs of people and respond to social, environmental and climate challenges. They do this most often at the local level. Reclaiming Public Services, a new report, found that there have been at least 835 examples of (re)municipalization of public services worldwide in recent years, involving more than 1,600 cities in 45 countries.

Cities and towns around the world are following different models of public ownership, with citizens and workers involved in a variety of ways. People are moving away from private options and developing new, public ways to deliver services. Far from being an anomaly, bringing services like transport, health care and energy back under public control is a worldwide trend -- and one that makes sense.

Privatization has been given ample chance to succeed and has come up short. The persistent myth that public services are by nature more expensive, inefficient and outdated, and that we, as citizens and users, should resign ourselves to paying ever higher tariffs for ever lower standards has not yet abated. Nor has the idea that service workers have no choice but to accept ever more degraded conditions. Because everything is seen to have a price, many politicians have lost sight of the common good, while "taxpayers" are sometimes only interested in their own individual pursuits.

The remunicipalization movement tells a very different story. While it is still in its infancy in Canada, the remunicipalization movement in Europe can be seen as a response to austerity policies and is being carried forward by an increasingly diverse array of politicians. Successful (re)municipalization experiences inspire and empower other local authorities to follow suit. We see it in the way municipalities and citizens have joined forces in Germany to push for energy democracy. In France and Catalonia, networks of public water operators pool resources and expertise, working together to deal with the challenges of remunicipalization.

There are many examples from outside Europe too. In India, the city of Delhi began the process of delivering affordable primary public health care in 2015 by setting up 1,000 Mohalla (community) clinics in 2015. Since then more than 2.6 million of its poorest residents have received free quality services.

These locally rooted changes are providing improved services as well as savings for local authorities and the public. The Nottingham City Council in the U.K., for example, decided to set up a new energy supply company in 2015 after finding that many low-income families in the city were struggling to pay their gas and electricity bills. Robin Hood Energy offers a cheaper service than private providers because it neither extracts profits nor confuses customers with complicated pricing schemes. The company, which offers the lowest energy prices in the country, has the motto: "No private shareholders. No director bonuses. Just clear transparent pricing." They have also formed partnerships with other major cities. In 2016, the city of Leeds set up the White Rose Energy municipal company to promote simple no-profit tariffs throughout the Yorkshire and Humberside regions. In 2017, the cities of Bradford and Doncaster agreed to join the White Rose/Robin Hood partnership. Meanwhile, campaigners with Switched on London are pushing their city to set up a not-for-profit energy company with genuine citizen participation. The motivations in these diverse cities are similar: young municipal companies can simultaneously beat energy poverty and play a key role in achieving a just and renewable energy transition.

By staff - LibCom.Org, June 22, 2017

Saying "It's just a bus but without the regulation/without unions/only for people with smartphones" is very incomplete as well, and it's worth unpacking why.

Firstly, regulations and working conditions are all the eventual product of years of struggle and strike action: from the ‘Great Upheaval’ of 1877 and the 1894 Pullman railway strikes all the way to the transit strikes which hit Philly last year, strikes in the transportation of goods and people have been a staple of US labour relations.

Yet to say "That’s because workers organised into unions" also doesn't explain why transport is so prone to strike action. There are a few reasons why strikes (and unions) are so much more common in transport than they are in other sectors in the American labour market.

The first reason is this: stop mass transit and tens of thousands of other workplaces are disrupted when their employees turn up late (if they turn up at all) or their customers decide not to come out and spend money to avoid transport hassle. This creates an extra pressure on bosses to keep the service running.

The second reason: transit is mostly immune from spatial fixes. While bosses can move a car or garment factory to China, doing the same with a bus or train route obviously isn't viable. Thus, while factory workers in the US were mostly decimated in the 1970s, transit/distribution have kept going to some extent until now.

For the genesis of Lyft Shuttle, a good place to start would be the 2009 deregulation of the UK post service. This followed the massive 2006-7 strike wave in the postal service, where staggered official strikes were backed up by work-to-rules and the refusal of other postal workers to cross picket lines, leading to disciplinary action which then led to further wildcat strikes. Post just did not get delivered for weeks at a time in some cases.

The response was to allow private companies to handle some deliveries, piggy-backing off Royal Mail's central infrastructure. Firms were then able to shift postal provider if affected by strike action, weakening leverage of workers: disruption was disrupted.

Fast-forward ten years and the gig economy starts to see industrial strife as Deliveroo workers go on wildcat strike in London. The atomisation of the workforce is clearly still not entirely successful as collection points still afford places for riders to meet and discuss issues, swap contacts and organise their strike via WhatsApp. Still harder than it used to be at Royal Mail depots though.

By staff - ATU Local 689, May 30, 2017

1. Privatization does not guarantee savings.  Proponents of privatizing transit often make lofty claims about savings through private sector efficiencies. But frequently these claims couldn’t be farther from the truth. Public agencies are often more efficient because no profit margin gets siphoned off to shareholders.

• In Phoenix, Veolia demanded an additional $27.5 million on top of its existing $386 million contract. Veolia threatened to leave on short notice during contract negotiations if the city did not meet its demands. 1

• Officials canceled a management contract with First Transit in Green Bay, Wisconsin. The public agency experienced a cost savings by managing the system in-house.

• Veolia was dropped after 3 years by Chatham Area Transit (CAT) in Savannah, GA after the CAT chairman concluded that the private operator “was becoming too expensive.”

2. Service issues may rise: any savings often come from cutbacks.

Contractor claims about service should be taken with a grain of salt. Up-front savings are often coupled with cutbacks, hurting the most vulnerable users like the disabled and children.

• In San Diego, First Transit promised $10 million in annual savings by taking over the North County Transit District. Modest cost declines were primarily due to service cutbacks. First Transit operated 14,000 fewer service hours while other costs shot up by $1.4 million primarily due to administrative fees. 

• Between 2008 and 2010, MV Transportation was fined 295 times for bad service in the city of Fairfield, CA, which had turned to the private operator as a solution to budget shortfalls. Officials concluded that the private operator “exhibited mostly negative trends in all areas” related to performance and efficiency.

• In Nassau County, NY Veolia slashed service to close a $7.3 million budget gap. More than 30 routes saw cutbacks, in all 60% of the system experienced service declines. 

• After 19 years of privatized service in the Toledo, OH area, paratransit riders complaints

were so numerous that the agency fired First Transit. 

By David Macaray - CounterPunch, March 8, 2017

By Liza Tucker - Consumer Watchdog, February 2017

This review fact-checks the perception of Jerry Brown as an environmentalist against his actions since taking office as Governor in 2011 to answer the question: “How Green Is Brown?” On a continuum of “Green” to “Murky” to “Dirty,” the review concludes that Brown’s environmental record is not green. The following advocates and public interest groups concur with the report’s analysis, conclusions, and recommendations: Food & Water Watch, Physicians for Social Responsibility-Los Angeles, Rootskeeper, Powers Engineering, Basin & Range Watch, Aguirre & Severson LLP, Public Watchdogs, the Southern California Watershed Alliance, The Desal Response Group, Restore The Delta, and Committee to Bridge the Gap.

Brown has staked his environmental legacy on fighting climate change, calling it the “singular challenge of our time.” He claims that he is enacting “a 1 thorough, integrated plan to reduce fossil fuel consumption.” He plans to have 1.5 million electric cars on the road by 2025 and has granted major investor-owned utilities a windfall of billions of dollars to build the charging infrastructure to make it happen. Yet, he has thrown his support to the fossil fuels industry whose products emit the most carbon on the planet when burned for transportation, electricity, and heat.

Far from the environmentalist that Brown claims to be, Brown has expanded the burning of heat-trapping natural gas and nurtured oil drilling and hydraulic fracturing while stifling efforts to protect the public from harm. The Public Utilities Commission has approved a slew of unnecessary new fossil-fuel power plants when the state’s three major investorowned utilities have overbuilt their generating capacity by nearly triple the minimum extra capacity that the state requires. Under Brown, the number of active onshore state oil and gas wells jumped by 23 percent since the year before he was elected Governor in a bid to produce more oil.

Hydraulic fracturing is producing 20 percent of the state’s oil, while companies continue to use other common, dirty methods of oil extraction exempted from fracking legislation under Brown. Companies are extracting oil from a few hundred newly permitted offshore wells in existing state leases since Brown came to office, though Brown asked then- President Obama to ban any new drilling in California’s federal waters. Brown’s regulators have ignored a petition signed by 350,000 people to ban the use of toxic oil wastewater for crop irrigation until proven safe.

Read the report (PDF).