Copyright © 2021 by Donald Cohen and Allen Mikaelian. This excerpt originally appeared in The Privatization of Everything: How the Plunder of Public Goods Transformed America and How We Can Fight Back published by The New Press. Reprinted here with permission.
A Very Brief History
Understanding privatization means understanding that it is first and foremost a political strategy. It was born this way, and so it remains, but it has also become a grab for billions of dollars in contracts and fees. In the years since it sprang from the mind of Milton Friedman as a way to undercut government “monopoly,” it has also become a way for profiteers to tap into the $7 trillion of public revenue (which swelled to $9 trillion during the COVID crisis) spent by local, state, and federal government agencies each year and carve out a piece (sometimes a very big piece) for themselves. Privatization has also in recent history become remarkably bipartisan—Democratic president Bill Clinton arguably did more for the privatization project than did his Republican predecessor Ronald Reagan. And it has become surprisingly pervasive, to the point where there are now 2.6 times as many federal government contractors as there are government employees, and there is literally no public good that is not at risk of being privatized. But it started very humbly, with ideas from the conservative intelligentsia that became a way to achieve political ends without incurring public disfavor.
School Choice and the “Iron Fist” of the Bureaucrats
In the 1950s, conservative economist Milton Friedman felt increasingly out of step with what he saw as “the general trend in our times toward increasing intervention by the state” and “the trend toward collectivism.” He strongly preferred a government that provided only enforcement and avoided providing any services. Yet he also believed that democratic governments tend to naturally grow larger due to self-interested groups and the self-preservation instincts of politicians and bureaucrats (in Friedman’s imagination, people often seem incapable of acting for the common good). Privatization was an effective, though imperfect, counterweight to these tendencies. In his landmark 1955 essay on school choice, Friedman admitted that few citizens would want to do away with universal public education, and suggested providing parents with “a specified sum to be used solely in paying for [their child’s] general education” and allowing them “to spend this sum at a school of their own choice.” This would satisfy a public desire while preventing the growth of bureaucracy. Sixty-two years later, President Donald Trump chose a secretary of education whose only experience in education was her advocacy for Friedman’s ideas, now packaged in the consumer-friendly term school choice.
Friedman’s vision for market-managed public services was remarkably clear-eyed; he was under no illusion that any profit-generating enterprise would act for the common good. He lambasted the very idea that a business could have social responsibilities, and insisted that executives have responsibilities only to the business owners. To even suggest a responsibility to something larger was to invite “the iron fist of Government bureaucrats.” So Friedman’s voucher-supported private schools, despite taking public money, would have zero responsibility to the public.
The implications were clear by the time Friedman’s essay was published. Brown v. Board of Education had already spurred a “school choice” movement in segregated states. Private schools, bereft of social responsibility, offered something their white customers wanted—segregation— and politicians hoped to support this deplorable choice with public money in the form of vouchers. The racial implications of privatization should have been perfectly obvious to a man of Friedman’s intelligence, but they apparently did not enter his thinking until someone pointed them out to him, after his landmark essay was largely complete. The issue of how the free market encourages racial segregation gets no more than an awkward footnote.
Outside of Friedman’s self-generated bubble, school choice was a raw expression of white supremacy. The white parents of Prince Edward County, Virginia, were happy with their public schools until the court forced those schools to accept black children. Vouchers came into play as part of a segregationist strategy that started with the county’s pulling funding for all public schools. Next came a “tuition grant program” that gave parents vouchers up to $150 for private school. White parents rallied together to create a “segregation academy” that could legally bar black students. Prince Edward County ultimately closed its public schools completely and chained their doors. This example inspired racists everywhere; in 1969 over two hundred segregation academies were thriving in the South, and seven states had instituted voucher programs.
The Prince Edward County school story offers a clear example of the ways in which privatization helps the powerful and well connected circumvent civil rights and the law. Putting public goods in private hands helps them evade accountability and protections. It prioritizes individual choice, even if that choice is one of racial oppression. While Friedman first devised privatization as a way to avoid the iron fist of government, his vouchers merely forged another fist, one specifically designed to curtail the rights of African Americans and other racial minorities.
The Reagan Revolution and Privatization’s “Golden Opportunity”
Privatization’s next big moment would not come until the 1970s, when it emerged as a response to the country’s urban fiscal crises. Cities were going bankrupt, and conservative thinkers had a ready scapegoat and a ready solution. They blamed overspending on government pensions and social programs for the drain on funds; in fact, these deficits were largely the result of a diminishing tax base as white residents fled desegregating urban neighborhoods and schools. The conservatives’ solution was to slash services, but when it came to services that voters wanted they offered privatization. It was clear that what they really wanted was for the public to have no role whatsoever in providing services, but they settled for limiting government to being something that merely manages contracts and writes checks to private companies. Ultimately, privatization would be a way station on the road to the smallest government possible.
In the early 1970s Emanuel Savas, a professor of public affairs who served as assistant secretary of the U.S. Department of Housing and Urban Development under Reagan, embedded privatization in the conservative movement by changing the way it was framed. In an essay co-authored with Friedman, he claimed that cities could lift themselves out of crisis by opening up “competition to reduce the monopolistic control many governments have over their customers.” Savas’s enticing but thoroughly dishonest language turned governments into “monopolies,” while citizens became “customers” and “competition” emerged as the panacea. Savas also perfected the art of the attack on public servants— even teachers and firefighters—whom he saw as utterly self-interested to the point of, in the case of his hometown, “victimizing the entire city, and holding all eight million New Yorkers hostage.” The budget crisis, he wrote, was “a golden opportunity” for privatization.
Savas’s influence cannot be overstated. Though hardly a household name, he has been one of the foremost advocates of privatization for over four decades. Prior to his post in the Reagan administration, he was the manager of urban systems at IBM Corporation and was a deputy city administrator from 1967 to 1972 under New York mayor John Lindsay. Today’s advocates of privatization consistently employ Savas’s language and lines of attack, including images of lazy, unionized bureaucrats; looming bureaucracies that are remarkably both inefficient and nefarious; and the utopian promise of competition. And Savas was more than a theorist; he helped found the Reason Foundation, a leader of antipublic thought that paved and lit the way for conservative free-market groups such as ALEC, the Heritage Foundation, and the Cato Institute, all of which played major roles during the Reagan revolution.
But the key to the ideological push for privatization was how it complemented an antigovernment political strategy. Robert Poole, a co-founder of the Reason Foundation with Savas, saw privatization as a way of “dismantling the state step by step.” He revealed in an interview how he believed that “socialism” in America would be undone “by privatizing one function after the other, selling each move as justified for its own sake rather than waiting until the majority of the population is convinced of the case for a libertarian utopia.”
Shrinking government through privatization is a fundamentally dishonest strategy. It has to be. Small-government conservatives’ biggest problem has always been how voters tend to actually like government services (and somehow fail to see the totalitarian Bolshevism lurking behind the smile of their kindly kindergarten teacher). Privatization became a way to reconcile a small-government philosophy with voters’ embrace of public services. “Cities have been discovering that public services do not necessarily have to be reduced by government or paid for by taxes,” claimed the Privatization Council’s David Seader in 1986. Through the magic of privatization, we could have it all.
At about the same time, Stuart Butler of the Heritage Foundation referred to privatization as a way to eliminate inconvenient pro-public interest groups. His goal was, as political scientist Jeffrey Henig put it, to “reshape the interest group environment.” By changing how services are delivered, the idea went, loyalties would shift away from public entities. The interest groups to which he referred included the standard bugbears of unions and organizations like the AARP that fight for the health of public programs, but more broadly he was referring to all of us. This framework can’t avoid casting aspersions on the people served by those organizations as well. The Reagan revolution helped crystalize a strategy to characterize any group of citizens that benefits from a public program as a “special interest group”; privatization would help divide them internally and from each other. The presumption here, and in some cases it has been proven right, is that it’s not hard to turn a citizen, one who thinks broadly about the ownership of public goods, into a consumer who cares only about whether certain goods are available to him.
The attack on public services was also an attack on the idea of the public, and it continued through the Reagan era with the Reason Foundation’s evolving prescriptions. Continuing Savas’s line of thinking, Poole inventoried in 1983 the services that citizens receive. He saw no reason to consider them public goods: “Most local services have few attributes of true public goods. Most of them—garbage collection, park and recreation services, libraries, airports, transit, and aspects of police and fire protection—have specific, identifiable users, who are the services’ beneficiaries.”
This brings us to another salient fact about privatization: it is easier to justify if you deny the public a role in deciding what is a public good. Poole was arguing that since not everyone uses a library, it is not a public good and should not be treated as such by city budgets. Rather, only those who use them should pay for them. And once you accept that, it’s very easy to argue that private entities should be allowed to take over and should be allowed to profit from them. In the end, Poole’s argument rests on the idea that the public has no role in defining what counts as a public good. As we will maintain throughout this book, that’s undemocratic and antipublic.
The stark divide between citizen and consumer is evident from this line of thought. A consumer should never pay for a service he does not use. Citizens, on the other hand, agree to pay for services that they don’t directly use because they can see how they benefit all of us, and they see the indirect benefit to themselves. As citizens, we realize that even if we never set foot on a city bus the fact that others do alleviates congestion, reduces air pollution, benefits the economy by getting people to work, and benefits all of us by getting the people we rely on—bank workers, the dry cleaner, the barista, or our mother’s caregiver—to their jobs. So it is something that all citizens benefit from by subsidizing. A consumer may not see that, but it is obvious to citizens.
The Reagan-era privatizers succeeded in obscuring citizenship and aggravating consumer-style grievances. The president himself perfected the art of alienating the public from the government; citizens became mere taxpayers (a term that can be used to exclude the poorest among us), public servants became mere bureaucrats, and public services became handouts. Privatization became a universal solution, as evidenced by the staggeringly long list of services targeted for transfer to private control by the President’s Commission on Privatization—public housing, federal loan programs, air traffic control, education vouchers, the Postal Service, prisons, Amtrak, and Medicare, just to name a few. The vision was enormous and comprehensive. It really was the privatization of everything. Reagan’s proposals amounted to “the greatest effort to return the provision of goods and services to the private sector that we’ve seen in this century,” boasted Richard Fink, president of Citizens for a Sound Economy, an organization created and funded by businessman and philanthropist David Koch.
It’s worth pausing to parse one important part of Fink’s statement: many of the items targeted for privatization, like weather satellites, had originally been created, owned, and operated by the public and thus could not be “returned” to private control. But privatization advocates typically try to create a mythical golden age of free enterprise, dishonestly dismissing how much private enterprise owes to public investment. And it also helps make their plunder of public goods seem more like a reclaiming of the private sector’s due. Ronald Reagan reflected this thinking when he announced the President’s Commission on Privatization and claimed that privatization was in the “great tradition of free enterprise and private ownership of property” and was a descendant of the Northwest Ordinance and “homestead program.”
Reagan was likening public things that the public had voted and campaigned to make public—water, Social Security, trash collection—to “private property” that should rightfully be in private hands (and he further likened these public creations to land that had been taken from Native Americans). His sunny comment blithely ignored dark moments in American history while revealing an expansive view of what should be considered private property. It foretold of a privatization takeover.
A Democrat Runs with It: Privatization in the Clinton Era
Democrats in Congress repeatedly thwarted Reagan’s vision, but the road map remained, and the political strategy turned out to be infinitely adaptable. Bill Clinton, looking to prove his centrist, “third way” bona fides, found privatization useful for precisely the same reasons the Reagan Republicans had—it gave the appearance that government could be cut without cutting services. Clinton, the New Democrat, had Vice President Al Gore lead an initiative to “reinvent government.” The resulting proposals were radical, but hardly inventive: Ron Utt, who had served as Reagan’s “privatization czar,” pointed out that the Clinton reform agenda was “virtually all drawn from recommendations made in 1988 by President Reagan’s Commission on Privatization” and amounted to “the boldest privatization agenda put forth by any American president to date.” Looking back some years after Clinton had left office, Robert Poole approvingly noted that “the Clinton administration’s privatization successes exceeded those of Reagan.”
Clinton-era privatization was as broad as any Reagan-era conservative could have wished for, but two efforts stand out in their scope and audacity: the acceleration of prison privatization and the creation of a new private industry that profited from the dismantling of the Great Society safety net. Both of these industries were symbiotic with a new breed of Republican politician that came to power with the help of the American Legislative Exchange Council.
ALEC is a behind-the-scenes organization made up of business interests and right-leaning politicians that creates model legislation—for example, bills to protect businesses from class-action suits and an array of laws targeting unions—largely for state lawmakers. In the 1990s ALEC helped shape the early careers of Republican governors like Wisconsin’s Scott Walker and Florida’s Charlie Crist. Both championed ALEC model legislation in their respective statehouses and scored victories that made them heroes of big business and big campaign donors. And it was in the mid-1990s that ALEC sparked the era of mass incarceration with its three-strikes and truth-in-sentencing model legislation, proposals that became laws in twenty-seven states.
Why would an organization primarily concerned with creating business-friendly policies suddenly take up issues of incarceration? To understand, one need only look to ALEC’s criminal justice task force, which authored at least eighty-five tough-on-crime measures. Representatives of the Corrections Corporation of America weren’t just in the room; they co-chaired the committee. CCA’s public relations people, who have a gift for generating incredulity, insist to this day that CCA did not help shape or vote on the three-strikes or truth-in-sentencing legislation that emerged from this committee. Apparently we are supposed to believe that CCA’s representatives sat silently in the co-chair’s seat while their disinterested colleagues drafted proposals that would add billions to CCA’s bottom line.
ALEC’s deft political maneuvering brought profits to its members and solidified a bond between social and economic conservatives. Privatization held it all together. ALEC and corporations like CCA helped nurture politicians who used privatization to advance a socially conservative agenda and strategically undermine sources of political power on the left.
In the 1990s, for example, Scott Walker was a Wisconsin state legislator who made his mark advancing ALEC-inspired tough-on-crime legislation. Walker has spoken openly about ALEC’s influence, and while serving in the Wisconsin state assembly two of his top fifteen donors were with CCA. Both were based in Tennessee but seemed highly interested in the outcome of Walker’s Wisconsin state assembly race. Within weeks of the victorious vote for ALEC’s truth-in-sentencing law, Walker sounded the alarm on prison overpopulation, a natural outcome of harsher sentencing. Since Wisconsin state law prohibited prison privatization, Walker pushed for shipping prisoners to private prisons out of state, and CCA was ready to receive them. As an elected official in Milwaukee, he also pushed for the privatization of the transportation of these prisoners, which CCA was more than willing to handle. Of course, he then argued to abolish a law banning private prisons, claiming that shipping prisoners out of state (something he’d helped bring about) amounted to a bleeding of jobs and tax revenue. Walker went on to national prominence as a governor willing to wage war against public-sector unions, public universities, and public assistance; in each of these efforts, privatization was his weapon of choice.
While the privatization of prisons largely flew under the public’s radar, the transfer of the public safety net into private hands was trumpeted as a major reform of a long-standing entitlement. Aid to Families with Dependent Children, popularly known as welfare, dated back to the New Deal but was a strikingly small part of the federal budget. When Bill Clinton signed the Personal Responsibility and Work Opportunity Act of 1996, he eliminated AFDC and replaced it with Temporary Aid to Needy Families (TANF), a system of block grants to states that came with a significant mandate—get people off the program—and little guidance on how to accomplish it. States were free to experiment, and many ultimately did so by giving control to private entities.
Several things happened in this effort that were astounding and new.
Private, for-profit enterprises—including companies traded on Wall Street—sprung up around welfare reform, guaranteeing that a significant portion of the few remaining public dollars sent to the social safety net would wind up in the wallets of the wealthy. In addition, in the name of “innovation,” many states utterly gave up on public control of the safety net. The private companies did not just carry out the will of the public like contractors, but also set policy and made decisions about whom they would serve and how.
In New York City, the perennial problems associated with the loss of public control emerged even before the bidding started. Mayor Rudy Giuliani’s administration, according to the city comptroller, tipped its hand to a preferred candidate—Wall Street darling Maximus Inc.— months before it opened bidding for the $500 million in contracts. Despite the possibility that NYC had violated fair bidding rules, the city awarded Maximus the contract.
The overarching goal of Clinton’s reform was to get people off public assistance. How this was accomplished was secondary, and the states and cities that received the block grants got the message. According to a Giuliani-era NYC commissioner, the intent of the changes was to provoke “a crisis in welfare recipients’ lives, precipitating such dire prospects as hunger and homelessness.” Through this paternalistic program, the poor were assumed to be too comfortable on welfare to want to improve their lives and would start work only if the clock started ticking on their benefits. Maximus’s job was to guide these newly threatened citizens into jobs or job training and to enforce the new rules regarding who could and could not continue to receive benefits.
Maximus agreed to a goal of placing 46 percent of participants in jobs, and the city gave them tremendous leeway in how to accomplish their objectives. Maximus failed miserably. A 2004–2005 review found only 8 percent of participants had been placed in jobs; 3 percent still held those jobs after six months. Most of the jobs obtained paid $8.00 per hour or less, and many were part-time or temporary. Despite the legal requirement to offer job training, and a strong preference among clients for further education, only 18 percent of Maximus’s clients received any training or education.
Outside audits were clear about the reasons: there was no incentive in the contract to obtain training or good jobs for clients. All the rewards were tied to getting people off public assistance; finding low-wage, unstable jobs was much easier than offering people a viable path out of poverty.
The other way to slash the welfare rolls was, of course, to kick people off for rules violations. Here Maximus proved to be a master of efficiency, expelling 76 percent of its clients from the program for failure to adhere to labyrinthine rules that seemed designed to be misunderstood. But in the new world of welfare reform, this counted as a success. Maximus’s contract was renewed in 2006.
During the 1990s privatization allowed politicians to take a big step back from their responsibilities. The tough-on-crime politicians, often the same politicians who promised to slash the size of government, knew that their policies would mean a larger government. Incarceration is labor intensive and requires a large bureaucracy. They owed the public an explanation, but instead hid the growth of government behind private prisons. Politicians who promised welfare-to-work programs immediately backed away from the “work” and settled for simply stopping public assistance payments. Privatization allowed them to punt the hard policy decisions to a private entity while claiming that the private sector would develop new solutions to endemic poverty. Adding insult to injury, it was public money that supported this shell game and allowed Wall Street investors to enthusiastically trade stock in companies that profited from widespread misery—hunger, homelessness, and incarceration.
The 1990s saw the use of privatization as a political strategy and as a way for government to dodge responsibility. The major shift, however— the real innovation—was toward private control over what had once been public decisions. The wide latitude given companies like Maximus allowed private interests to redefine public goals. Given enough leeway, these companies were able to put the profits of their shareholders over the will of the people, even as they continued to receive the people’s money.
Each Crisis an Opportunity: Privatization After 2000
The push for privatization accelerated under the administration of George W. Bush, even though he was unsuccessful when it came to the privatization of Social Security. Aside from that one exception, however, the floodgates were open. Privatization even seeped into how we fight our wars, with the military expanding its use of contractors, including the notoriously unaccountable private security firm Blackwater. What was new here wasn’t just the increasing reliance on private employees; the nature of their work changed as well. The Pentagon had a long history of using contractors to fill support roles and civilian jobs, but in Iraq and Afghanistan contractors were increasingly placed on the front lines and ran as a parallel military force, often without the discipline and accountability of regular uniformed personnel.
Worse still, uniformed service members found themselves doing the exact same job as contractors for a fraction of the pay. When it came time to reenlist, many made the obvious choice: leave the military, take a job with a contractor, and return to the field with a six-figure salary. In this way, privatization—intended to help alleviate personnel shortages—actually made them worse and drove up the cost of the post-9/11 wars. These twin outcomes—the creation of an environment of unaccountability and a cycle of dependency as talent leaves for the private sector—are common in all manner of privatization schemes; in the national security arena they have expanded consequences. In far too many cases, contractors operated in sensitive areas like security and intelligence, where they were given power without clear accountability. Neither military nor local laws strictly applied to them, and in the legal gray area they inhabited, abuses became endemic. Meanwhile, profits for these companies, derived almost entirely from public money, soared.23
While Bush furthered the outsourcing of national security and made his play for the privatization of Social Security, the transfer of public goods to private hands was encountering little resistance at the state and local levels. Deep Republican tax cuts forced increasingly anemic budgets on statehouses and city councils, which propelled this quiet takeover. As a wave of public servants retired, the bills for their pensions came due. Promises made at a time when the stock market was soaring and taxation was more equitable now became scapegoats for state and local deficits. Again, the answer from the antitax, antigovernment side of the aisle was to avoid responsibility by eliminating government jobs and replacing them with private contractors, who hired nonunion workers without pensions and in many cases without any benefits. If they were underpaid and unable to cover their own retirements, that was not the public’s problem (even though they were doing the public’s work).
The trends only accelerated after the 2008 market crash devastated pension funds and further shrank state and local budgets. Stretched beyond the breaking point and stubbornly refusing to raise revenues via more reasonable and equitable tax rates, governments took previously unthinkable steps to quickly raise revenue and cover budget shortfalls. For example, water systems, the very lifeblood of cities and towns, came to be viewed as both a burden and a source of quick cash. Cities that had long neglected their water systems were faced with massive repair and upgrade bills at the very moment when they could least afford it. Multinational corporations with Wall Street backing started turning up at small-town council meetings with an enticing offer: sell the entire system to us. We’ll take care of repairs, you don’t have to be responsible for water any longer, and your city gets a big, one-time payday that will help paper over the fact that you’ve failed to raise enough revenue to provide for public goods. By 2014, one mayor who had seen this play out in his state several times over declared, “Water is the new oil.” The reason for this and other lootings of public goods was simple, according to the chairman of a major privatization financing company who saw huge opportunities in the immediate aftermath of the 2008 crash: “Desperate government is our best customer. There will be a lot of desperate governments out there.”
By 2008 privatization had become such a fixture on the political landscape that even Barack Obama, who spoke more eloquently about the role of government and the power of the public than any president since FDR, could not avoid it. Nor would resistance on Obama’s part have been terribly effective; many of the most important decisions about public goods had devolved to the states and cities, where it is easier for private entities to exert influence and where the conversion of public goods to profiteering hands can be more complete. The short, eventful history of privatization is the history of a political and ideological strategy expanding quietly over time and seeping into every corner of American life, from the water we drink to the wars we fight. The political and ideological phase of this transfer of power is all but complete. Now we are living through the reaping as corporations sit upon their harvest of the $7 trillion or more that governments spend each year in the name of the common good. They could not have asked for a better friend than Donald J. Trump.
Donald J. Trump, the Antipublic Epitome
At some point in the last few years, public schools became “government schools.” Few noticed it in 2016 when presidential candidate Donald Trump repeatedly referred to government schools during his rare forays into education policy, but during his 2020 State of the Union address the phrase became much more pointed. And they weren’t just government schools; they were invariably “failing government schools.” Trump was channeling the language of small and devoted Tea Party groups and conservative politicians who made the conscious decision to stop talking about public schools and speak only of government schools. It’s a snarl, but it caught on. And it makes clear how much we need to change the conversation. Somewhere along the way, we mentally separated the government from the public, reflexively assuming that it is something distant from us and something incompatible with free markets.
A Republican Kansas state senator recently embraced the term in a screed against providing free lunches to poverty-stricken children, claiming, “Our local grade school is now the government school. Our children have become government children. Think about it—it’s true.” According to this lawmaker, schools transformed children into “government children” by offering the poorest among them free lunches; soon, he claimed without evidence, even those who brought lunches from home were clamoring for hot government meals, and before you knew what was happening, “the good parents began to be bad parents. Government was at the heart of this, of course.”
There’s a lot to chew on here, including the utter lack of evidence, the automatic assumption that only “bad parents” are unable to afford healthy meals, and so on. But there is more than antigovernment animus behind the pernicious twisting of language that has given us the phrase “government school.” This effort is not just antigovernment; it is antipublic. It is an attempt to dissolve the entire idea of the public working together on a problem, like feeding hungry children. It is an attempt to separate us from each other. It’s a declaration that the government serves underserving others. It is an attempt to deny that there is an “us.”
When we lose the public, when we speak of schools as run by a distant government and not by empowered citizens working together in a democratic process (which in fact they are), we lose the idea of a common good. It is we who decided that children should not be hungry, and we did so not just for emotional reasons like guilt or empathy. We decided that providing for hungry children uplifts all children, that it is a drag on communities as a whole to allow some of us to attend school unable to focus because of malnutrition. It was not a program devised simply to serve those children, or their parents, or “the government”—it was created to serve all of us.
Trump’s counterpoint to “failing government schools” is school choice, and during his 2020 State of the Union he put on a little show to illustrate. In the audience was a supposed victim of a failing government school, Janiyah Davis, a fourth-grader from Philadelphia. Trump claimed that she was one of tens of thousands of students waiting for government scholarships and then, with much flourish, announced that she was now officially a scholarship holder and could attend a private school. As it turned out, this was not due to some new policy or big administrative achievement. Quite simply, his education secretary, Betsy DeVos, had reached into her vast family fortune and donated some of it to this young girl. The message seems to be that we fail when we work together. Instead, we need to rely on the billionaire class to provide us with choice and opportunity and ultimately to save us from our own government.
We knew even before he took office that Trump would out-privatize his predecessors. At least thirty-two Trump transition team members had either worked for privatizers or had touted the philosophy. Betsy DeVos was likely the most visible example, but the list also included Tom Price, tapped to head Health and Human Services, who was well known as an advocate of privatizing Medicare. The person Trump wanted in charge of the Centers for Medicare and Medicaid services, Seema Verna, who took over as HHS secretary after Price resigned following a series of embarrassing abuses of office, had been a consultant on Iowa’s troubled Medicaid privatization experiment, a wide-ranging disaster detailed later in this book. On transportation and infrastructure, Trump brought in a director of “public-private ventures” at the American Road and Transportation Association and a former official who’d authored Virginia’s Public-Private Transportation Act. The administration took office fully committed to the privatization project.
Yet he went further still. On education, for example, Republicans had gotten used to supporting both charter schools and school vouchers under the umbrella of “school choice.” Trump and DeVos proposed to zero out federal funding for charters and throw everything behind vouchers with a $5 billion tax credit. He further supported the privatization of public education by making private K–12 tuition payable from tax-free 529 college savings plans. Those who could afford it now had a chance to essentially launder their income through a 529 before paying private school tuition, getting a big tax break and imposing a significant burden on their states, which were forced to help pay for Trump’s privatization policy.
Trump went further still on student loans. Republicans had long yearned for a return to a student loan market run by banks, despite the public savings of $68.4 billion Obama had won by bringing the loans back into the federal government. Trump and DeVos made every attempt to undermine the federal program and undo the minor relief Obama had instituted. Then they went further. In 2019 the Trump Department of Education proposed replacing student loans with income-share agreements, whereby investors would back a student’s college education in exchange for a percentage of their future salary. It was just different enough from a loan to get around caps on student loans and maybe just flexible enough to avoid laws on indentured servitude. And since these loans were creations of Wall Street investors, they could do things the government couldn’t do—like undermining students’ choices by giving subprime rates to humanities majors and plum rates to majors with supposedly more profitable career paths. It was in effect the sale of our children to hedge funds and private equity.
Trump went further still on prisons. Obama had taken steps to pull the federal government back from the private prison industry, and candidate Hillary Clinton had promised to stop using them altogether. Trump, by contrast, packed his administration with prison advocates, and then he went further. Private prisons flourished under Trump as he filled their expensive beds with unnecessarily detained immigrants.
George W. Bush had taken significant and ultimately dangerous steps to privatize American wars and intelligence analysis, but Trump wanted to go further. In 2018 a top Trump fundraiser helped package a proposal that would outsource clandestine field work—intelligence collection and covert operations—in order to get around the “deep state” (which is really just a synonym for oversight and rule of law). While it’s unclear how far this proposal went, its cousin appeared in Scott Pruitt’s Environmental Protection Agency, which hired an opposition research firm that monitored EPA employees suspected of being insufficiently loyal.
In these cases, Trump proved willing to aggressively undermine law, regulation, and existing policies by shifting into private mode. It was no different during the pandemic crisis, when it was most clear that lives were at stake. In the midst of a destructive PR war with his own Centers for Disease Control, Trump abruptly moved data gathering from hospitals away from the CDC and handed it to a private company with a no-bid contract, upending a system that had worked well for the better part of a decade. No one had asked for this. The hospitals that the administration said would benefit from the change howled in protest. A valuable hospital-capacity map run by the CDC suddenly went dark. The contractor refused to answer senators’ questions, claiming it had a nondisclosure agreement with the Department of Health and Human Services. And the COVID-19 data that had long helped drive criticism of Trump’s abhorrent handling of the crisis were out of public hands.
From segregationist school vouchers to Trump’s privatized COVID memory hole, privatization has been a way to get around the law, civil rights, and accountability. From the early proposals to outsource all municipal services to the more recent attempts to outsource America’s wars, privatization has been a strategy for separating the public from the government, and from each other. Along the way, privatizing corporations have grown exceedingly rich and powerful.
This decades-long concentration of power and profit means that Democrats are not immune from its sway. While it’s heartening to see a platform statement from the Democrats that includes the line, “Private profit should not motivate the provision of vital public services, including in the criminal justice system,” other Democrats have proposed making water privatization easier. And the lure of the public-private partnership for infrastructure, and even for school construction, remains strong. Democrats have a history of helping to advance the privatization of everything, and won’t reverse course without public awareness and pressure.
We need that public pressure because of what privatization really means. All of the political, social, and fiscal costs of privatization have come at the expense of our public goods. In other words, they have had a distinct, measurable, and sustained human cost. Those human stories, of what happens to us when we are separated from public goods, constitute the real history of privatization and will be the focus of the following chapters.
