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ChangingMinds Blog! > Blog Archive > 20-Aug-17


Sunday 20-August-17

Tragedy, Opportunity, Privatization and Politics

When New Orleans flooded, economist Milton Friedman declared it a tragedy, but also an opportunity. Though opportunities for some can lead to problems for others. Schools, for example, became highly privatised as the government balked at the cost. Landlords rebuilt high value housing. Those with money made more money.

The same principle applies widely. Chaos is a gravy train for contractors who profit from rebuilding and restoration. Have a war; rebuild after the war. Government contractors benefit from both. Natural disaster; rescue and rebuild. More profit. Economic collapse; bail out the 'too big to fail' banks and prop up bonuses. Problems in government policy; call in the consultants to sort out the mess. Criticize a public broadcaster as biased; cut its headcount and force outsourcing. Run down a government service; declare it incompetent and further privatize it.

The list is long and riddled with corruption. Why? Because the separation of government and private profit is breaking down. When people from industry are employed in supporting government. When government officials are allowed private incomes. When those letting contracts are friendly with contractors. These and more are opportunities for corruption, for secret and even brazenly open personal gain.

It is human nature to put me and mine above you and yours. We are naturally selfish, which is a key reason why we need laws and a moral society. Sure, we can also be altruistic, but when there is a big pile of money on the table in front of us and we think we will suffer no consequence for picking it up, many would reach forward and try not to think about where it might come from or where it might take us. This is the basis of corruption.

And if governments and officials become corrupt, even in small and understandable ways (and we all excuse ourselves from blame), then society pays the price. Because the result is trickle up of money to the few and declining standards for the many.

There are three ways all this could be avoided.

One way of containing all this without swinging to the hard left (which is still a distinct possibility) is the principle of 'fair profit'. Accept that governments will employ private contractors, and that private industry needs to pay both its bills and its shareholders. But constrain the profits that they can make. Define a 'fair profit' and include it in the contract. Then require full financial transparency that prevents creative accounting.

The second lock against corruption would be to prevent those in public service from ever gaining personal profit out of their work. Again, this would need transparency and due scrutiny. This is not a new idea. Plato identified 'philosopher kings' as an ideal governing system, where officials were paid modestly and forbidden from gain.

A third leg is leadership and culture. There are many public servants who still believe in public service, but when whistleblowers risk their futures and power is casually abused, keeping your job means keeping your head down. An honest, caring culture starts from the top, where leaders set the example and do not tolerate corruption of any kind.

Will this happen? It seems unlikely, because it would require that governments restrict their personal income and turkeys tend not to vote for Christmas. Yet a continued swing towards elitism, privatization and 'fat cats' will leave increasingly more in the dirt. And when people feel they have nothing to lose, they take radical action. Trump is a step on this route, voted in as a populist rescuer. When he fails, the replacement may be more radical and more corruption result.

Until eventually what? New politics? Revolution? I guess we'll see.

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