Monday, March 1, 2010

Privitization Chicago Style

The word 'privatization' is used in two different senses. It is important to understand the difference.

In one sense, it is used to mean that the government removes itself from a sector of the economy, either by stopping from providing a service and allowing the free market to handle it, or a government operation is spun off so that it is run privately with no further connection to the government. The key here is that the government leaves the scene and allows the private sector to handle the service.

'Privatization' is also used to mean a situation where the government no longer run a particular operation directly, but hires a firm outside of government to provide the service. Thus, the government remains involved because it continues to pay for the service. In other words, this is pseudo-privatization. It is not an organization that survives because of consumers bidding for the service, but because of government support. It remains subject to the dangers of corruption that occur when government money is involved.

Privatization has been going on in Chicago. It has been going on is in this second sense of the word. Peter Huebl explains what this means in Chicago:
...the Daley/Burke Crime the town [of Chicago] within a 50 member city council... .This city’s politicians once had the perfect incumbent Protection Plan. It was called patronage. They controlled nearly every city job. These workers had two functions, campaigning for the local ward boss and performing the actual work they were hired to do in the first place.The government jobs in Chicago were all union, well paying and provided great benefits. The Federal courts took a dim view of the practice and dismantled the patronage game but only to a point. This crippled the politician’s reelection efforts and forced them to pay for campaign workers. The money for this quickly came from city contractors.The city privatized what jobs they could and handed out huge cash contracts to their political cronies who gladly financed the campaigns and showered Chicago’s political whores with wealth. The cash was a true narcotic and spending on unneeded public works was put in overdrive.


  1. These days privatization usually means private public partnerships and government contracting...


  2. Nothing has changed. This is how this country did "business" even in colonial times. Price controls, government-granted trade monopolies (redundancy), official harassment of political opponents.

    You know what the two forms of charter were for colonies in the new world? Royal, and proprietorship. Proprietorship is just a fancy word for private interests running the local colonial government for the king (and taking a bit of the quitrent along the way as a useful middleman).

    Nothing new under the sun. Government is the only crime older than prostitution.

  3. Thanks to Wenzel for pointing out this imprtant differecne in the two privatizations. This was why I abandonned Reason magazine. Its founder promoted the version which supported government.

    I agree with TC's comment("Nothng has changed.") but believe he is giving prostitution a bad name by association.