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Tuesday, 01 February 2011 04:00

Are America's Public Universities in Danger of Being Privatized?

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Fourteen years ago, the president of the conservative Mackinac Center for Public Policy said that privatization "is now approaching the status of undisputed, conventional wisdom." With public universities facing unprecedented financial difficulties, is privatization coming to a public university in your state?


In a 1997 post-welfare reform speech, Lawrence W. Reed, president of the conservative Midland, Michigan-based Mackinac Center for Public Policy, touted privatization as the wave of the future: "[Its] superiority ... is now approaching the status of undisputed, conventional wisdom: the private sector exacts a toll from the inefficient for their poor performance, compels the service provider or asset owner to concern himself with the wishes of customers, and spurs a dynamic, never-ending pursuit of excellence - all without any of the political baggage that haunts the public sector as elements of its very nature."

Reed discussed two basic shibboleths of privatization: private corporations have a critical role in bridging the gap between government capacity and needed services during times of government expansion (the Progressive Era of the late 19th Century, the New Deal and the Great Society); and privatization "reduce[s] costs and increase[s] efficiency during periods of reduced government funding," (the Reagan Era, Welfare Reform), as Kristi D. Laguzza-Boosman pointed out in her 2008 paper titled "Does Privatization at the Federal Level Serve the Public Good?"

Laguzza-Boosman also noted that the Bush administration "greatly accelerated the privatization efforts of previous administrations."

These days, in state after state, as Daniel Denvir recently pointed out in "Is American Higher Ed Screwed? Conservatives Try to Privatize College As Tuition Soars," the financial crisis has forced public university systems to re-think how they function: "As in most corners of American life, crisis is the new normal in academia. Investment returns to university endowments have plummeted, state aid is being cut, and critical federal stimulus dollars are running out. Tuition is up, enrollment is being capped, positions are being eliminated, and universities are increasingly relying on part-time adjunct faculty that shuttle from campus to campus in an effort to cobble together a paycheck."

In addition, colleges and universities are contracting out services, naming athletic facilities after big donors, and investing in e-learning as a significant commercial enterprise. Private-public partnerships - with multinational corporations often calling the shots, especially on patent ownership - are endemic. (See "Privatization and Public Universities," an Inside Higher Ed interview with Edward P. St. John of the University of Michigan and Douglas M. Priest of Indiana University, co-editors of the book Privatization and Public Universities.)

Denvir pointed out that politics may be the driver in the next wave of privatization: A mobilized Tea Party movement, Republican control of the House and 29 governorships, and recent GOP victories in November where they "won over 720 new seats in legislatures nationwide" has placed privatization in the forefront of the discussion about how public universities are going to survive.

The financial crisis in many states provides a launching pad for those advocating privatizing America's public universities.

As Naomi Klein argued in her masterful work The Shock Doctrine: The Rise of Disaster Capitalism, it often takes a crisis, real or manufactured, to open the door to implementation of long-held conservative ideas. She quoted the late Milton Friedman, a man she described as the "grand guru of the movement for unfettered capitalism and the man credited with writing the rulebook for the contemporary, hyper-mobile global economy," who said that "only a crisis - actual or perceived  - produces real change. When the crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe, is out basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes politically inevitable." Today, Friedman's crisis scenario is starting to be played out on the campuses of public universities across the nation.

Universities across the country have been forced to raise tuition and other fees, scuttle academic programs (especially in the humanities), and rethink tenure and performance bonuses. And, as Daniel Denvir pointed out, "the university is being remade to operate according to the principles that guide multinational corporations."

According to Denvir, "The business approach has already taken over much of the politics surrounding secondary education, with charter schools and easy-to-fire, performance-paid teachers touted as a silver bullet. High school reading and math test preparation has nudged aside courses on literature, art or history. The corporate makeover of higher ed has meant less job security for faculty, bigger salary differences between more or less 'valuable' professors, and an attack on the humanities, from literature to philosophy."

Privatizing Welfare: A Cautionary Tale

With the privatization of America's public universities a distinct possibility, it is worth exploring another area where privatization was touted as the panacea: welfare reform.

Ten years ago, I was asked by the Applied Research Center, a racial justice institute, to investigate the privatization of welfare. In my report, titled Prospecting Among the Poor: Welfare Privatization, I wrote: "Privatization, as touted by its supporters, was to be the guiding hand of welfare reform. It was supposed to convert bloated federal and state bureaucracies into streamlined and cost-effective corporate providers of services. Privatizers held that private companies would also administer welfare regulations more stringently and accurately, deliver more timely and efficient services, and only to the 'deserving' poor. At the same time, the private sector would save money for taxpayers. Private companies competing for contracts promised states they would dramatically reduce welfare rolls. Indeed, this is the one area they have been successful. But at what cost, and to whom?"

".... The privatization of welfare services has resulted in numerous examples of the erosion of services. Many programs are seriously under-staffed and there is a woeful lack of public accountability. There are an increasing number of local stories exposing corporate misdeeds under the 'cost of doing business'-the amount of money corporations spend to wine, dine, and pay off principles involved in making decisions about awarding contracts. The public gets what its paying for-poorly run welfare services in the hands of large corporations."

While my original report may seem to some to be dated, in 2006, ten years after The Personal Responsibility and Work Opportunity Reconciliation Act of 1996, AFSCME released a report titled Safety Net for Sale: The Dangers of Privatization. The report pointed out: "In the past decade there has been an aggressive effort to privatize much of this safety net, shifting responsibility for programs to non- government entities. Privatization has been attempted in cash assistance, child welfare services, child support collection, and job training and placement programs. Contractors have included large and small for-profit firms, as well as non-profit organizations.

"The stated goal of privatization has usually been to reduce costs and improve services. The result has often been quite the opposite. The history of privatized social services is replete with cost over-runs and service breakdowns. Meanwhile, critical decisions affecting our society's most vulnerable citizens have increasingly been based on short-term private incentives rather than long-term public interests."

In March 2007, the Center for Public Policy Priorities, "a nonpartisan, nonprofit policy institute committed to improving public policies to better the economic and social conditions of low-and moderate-income Texans," pointed out in an op-ed in the Austin-American Statesman that, "Earlier this week, Texas announced the termination of its contract with Accenture, the private company the state hired to enroll Texans in health care, food stamps, and TANF cash assistance. Although privatization was supposed to save the state money and improve services to families, thousands of the most vulnerable Texans were wrongly denied benefits and the state didn't save a dime. "

A July 2009 article in the Fort Wayne Indiana Journal Gazette, titled "Medicaid problems swell in new system," led with: "Indiana's nearly 2-year-old experiment with a privatized welfare system appears to be failing." The article pointed out that, "The backlog of pending Medicaid applications has ballooned in counties where welfare is handled by private contractors." And, "...the contractors, led by IBM Corp., missed deadlines for processing Medicaid applications at twice the rate of counties that haven't joined the new system."

A Journal Gazette editorial didn't mince words when it concluded: "Enough time has passed in testing this business-model approach to administering vital public services. The results are not encouraging by any corporate measure and uncompassionate by any humane measure."

It is clear from looking at the record that welfare privatization has been a disaster for those in need (also known as customers), and a boon for the companies that received huge contracts (also known as taxpayer money) to deliver services.

At this time, there is no clear trajectory for the privatization of America's public universities. However, you can be sure that masterminds in right-wing thinks tanks are mulling over the prospects. Whether the arena is welfare services or higher education, it doesn't take a prophet to understand that there is a future in corporate profiteering.