Skip to main content

Low energy, high profits: how privatizing public utilities left us all in the dark

More than a generation after President Ronald Reagan barked at his subordinates, “Don’t just stand there; undo something!” government officials from South Africa to southern California have embarked upon an unprecedented dismantling of the public sector.

by Jon Jeter

The Maryland rapper Sean Born’s 2012 album Behind the Scale includes what one reviewer described as the “candidly soulful single” “Lights On,” which has the driving and catchy up-tempo beat that tends to characterize much of contemporary hip-hop. Its lyrics, however, have none of the swagger that the genre is known for and is, in fact, so achingly honest that it seems an apologia of sorts to explain the emcee’s drug-dealing past.

I ain’t trying to be a kingpin

Real Talk, I’m just trying to pay rent

I’m just trying to put some money away

Got to, Man, it only makes sense

I’m just trying to keep my lights on, lights on

I’m just trying to keep my lights on, lights on

I’m just trying to keep my lights on, lights on

More than a generation after President Ronald Reagan barked at his subordinates, “Don’t just stand there; undo something!” government officials from South Africa to southern California have embarked upon an unprecedented dismantling of the public sector, hiring for-profit enterprises to manage everything from homeless shelters, to toll roads, parking meters, and utilities. While there are no known comprehensive studies, the best available evidence strongly suggests that consumers worldwide have never spent so much of their paycheck to park downtown, or for a liter of water, or a kilowatt of electricity.

No demographic has been squeezed more than communities of color, which have borne the brunt of Wall Street’s restructuring of the economy, and its 40-year effort to hollow out the manufacturing industries that Blacks and Latinos have heavily relied on for jobs that pay a decent wage.

I really like Sean Born,” Chris Waters, a 33-year-old African American social worker who lives in Philadelphia told MintPress, “because he’s talking about hustling — not to buy big cars or fancy jewelry – but just to meet life’s basic necessities, like paying the electric bill. That’s real to a lot of people these days.

With spring approaching, Waters said, he sees many families scrambling to borrow or raise enough money to pay overdue gas or electric bills before Philadelphia Gas Works is legally permitted to shut off the heat. A popular scam in the city is doctoring paychecks to qualify for discounts on electricity and gas, and Waters says he has an unmarried friend who greets visitors wearing a bathrobe over his daytime clothes.

He doesn’t want to get set back with a $300 or $400 gas bill [by turning up the heat], Waters said. “That’s the equivalent of a (monthly) car note just to heat your apartment.

A classic idea that hardly ever works out

The classically liberal macroeconomic idea that undergirds privatization is that the business sector has more incentive to innovate, improve service delivery, and reduce costs over time. The reality has been quite the opposite. By at least one estimate, water supply systems in the U.S. require a $1 trillion investment over the next 20 years to get up to speed. In the decade following the 1989 privatization of England and Wales’ water system, consumers saw their rates increase by 46 percent when adjusted for inflation, and shutoffs for delinquent payments tripled. In perhaps the most infamous case, Bolivia sold its state water system to a consortium of British investors in 1999 for only $20,000. Within a year, the buyers had tripled the price of water in Latin America’s poorest country, with a population of nearly 11 million people, mostly indigenous. And to reinforce its monopoly, corporate executives wrote a codicil into their contract with the state that legally prohibited Bolivians from collecting rainwater for personal use. Massive street protests in 2001 led the government to cancel the contract.

In 1999, privatization efforts led to the worst cholera outbreak in South Africa’s history. In preparations to sell its water infrastructure to a private vendor, government officials in the Kwa Zulu Natal region on the country’s eastern edge installed taps to underserved, rural areas but increased the price dramatically. When customers couldn’t afford to pay, the municipalities shut off their water, forcing thousands to drink from the same river that was used as a toilet by their neighbors. Local hospitals reported nearly 115,000 cases of cholera at the height of the health crisis.


A 2014 study commissioned by an Australian trade union found that privatization of electricity infrastructure in the 1990s resulted in dramatic price increases. Then, just last month, the CEO for Dayton Power and Light announced a plan to cut 160 jobs in Ohio and Indiana, and market analysts predict that the company might soon request a rate increase from the state regulator to recoup revenues lost as a result of more efficient household appliances.

A new refrigerator only uses 10 percent of what it did 20 years ago,” David Rinebolt, a public-interest attorney told MintPress, adding: “Electricity usage nationwide is going down, but these companies promise their shareholders an annual return of somewhere between 9 and 11 percent. So what do you do? You go to the regulator and you say, ‘I’ve got these pipes and these wires in the ground and I have to cover my fixed costs no matter what you use.’

Worsening matters for consumers is that, while increasing technological efficiency does drive usage down, utilities are typically monopolistic enterprises selling a basic necessity to a captive market, William Lazonick, an economics professor at the University of Massachusetts at Lowell, told MintPress. That’s important, he said, because it indicates that, in economic terms, utilities are highly inelastic — meaning that a rate increase doesn’t significantly lessen the demand for the product.

Typically, Rinebolt said, corporations will agree to maintain employment at a steady level for a few years after buying a public utility, but then workforce layoffs are fair game. With the cost of acquiring electricity and gas fairly static, and labor costs at a minimum, the biggest barrier standing between shareholders and optimal profits is the state regulator, which must approve rate hikes. And that, Rinebolt said, is usually an easy lift: “There is something in the industry called ‘regulatory capture,’ which states that monopolies often take over their regulators. These companies are so politically powerful that they usually get their way or something very, very close to it. There’s really not much risk for [private utilities]. Their returns are pretty much guaranteed.

Similar to his predecessor in the White House, President Donald Trump has proposed selling off federally financed New Deal-era energy projects — including the Tennessee Valley Authority and Bonneville Power Administration in the Pacific Northwest, each of which provides some of the cheapest and most reliable electricity in the U.S. Lobbyists have descended on Capitol Hill in the scramble for power, literally.

Sue Kelly, president and CEO of the American Public Power Association, which represents 2,000 nonprofit utilities serving 49 million customers in 49 states, told the Washington Examiner last month: “It’s a bad bipartisan idea.

Source, links:

Comments

Popular posts from this blog

While Trump cuts food stamps, USAID bankrolls Venezuela regime change with half a billion in tax dollars

The Trump administration has spent $654 million in “aid” to try to overthrow Venezuela’s government, including $435 million through USAID and $128 million directly to Juan Guaidó and his corrupt coup gang — all while imposing crippling austerity at home.
by Ben Norton
Part 5 - Falsely accusing Venezuela of the hemisphere’s worst migrant crisis

In addition to directly participating in regime-change efforts and bankrolling right-wing opposition groups, USAID has helped to popularize demonstrably false talking points demonizing Venezuela, which have been breathlessly echoed by corporate media stenographers.

In its press statements announcing tens of millions of tax dollars in support for Venezuela’s right-wing coup regime, USAID has accused Venezuela of creating “the largest external displacement in the history of the Western Hemisphere.

Mainstream media outlets have frequently repeated this claim, citing the US regime-change organization without investigating its veracity.
It is impossib…

We can't just wait for robots and 3D printers to overthrow capitalism

by system failure

During a speech four years ago, Yanis Varoufakis ended with some interesting views about the future of the capitalist system. As he pointed out:
The world we live in, is increasingly rudderless, in a constant slow burning recession, while at the very same time, the increasing concentration in the IT sector is creating the new technologies that will do that which the Left has failed to do: overthrow Capitalism. It is really very simple. The moment machines pass the Turing test properly, and you pick up the phone and you do not know whether the person you are talking to is a human being or a machine˙ the moment we are going to have 3D printers operating as public utilities - you can send any blueprint to it and it can print from one pin to a motorcycle, or to a car - the moment that this happens, we have not just a process of Schumpeterian creative destruction, but we have a process where economies of scale and the whole logic of corporate Capitalism colla…

Εξωτερική πολιτική για κλάματα: το Μητσοτακικό καθεστώς βάζει τη χώρα σε νέες περιπέτειες

globinfo freexchange

Πιστεύαμε ότι η κυβέρνηση Τσίπρα 'το είχε τερματίσει' όταν αποφάσισε (προφανώς μετά από έντονες Αμερικανικές πιέσεις) να προβεί στην ανήκουστη και απαράδεκτη ενέργεια να απελάσει τους τέσσερις Ρώσους διπλωμάτες. Το Μητσοτακικό καθεστώς όμως φαίνεται ότι έχει κάνει νέο ρεκόρ πλήρους υποταγής στους Αμερικανούς ιμπεριαλιστές, δίνοντας το τελειωτικό χτύπημα στην ευελιξία της εξωτερικής πολιτικής που θα έπρεπε να έχει, έτσι και αλλιώς, κάθε σοβαρή και ανεξάρτητη χώρα. 
Όμως η δήλωση Μητσοτάκη απλώς επιβεβαίωσε ότι η νεοφιλελεύθερη Μητσοτακική δεξιά, η χειρότερη που γνώρισε η χώρα μεταπολιτευτικά, είναι απόλυτα υπόδουλη στα Αμερικανικά συμφέροντα. Και τελικά, πως η ίδια η χώρα, είναι ένα Δυτικό προτεκτοράτο και μια κανονική αποικία (και όχι απλά αποικία χρέους).
Ο χειρότερος Μητσοτάκης όλων των εποχών αποφάσισε να επισκεφτεί τον Ντόναλντ Τραμπ για να κάνει το πιστό του 'ρομποτάκι', δηλώνοντας ουσιαστικά ότι επικροτεί την εγκληματική ενέργεια - πέρα από κ…

Το Μητσοτακικό καθεστώς βυθίζει τη χώρα στο χάος

globinfo freexchange
Αμέσως μόλις η κυβέρνηση Μητσοτάκη ανέλαβε τα ηνία της χώρας, είχαμε προειδοποιήσει ότι, είτε με την ψήφο του, είτε με την αποχή του, ο "σοφός λαός" έδωσε το ελεύθερο στη χειρότερη δεξιά της μεταπολίτευσης να σαρώσει σαν 'οδοστρωτήρας' τα πάντα στο πέρασμά της. Μετά από τέσσερα χρόνια νεοφιλελεύθερης λαίλαπας, το τοπίο καταστροφής θα έχει κάνει τη χώρα κυριολεκτικά αγνώριστη.
Δεν μπορούσαμε όμως να φανταστούμε ότι η Μητσοτακική δεξιά θα παρήγαγε τέτοιο χάος σε τόσο μικρό διάστημα. Κι όμως, θα έπρεπε να το είχαμε προβλέψει.  
Διότι ένα τέτοιο καθεστώς, που ουσιαστικά επιβλήθηκε με τη βοήθεια της μιντιακής χούντας μέσα από μια εικονική πραγματικότητα αδιάκοπης επικοινωνιακής προπαγάνδας, ήταν θέμα χρόνου να τα βρει σκούρα όταν θα προσγειώνονταν απότομα στον πραγματικό κόσμο. 
Και το προσφυγικό ζήτημα ήταν αυτό που κυρίως επίσπευσε την αποκάλυψη της απόλυτης ένδειας του καθεστώτος και την πλήρη ανικανότητά του να χειριστεί σχεδόν οποιοδήποτε πρόβ…

WikiLeaks paper confirms biggest fear of the US empire and the Wall Street mafia

The WIKILEAKS Public Library of US Diplomacy (PlusD) holds the world's largest searchable collection of United States confidential, or formerly confidential, diplomatic communications. As of April 8, 2013 it holds 2 million records comprising approximately 1 billion words. The collection covers US involvements in, and diplomatic or intelligence reporting on, every country on earth. It is the single most significant body of geopolitical material ever published. The PlusD collection, built and curated by WikiLeaks, is updated from a variety of sources, including leaks, documents released under the Freedom of Information Act (FOIA) and documents released by the US State Department systematic declassification review. 
globinfo freexchange
A cable from July, 2007, depicts the anxiety of US officials about the potential capability of North Korea to produce hardly detectable US counterfeit currency.

There are numerous references about the effort of the US government to stop the production…

It's official: the oligarchs and the corporate media declare war on Sanders' progressive movement

globinfo freexchange
We can safely now say that Bloomberg's propaganda ad against Bernie Sanders' supporters marks the establishment's official declaration of war on the progressive movement. Previously, corporate media revived the "BernieBro" myth in order to open the road for the war.
As we already mentioned, the anti-movement hysteria reached unprecedented levels when MSNBC anchor Chuck Todd compared Sanders' supporters to Nazi brownshirts! Todd's preposterous comparison wasn't accidental. He was specifically targeting moderate voters of the Democratic party. The aim was to scare them and prevent further popular-vote leakage from the establishment nominees towards Bernie during the next primary battles.
Michael Bloomberg grabbed the chance and tried to amplify further the BernieBro-scare through a blatantly propagandistic sample of negative advertisement. He doesn't have any movement behind him, but he has a lot of money to spend for smear camp…

Julian Assange - Public Rally Event with Wikileaks, Nils Melzer, Tariq Ali and more

acTVism Munich
The complete public rally event for Julian Assange that took place on the 4th of February 2020 at the Royal National Hotel in London. This event was organised by the "Don't Extradite Assange Campaign". 

As Houthis close in on Al-Qaeda in Yemen, US drone strikes target its leaders

An escalating campaign of U.S. drone strikes in Yemen has sparked anger from residents and tribal leaders. The drone strikes, according to the victims’ relatives, not only killed suspected members of al-Qaeda in the Arabian Peninsula (AQAP) but also killed and injured a number of civilians. The recent escalation comes after the commander of the U.S Central Forces, Joseph Votel, handed ousted former Yemeni President Abdrabbuh Mansur Hadi a list of al-Qaeda military commanders and their supporters being targeted by the United States, according to local news outlets close to Hadi.
Last week, a suspected C.I.A. drone targeted a home alleged to contain al-Qaeda leader Qassim al-Rimi in Marib Province, allegedly killing not only al-Rimi but some innocent civilians as well. By Washington’s standards, residents told MintPress, just because they were near the house, those civilians deserved to die alongside al-Qaeda. 
The drone strike took place in the al-Hazmah region in the eastern province…

Capitalist factions continue tough bargain in the beginning of the post-Brexit era

globinfo freexchange
Johnson's victory in the recent UK national election marked the definite "divorce" between the UK and the EU. Yet, the real "show" starts now as we begin to realize the toughness of the Brexit negotiations and the war between the capitalist factions, which is expected to become wilder. 
As we already mentioned, the pro-Brexit faction sees a potential Labour government under Jeremy Corbyn, also as a major threat. This is one of the few common views it has with the globalist faction. Now that the Corbyn "threat" has been removed, capitalist factions are free to focus on the war between them.
Johnson's big victory gives an additional advantage to the Brexiteers who are now seeking to impose their terms in this very tough bargain. 
In this merciless war, first signs show that Boris Johnson seeks a decisive strike at the heart of the globalist faction. That is, the financial sector and the City financial capital. Another decisive v…

Social Media and Social Control: how Silicon Valley serves the US State Department

Facebook isn’t the only Silicon Valley firm with partisan oversight of what we see: the bipartisan billionaire class and their security state have partnered with tech firms since the dawn of the internet to control the parameters of users’ thinking.
by Morgan Artyukhina 
Part 17 - Pentagon-Google cooperation
Alphabet’s Eric Schmidt, too, is connected to the U.S. security state as well as to the Democratic Party, again proving that a cross-party link is established where the material interests of the billionaire class are shared. A man who joined the Google team early-on in 2001, by 2011 Schmidt was able to step down from Google’s Chief Executive Officer to be the Executive Chairman of its Board of Directors with a $100 million equity award. He maintained that position through the 2015 restructuring of Google into the holding company Alphabet, Inc., stepping down in 2017 only to become chairman of the Pentagon’s Defense Innovation Board, an advisory committee to the Secretary of Defense.…