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The Public Good

By David Morris, Vice President, Institute for Local Self-Reliance

At the birth of the American Republic, the word “private” had a sinister connotation. Derived from the Latin privare, meaning to reduce or tear apart, it described behavior that was independent of and often contrary to the public interest.

Today, “private” has become a positive, even a boosterish word. The term “private sector” has become synonymous with efficiency and innovation. It is the word “public” that now carries a shady undertone. The “public sector” has become a pejorative phrase, synonymous with bloat and unresponsiveness, even corruption. The phrase “public good” is viewed increasingly as an oxymoron.

It is remarkable that this linguistic and attitudinal love affair with the private has taken place during an era in which the costs to society of private malfeasance have far eclipsed the costs of public bumbling. Corruption in the private savings and loan, energy, and dot com sectors alone may have cost society as much as a trillion dollars.
Given the remarkably destructive recent record of the private sector, we may want to revisit our newfound antagonism to the public sector. When we do so we will discover that the public sector often delivers services at least as efficiently as the private sector. When privatization does lower costs, too often it does so simply by lowering wages and benefits, not by improving efficiency.

Consider electricity, the nation’s third largest industrial sector. Non-profit utilities, whether cooperatively or municipally owned, provide better service to their customer-owners than their absentee-owned, profit-oriented competitors. And they do so at lower prices.

The Defense Department is pushing to privatize approximately 1,600 utility systems located on military installations worldwide. That ideology, not economics, is driving this effort is clear from the process involved in privatizing the utilities at Robins Air Force base in Georgia.

In 2000, Robins took a detailed look at privatizing its electricity, sewage, and water systems and decided not to proceed. With a new administration in Washington, the effort is back on track. The man in charge of the effort, Colonel Lin Torchia, concedes, “We’re not unhappy at all with the way our people are doing their jobs. This system is in very good shape. The base has made significant investment over the years. This is the best utility system I’ve seen in 25 years.”

Privatization involves losing control. The churning of an increasingly globalized economy can make it difficult for communities to even know who owns their basic infrastructure. In 1992, New Orleans signed a contract with a company called Professional Services Group (PSG) to run its wastewater treatment plant. USFilter purchased that company. In 1999, USFilter was acquired by Vivendi, the parent company of PSG and its holding company Aqua Alliance.

Earlier this year, after a disastrous experience with privatization, Atlanta retook control of its water system even though many in the city thought that doing so could raise the price of water. Offering an interesting perspective on the public versus private debate, one Atlantan told the New York Times, “Is it possible to have private water work right? I’m sure it is.

But if you have a political problem in your city, you can vote in a new administration. If you have a private company with a long-term contract, and they’re the source of your problems, then it gets a lot more difficult.”

One of the reasons it is so easy to condemn the public sector is that it’s so, well, public. Govern-ment makes decisions in front of everyone. Even a cub reporter can easily uncover peccadilloes. The private sector, on the other hand, acts in secret. It is frightfully difficult to discover chicanery at privately owned Cargill; it is relatively straightforward to discover irregularities at the Minneapolis City Council.

In part we beat up on the public sector because we can. We can “throw da [public] bums out.” We can even, if we choose (and we seem so to be choosing) shutter the public sector. But we can’t throw the private bums out. Nor can we go to the polls and close down a private corporation, no matter what its level of venality. The debate about the relative merits of the public and private sector is a healthy one. But a viable debate needs two sides. Where are those political leaders who will stand up and speak forcefully in favor of the public?

About the Author: David Morris is co-founder and vice president of the Institute for Local Self Reliance, a non-profit research and educational organization providing technical assistance and information about environmentally sound economic development strategies. Learn more about their work at www.newrules.org.