privatization | Civic Studies

After the binge of privatization of municipal water systems in the 1980s and 1990s, citizens and city governments are starting to realize what a big mistake they made. Privatization resulted in higher rates and lower water quality, service and public accountability. As William Harless describes in the Wall Street Journal (August 19), many municipalities are now mounting lawsuits and ballot measures to try to regain control over systems that they had ceded to private companies.

In Ojai, residents will vote next week on whether to buy back their water system from Golden State Water Co., a move that the company opposes. A lawsuit in Worchester, Massachusetts, is trying to regain public control over the city’s water system, which had been sold. And in Connecticut, some towns are objecting to higher rates that have resulted after their systems were acquired by Aquarian Water Co. of Bridgeport, Connecticut, which consolidated the rates for the towns it serves.

It is satisfying to see the glittering promises about privatization exposed for what they are: glittering promises. For more on this theme, check out the work of a group called In the Public Interest, one of the most aggressive Washington, D.C.-based policy opponents of privatization in the US. The group's website has lots of materials explaining how and why privatization of public resources is a bad deal for taxpayers and citizens.

Now that the City of Detroit has declared bankruptcy, one of the most critical questions will be what assets will be put on the table to pay creditors – and what assets, if any, will remain inalienable, that is, not capable of being sold. You see, there are moves afoot to sell off priceless paintings and artworks from the Detroit Institute of Arts to pay off the city’s debts. The stash of assets include works by Bruegel, Caravaggio, Rembrandt and van Gogh.

Normally the market value of large art collections is not calculated except as needed for blanket insurance policies. But now that a pack of hungry creditors wants to be made whole, many people are starting to look yearningly at the estimated $2 billion that could come from liquidating the museum’s collection, or substantial portions of it.

The whole scenario is of a piece with other enclosures driven by finance capitalism. The investor class has gone way beyond privatization; now it wants to use the debt crisis to gain outright ownership of public assets and start charging for the use of them. As economist Michael Hudson has put it, cities are selling sidewalks and citizens have to start paying to walk on them.

The fate of the Detroit Institute of Arts’ collection will say a great deal about how far we Americans are willing to go in monetizing our cultural heritage. Museums are supposed to act as permanent trustees of a community’s priceless heritage. Donors are willing to give works to museums only because they believe that the works will be there forever, and not sold off to satisfy some unrelated financial claim against the city. In other words, the artworks held in trust for the public by a museum are supposed to be treated as the priceless heritage of the citizenry, beyond any market valuation. That principle may be breached very soon.

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Category Archives: privatization

The Remunicipalization of Water

Using the Debt Crisis to Steal Public Assets