41st Anniversary Special: The perils of privatization - Page 5

Ronald Reagan started dismantling government 25 years ago, but his privatization legacy is alive and growing -- even in San Francisco

So the community came together and created a network of nonprofits that funded services, education, and research.

"The AIDS Foundation was founded in response to the epidemic at a time when there wasn't a response from the federal government," Jeff Sheehy of the AIDS Research Center at UC San Francisco told us.

At first, activists all over the country praised the San Francisco model of AIDS services. Over time the nonprofits began to get government grants and contracts. But by the 1990s some realized that the nonprofit network was utterly lacking in public accountability. The same activists who had helped create the network had to struggle to get the organizations to hold public meetings, make records public, and answer community concerns.

That, Sheehy said, shouldn't have come as a surprise.

"There isn't that same degree of accountability that you would have" with the public sector, he told us. "SF General is not going to turn you away at the emergency room, but nonprofit hospitals are less and less interested in running ERs."

Sheehy said he's seen cases where difficult clients have been banned from accessing help from nonprofits. Unlike at public institutions, "the burden is not on the agency to provide the service. It is with the client to get along with the agency," he said.

Sheehy outlines other issues: nonprofits run lean and are more apt to make cuts and resist unionization, which means workers are often paid less, there can be higher turnover, and upper management is often tasked with fundraising and grant writing and distanced from the fundamental work of the group. There's no access to records or board meetings. "If service takes a sudden downward shift, what can you do?" Sheehy asks. "You can't go to board meetings. You can't access records. What's your redress?"

And that perpetuates the problem of government not stepping up to the plate. More than half of the social services in San Francisco are run by nonprofits, a trend that isn't abating.

"When the services are shifted from the public sector to the nonprofit sector," Sheehy said, "that capacity is lost forever from government."


When Dannin teaches her students about privatization, she uses the analogy of personal finance. "If I find my income does not meet my expenses, I can cut my expenses, but there are certain things I have to have," she said. To meet those needs a person can get a second job. In the case of the government, it can raise taxes.

But "that is not an option governments see anymore," she told us. "So the third option is to buy a lottery ticket — and that's what privatization is."

When a publicly owned road is leased for 99 years to a private company, the politician who cut the deal gets a huge chunk of cash up front to balance the local budget or meet another need. When the new owner of the road puts in a tollbooth to recoup costs, that's the tax the politician, who may be long gone, refused to impose. What option does the voting driver have now?

Public goods, from which everyone presumably benefits, are frequently and easily falling out of the hands of government and into the hands of profit-driven companies. In New Orleans, charter schools have replaced all but four public schools. In about 15 municipalities public libraries are now managed by the privately owned Library Systems and Services. (In Jackson County, Ore., it's being done for half the cost, but with half the staff and open half the hours.) At least 21 states are considering public-private partnerships to finance massive improvements to aging roads and bridges.