What IS Tolerated in the Private Sector?

By Michael Kaufman

Go to any local school board or local government meeting nowadays and someone is sure to proclaim, “This would never be tolerated in the business world,” or “We need to operate more like they do in the private sector,” or some variation of those sentiments. You hear it most within the context of cost containment, as if private businesses are the experts in this regard, and school board members and local government officials a bunch of dupes. Why else would they agree to give schoolteachers a raise or fund a nursing home to provide quality care for county residents? Where’s the profit in that?

Such statements are rooted in ignorance of both history and contemporary reality. Exactly which businesses in the private sector are to be emulated?  They can’t mean Enron, of course, or failed airlines such as Eastern, Pan Am, TWA and Braniff, to name a few. How about Goldman Sachs? No, they obviously mean a business successfully operating today. How about Whirlpool? They’re doing well….but, like many other successful companies, they shut down a refrigerator plant in southern Indiana and put 1,100 people out of work to move to Mexico, where they can pay workers less money. (They did this even after taking $19 million in “economic recovery” money from the federal government.)

Frankly, it is amazing what is tolerated in the business world: multimillion dollar exit packages for people who failed as CEOs, for example. Remember the Ford Pinto scandal of the 1970s? Company officials decided it would be cheaper to pay the families of people who died from the exploding gas tanks than to recall the cars and retool manufacturing. Last time I looked, Ford was still making and selling cars.

Pfizer remained one of the world’s major pharmaceutical companies even after pleading guilty to criminal fraud in the promotion of Neurontin, an anticonvulsant drug, and agreeing to pay $430 million in 2004. Apparently that amount wasn’t enough to teach the company a lesson. In 2009 Pfizer pleaded guilty to fraudulent marketing of Bextra, its now-withdrawn pain medication, and agreed to pay $2.3 billion to settle. (Tongue-in-cheek question: Would such behavior be tolerated in the public sector?) Other big pharma companies have been cited for similar practices yet continue to flourish.

Daniel and Katy Moore, the parents of a two-year-old boy who died of liver failure a day after taking tainted Children’s Tylenol a couple of years ago, sued Johnson & Johnson and a long list of others allegedly involved in a “phantom recall” of the product. Company officials who knew of the tainted batch are accused of keeping it a secret. Rather than experience the negative publicity of a recall, they hired people to buy up the entire tainted supply from retail outlets. But they got to the store too late for River Moore.

Would a small local business like a restaurant be a better fit for those statements mentioned earlier?  The answer is no. The vast majority of new restaurants go out of business within two years. Turnover among underpaid wait staff is usually quite high. We wouldn’t want to see that kind of turnover with our public schoolteachers or among those caring for our elderly loved ones. And this is where history comes in.

County nursing homes are among the institutions that came into being, were necessitated as it were, by societal change. The days are long past when most people worked on either a family farm or in a family business. In those days older children helped care for young ones until they were ready to work. And when elders or ill family members required care, everyone helped out. Today, family members are scattered across the country (and the world) to make a living at their jobs.

The point is that our public schools and public nursing homes were never meant to be profit-making businesses. The miserable failure of EdisonLearning, Inc, in Philadelphia, Cleveland and other cities in recent years raises important questions about the broader social, political and cultural implications of this approach, which is always accompanied by an attempt to avoid dealing with a unionized work force. (For more on this subject, see Kenneth J. Saltman’s The Edison Schools: Corporate Schooling and the Assault on Public Education [Routledge, 2005]). The same is true of our public nursing homes. But the Orange County legislature at the behest of County Executive Diana, have put Valley View up for sale. Shame on them.

Michael can be reached at micheael@zestoforange.com.





5 Responses to “What IS Tolerated in the Private Sector?”

  1. Russ Layne Says:

    Well spoken, Mike…on the heels of the entire Philadelphia public school system being privatized, not to mention the “Shock Doctrine” (Naomi Klein) of the total privatization of the New Orleans Parish School District after Katrina and now…Gov. Bobby Jindal opening the doors in Louisiana for the ENTIRE state public education system to privatization. Watch out….right here on my home turf in Warwick things can quickly move in that direction.


  2. Valerie Lucznikowska Says:

    You’ve raised an issue that needs more attention. The US Postal Service has been operating at a small profit for years AND THEN: private sector lobbyists got the Bush administration to pass a law that 1) shifted the previous portion of the PO’s retirement fund previously paid from the general treasury to the PO, and 2) required the USPS to fully fund their pension plan liability for FIFTY YEARS into the future (up to 2056) – and gave them only a few years to do it. Show me one private business that does that (or any other government agency). The idea was to break the USPS and have private interests take over the mail delivery business completely. Bet if they succeed that they’ll take over that juicy pension fund too – but it will not go to the workers – that’s another game private business plays.

  3. Michael Kaufman Says:

    Thanks, Russ and Valerie, for the additional information. Another game they play: Filthy up the environment while making huge profits;then, after getting called out for doing something particularly egregious (see Exxon Valdez or BP oil spills), make additional profits cleaning up.

  4. Jim Gilbert Says:

    Thanks Mike. This is a topic of mounting concern that you addressed with precission and clarity – privatization run riot. Where will it end? Abollute privatization of the government? We are already off to a running start with Citizens United.

  5. MichaelKaufman Says:

    That certainly seems to be the case. It is already happening under our noses and people have been misled into thinking there is a kind of balanced playing field of contending “special interests.” But the trade union movement in this country does not have anywhere near the money for lobbying and political advertising to match that of a relative handful of super-rich people. Have you seen how much money Scott Walker is raking in from wealthy anti-labor donors outside of Wisconsin?

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