Noam Chomsky on Privatization

[_Kevin Graham]

Where is he wrong?

https://www.youtube.com/watch?v=UikhLJNLFK4

[_honorentheos]

There's certainly truth in the first part of what Chomsky describes as a process used to defund social programs such that they stop working well, people get fed up with them, which allows politicians to then privatize them. Privitization often is sold as offering choice and innovation as well, both of which could be true but certainly not always. And without some form of oversight, performance becomes third tier to profits as well, meaning for it to be effective it still demands government involvement.

As to the specifics on Social Security, I think he's fairly accurate in describing the motives for those arguing to privatize it, too. But he misses a couple of key points. Payroll taxes which fund SS required forced saving from both the employer as well as the employee, and the self-employed are required to pay both halves of that. This arrangement seems to be behind much of the animosity, where businesses see money going into something that isn't intended to benefit the business per se, employees are forced to put money into savings, and a person who is self-employed feels the pinch as Big Brother is forcing them to do something that some argue would be better invested in a way that grows the business or could earn interest. I thought Chomsky's argument interesting and an angle I hadn't thought of before as to why retirement savings tied to stock performance is forcing employees to support the same forces at work in a company that are seeking to reduce costs (i.e. - employees and their benefits, for example) and focuses on profit to investors over the other metrics of a company's health that might be more aligned with the employee's benefit as well.

[_Maksutov]

I've enjoyed and benefited from Chomsky's critiques but have never seen an example in reality of what he considers a successful society. References to "anarcho-syndicalism" left me with footnotes but no exhibits.

[_subgenius]

Where is he wrong?

https://www.youtube.com/watch?v=UikhLJNLFK4

Great OP, so much you have offered...your brain must be exhausted.
But where is he wrong?
His support of Sanders.
His hobby of political activism buttressed by his nonsensical philosophies of democratic socialism.
And probably when he sabotaged his career by supporting Faurisson.

[_EAllusion]

Privatization often isn’t really privatization. If the government retains control over some facet of the economy, say building roads or providing education, but subcontracts the work to the market, that’s not actually privatizating anything. Often things are called privatization that are just subcontracting because that label suits the rhetoric of both opponents and proponents.

While in theory privatization can open up market efficiencies to government functions, and sometimes succeeds in doing so, it also has been a way to invite cronyism,rent seeking, and end runs of regulatory authority. Prisons are a particularly bad example of that happening. That’s bad and has been used by folks like Chomsky to attack real privatization.

[_EAllusion]

When asking if X should be privatized you should first ask yourself if the government is obligated to ensure X. If no, then privatize it. If yes, then ask yourself if the market can provide X better than it as good as the government. If yes, then privatize it. If no, then consider the ripple effects of government intervention. Do the costs of that outweigh the benefits? If yes, then privatize it. If no, then the government probably should be doing it.

[_Kevin Graham]

[_canpakes]

And probably when he sabotaged his career by supporting Faurisson.

Well, there’s a wee bit of irony, considering your own positions.

[_EAllusion]

Regarding the specific example Chomsky is talking about, social security "privatization" isn't actually privatizing social security in the sense of returning it to the market. Privatizing social security would entail dissolving the program and allowing people to plan for retirement themselves via savings, insurance, private retirement plans, etc.

The privatization plans instead are a form of subcontracting of investment for the federal social security progarm. In theory, this would create better yields because the market could beat the federal government on returns on a consistent enough basis to wash out risk. The downside is that this invites corruption of the sort the current program is fairly immune to. I think the latter is too much of a concern to chase the former, but there's the main debate.

[_EAllusion]

One thing I would say about true privatization is that people who live in societies where the government controls some aspect of the economy tend to be absolutely baffled by the idea that it could be provided by the market. You might as will propose eliminating the government program in favor of wizards as far as they are concerned. The invisible hand is really counter-intuitive to people.

Fortunately, because every Western society has evolved a little bit differently, we have lots of examples of things that are private in one country that are publicly operated in another with it working fine. Suggest to an American that we should privatize water management and they'll typically think you're mad. People will assume you're asking for Flint, MI in every city. Yet there are countries where private water is going fine and Flint was caused by government management.

Social needs can typically be met through market action with government regulation where needed. It usually takes some work for people to get this in an area where they are used to government control. This is one of the reasons why opposition to government control over a new sector of the economy is so intense. Once it is locked in, it's difficult to muster political will to dismantle it because people can't envision another way.