Why Privatization IS a BAD Idea

The Cape Council have been entertaining privatization notions of late.

Excerpts from a recent Newsweek Report follow...

There is no substitute for water...Most of us would probably agree that water is too precious for anybody to own.

But the rights to divert water—from a river or lake or underground aquifer—are indeed sellable commodities; so too are the plants and pipes that process that water and deliver it to our taps.

Markets don’t care about the environment, And they don’t care about human rights. They care about profit.

Privately owned water utilities will charge what the market can bear, and spend as little as they can get away with on maintenance and environmental protection.

Private operators often reduce the workforce, neglect water conservation, and shift the cost of environmental violations onto the city.

In the late 1990s the World Bank infamously required scores of impoverished countries—most notably Bolivia—to privatize their water supplies as a condition of desperately needed economic assistance.

The hope was that markets would eliminate corruption and big multinationals would invest the resources needed to bring more water to more people.

By 2000, Bolivian citizens had taken to the streets in a string of violent protests.

Bechtel—the multinational corporation that had leased their pipes and plants—had more than doubled water rates, leaving tens of thousands of Bolivians who couldn’t pay without any water whatsoever.

The company said price hikes were needed to repair and expand the dilapidated infrastructure. Critics insisted they served only to maintain unrealistic profit margins.

Either way, the rioters sent the companies packing; by 2001, the public utility had resumed control.

Private water companies usually have very little incentive to encourage conservation; after all, when water use falls, revenue declines.

In 2005 a second Bolivian riot erupted when another private water company raised rates beyond what average people could afford.

Even as many U.S. cities look toward ceding their water infrastructure to private interests, others are waging expensive legal battles to get out of such contracts.

In 2009 Camden, N.J., sued United Water (an American subsidiary of the French giant Suez) for $29 million in unapproved payments, high unaccounted-for water losses, poor maintenance, and service disruptions.

In Milwaukee a state audit found that the same company violated its contract by shutting down sewage pumps to save money; the move resulted in billions of gallons of raw sewage spilling into Lake Michigan.

And in Gary, Ind., which canceled its contract with United Water after 12 years, critics say privatization more than doubled annual operating costs.

It ends up being a roundabout way to tax people, Only it’s worse than a tax because they don’t spend the money maintaining the system.

The Nattering One muses... Privatizing overpaid city hall executive management is one thing...

However, privatizing the Cape's most valuable resource, its water production, distribution and reclamation, is quite another.

Losing control over the taxpayers most valuable resource, has been, is and always shall be, a fatal mistake.

Gentlemen, you would do well to take heed, as this regrettable mistake, oft made by the misinformed, is quite avoidable.

The Race to Buy Up the Worlds Water.