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The move towards privatization

Chris Farrell Jan 13, 2012

Jeremy Hobson: Now to New Jersey, where the governor has just signed a bill to allow private firms to run some public schools. The move comes less than two weeks after the state of Ohio privatized several state prisons.

For more on this wave of privatization, let’s bring in Marketplace Economics Correspondent Chris Farrell. Good morning.

Chris Farrell: Good morning, Jeremy.

Hobson: Well Chris, privatization of public space has been going on for a long time in this country, at least since the Reagan years. Is it happening a lot more now?

Farrell: Jeremy, it’s happening a lot more now. Part of it is, you know, state and local governments are under enormous pressure, so they need to raise money, so they’ll privatize some public housing, maybe the parks. They’re moving all over, but it really came home to me last weekend. I was at a conference with Mark Hudoff, president of the University of California, and he was bemoaning and talking about the privatization of the public university, this sense that yes, you get a degree, you get lifetime earnings, that’s a really good thing — therefore you should pay more. But he’s worried about that trend.

Hobson: Well obviously, these organizations — whether they be universities or governments — are doing this because they are low on cash, as you say. Is there any way around this, Chris?

Farrell: Oh yes there is, because in an earlier era, there’s a lot more taxpayer support. There’s a lot more public support. The public universities are just a private good. It also is about being citizens, about the knowledge in our society, innovation, creativity; everybody moving up together. So what I worry about, whether you’re looking at universities or parks or even things like prisons — are we losing a sense of a social good, a social compact, that commonwealth that we’re all in this together?

Hobson: Is anybody pushing back against this in a big way?

Farrell: I think there’s an enormous pushback going on. Now, privatization isn’t exactly on the tip of everyone’s tongue, but 99 percent is. And as part of this discussion, what’s the good of private equity? What do we go about income inequality? How about social mobility? Has privatization gone too far? This is all part of an important, dynamic discussion that’s going on in our society.

Hobson: Marketplace economics correspondent Chris Farrell. Chris, thanks a lot.

Farrell: Thank you.

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