Would privatizing the Export-Import Bank work?

What will Republicans want to shut down and privatize next once they get their way with their current pet peeve, the innocuous Export-Import Bank?

How about the U.S. Mint? Printing money is easy and counterfeiters offer a skilled pool of labor. The national parks? Anyone can dress up as Smokey Bear and manage a geyser or two. Private contractors already run the Pentagon, so why not just replace the generals and other middlemen with the company that virtually ran the war in Iraq, Blackwater (or Xe Services or Academi, or whatever alias it uses these days)?

This sounds ludicrous, but at one time, so would the notion of allowing snack-food companies to take over food prep at the country's schools. Domino's Pizza now feeds lots of our schoolkids with no-topping pies (and may be responsible for getting tomato paste classified as a vegetable).

Export-Import Bank

So when the new House majority leader, Kevin McCarthy, said the private sector can do the job of the Ex-Im Bank better, the only surprise was that there will be relatively little for the private sector to pick over in the carcass of the bank. The loans it makes to foreign companies that buy U.S. products are not profit centers. Private banks would have to charge so much interest to make money that small businesses, which benefit most, would suffer.

Poor Republicans. There aren't many targets of opportunity left. Growth industries such as war and incarceration are fully mature. And the way those mass endeavors have been handled should make privatization a dirty word, not a lofty goal.

A spate of investigations into corporations doing what government used to do show that delicate matters such as criminal justice and killing should remain the province of government. Otherwise, real people -- not to mention the country -- get hurt.

Take Iraq, which was inundated with private security companies running amok. Blackwater has long been controversial, having paid $5 million to $7.5 million in fines for trading in illegal arms, bribing officials and lying about it. It's had a shady reputation almost from the moment it was hired by the George W. Bush administration and moved into Baghdad. By the time the State Department tried to monitor its operations -- calling it "an environment full of liability and negligence" -- Blackwater had become a government unto itself. According to the New York Times, its top manager issued threats, saying that "he could kill" the government’s chief investigator and "no one could or would do anything about it."

The Blackwater manager had a point, given conflicting interests among government agencies. Part of the U.S. government (read: the Pentagon off-loading its duties) had a cozy relationship with the company, while other parts (read: the State Department) saw it as violating the criminal code.
The inquiry was abandoned. Among Blackwater's many failings, the bloodiest may be the killing of 17 Iraqis, including a child, in the center of Baghdad. One guard testified that two contractors high-fived each other after it was over. Four Blackwater employees are on trial in connection with the deaths.
OK, so maybe war is an iffy way to make money. Managing prisons, however, seems like a safe bet. The U.S.'s dubious record for holding huge numbers of inmates has spawned a booming business. Although many companies have been dumped for allowing deaths, gangs, riots and daily violence, the largest privateer, Corrections Corporation of America, is still thriving, running close to 70 facilities.
Page 1 of 2 >>

Copyright 2014 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

comments powered by Disqus
Check out Futures Magazine - Polls on LockerDome on LockerDome