Privatization tends to drive prices up

By Medicine Hat News Opinon on October 1, 2019.

Premier Jason Kenney staked his political everything on a balanced budget in his first term, and in a Monday column I wondered if Albertans were at all prepared to judge the path his party takes to get there.

The question isn’t whether lower deficits is a discussion worth having, but whether the choices made to achieve that are good for Alberta. In the now well-known MacKinnon Report, which the UCP is using to draft its first budget, and from the premier’s mouth itself, are calls for health care and education cuts by way of attrition, a shift of services to the private sector and restraint on public salaries.

On Monday we looked at employee attrition – the elimination of jobs through retirement or resignation – and how making jobs disappear won’t make work disappear. When you erase an existing job, someone has to pick up the slack.

It’s up to you to decide if added “efficiency” is worth the risk on “quality.”

The next thing Alberta will apparently do is shift certain services to the private sector. Obviously we have nothing more than speculation on which services might be contracted out, so all we can really discuss are the merits of public versus private as a whole.

Many in this province will quickly declare loyalty to the private sector, but is that really the efficient choice? In a vacuum, it couldn’t possibly be true. Each side deals with the same fixed costs of operation, while only one side has to include a profit motive. Not only does the private sector have to make a profit, it makes doing so its top priority in 100% of all cases.

So, then, how does the private sector give off the impression of being more efficient? Another important difference between public and private is that the government has to think about the people who work for it, since they possess power to hold the boss accountable. Luckily for the private sector, it doesn’t actually have to worry about that. Sure, there are nice bosses out there, but no employee will ever come between the boss and their profit.

Ever.

I’ve worked in the private sector my whole life and have never once witnessed the boss talk about how to add more jobs. The system of expand-or-die capitalism doesn’t allow it. The private sector’s goal will, in every scenario, be to employ the least number possible in order to get the job done.

And since that job exists to maximize profit, it is always one of the first things to go when a business needs to “find more cash.” Labour costs can be controlled, so they are controlled. It’s that simple.

Is that a big deal when we’re at a restaurant, or a grocery store or a car dealership? As long as you don’t work for one, maybe it isn’t. But this is education and health care we are talking about. You can gripe about economy all you want, but among the many great things that make us Canadian is our social safety net, and that net is worthless without the best education and health system possible.

And it’s not just about how employees are dealt with. The customer’s relationship is also much different. Your government, like it or not, has real reason to put your needs first. Maybe you saw a nurse leaning against a counter once, or you super hate “new math,” but if your perception is that health care and education professionals don’t care about your needs, why would you assume a private business would?

That doesn’t mean businesses across the private sector do a bad job, it just addresses the reality behind why they’re doing the job at all. And that’s to make money. The only reason to do the best job possible is competition, but not even competition stands in the way of the profit motive.

You’re a customer they care about as long as you contribute to the No. 1 goal. Which is why, the other thing the private sector will do once its thinned out the labour herd, is raise prices. People like Cypress-Medicine Hat MLA Drew Barnes love to say taxation is behind all spikes at the till, but in what dream world is that true?

A business’s goal, in every scenario, is to charge the highest price possible without disrupting demand. And if that product is something people need, or at least think they need, those prices tend to be inflated without much acceptable reasoning.

Just ask anyone who filled a gas tank in Medicine Hat as well as Calgary over the past five months. And if we can’t trust a business owner providing us with gasoline, why on earth would we trust one providing us health care?

Part two of a four-part series

Part one — Should ‘efficiency of service’ always be the top priority?

Part three — Push for better pay in private sector

Part four — They want to cut your social safety net

(Scott Schmidt is the layout editor at the Medicine Hat News. You can contact him by email at sschmidt@medicinehatnews.com)