Privatization and Deregulation Help the Rich Not You
Facing Facts
The pro-labor media outlet More Perfect Union released an Instagram post that showcases President-elect Donald Trump saying he is considering privatizing the US Postal Service.
This is concerning for many reasons. I think the privatization of government services and sectors ultimately hurts the working class.
Privatization and deregulation often go hand in hand as government officials strip back regulatory practices placed on industries. This is characteristic of neoliberal politics, which consists of deregulation, privatization, government spending reduction, and other austerity measures.
Implementing many of these ideas in policy has resulted in worsened wealth inequality, stagnant wage growth, global exploitation, and numerous financial crises.
The policies and procedures of privatization and deregulation help to serve the interest of the wealthy rather than the working class.
Let me give you a case example… airplanes.
Why is My Flight So Miserable?
Before the 1978 Airline Deregulation Act the federal government had more control of the fares, routes, and entry of new airlines into the airline industry.
Leading economists like Alfred E. Kahn took major steps toward advocating for deregulation in the airline industry. He was in charge of the Civil Aeronautics Board under President Jimmy Carter.
Folks like Kahn argued that deregulation would increase competition which would decrease fares and increase airline quality.
However, Kahn and others who thought airline deregulation would benefit the public were not entirely correct.
After the Airline Deregulation Act was implemented, airline fees increased, major airlines began monopolizing the market, labor unions were sidelined, and airports became more crowded.
More airlines began adopting a hub-and-spoke system in which a few major airports served as central connecting points. This led to increased congestion, wait times, and cancellations.Â
To be charitable, airfare has become cheaper relative to the past. At the same time, the federal government had spent billions of dollars to bail out airline companies and cities have spent millions of dollars to keep airlines around.
More importantly, we have to look at who primarily benefits from deregulation and privatization. Proponents of deregulation will argue that regular people primarily benefit from deregulated industries, but we should know that the executives and shareholders of a company have the most to gain from the deregulation of an industry.
For instance, American Airlines (AA) is the largest domestic airline by passengers carried in the United States. The CEO has a salary of 31.4 million dollars and AA has a market worth of about 11 billion dollars. The net worth of AA in 1967 was approximately 48 million dollars which when adjusted for inflation is close to 450 million dollars in today’s money.
If we use a percent change calculation that is an approximate 2344.44% increase from 1967 to 2024. Given these facts, we need to ask who benefited the most from this increase.
Deregulation Hurts More Than It Helps
In the last Trump presidency, we saw support for fracking, offshore drilling, dumping coal into water sources, and other forms of environmental deregulation.
The rollback of environmental protections not only has the risk of damaging ecosystems (which matters because we all live on Earth) but even our health.
Environmental contaminants in air and water can increase the risk of diseases such as cancer, cardiovascular disease, and asthma.
Climate scientists also constantly telling us that greenhouse gas emissions will and have led to increased global surface temperature, which will increase the frequency and impact of natural disasters.
Outside of climate and environmental considerations, even if we look at financial sectors we can see areas of concern.
Some point to the deregulatory tactics of the Reagan and Clinton administrations as precursors for the 2008 financial crisis. This trend of deregulating the banks has still followed us since the first Trump administration which saw deregulatory practices leading to bank failure.
Final thoughts
Deregulation and privatization of industries help the rich and powerful more than it helps the working class.
We can go on and on about examples related to energy, finance, transportation, food, and healthcare. However, there needs to be a point where we as working-class citizens living in the United States do not fall for the narrative that deregulating or privatizing important sectors of our society works in our favor.
The logic of free market capitalism continues to fail as our government has to constantly step in to bail these big companies out while neglecting to provide adequate services for the people who need them most.
There is no reason why our healthcare, energy, housing, or food should be in the hands of a few oligarchs. The people should have democratic control of their resources.