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Last Sunday I wrote a column from Pro Publica investigative writers that JP Morgan was earning millions of dollars processing food stamps for about half the nation’s states which outsourced the service to cut costs.
I duly reported my opinion that the concept of Wall Street, in this case, reaping profits from a public service usually administered by public agencies was morally questionable. I said it was a “creepy” practice and failed to “pass the stink test,” I unfortunately opined.
Readers artfully and correctly pointed out the errors of my muddleheaded thinking.
Wrote one:
Would you rather the States do it themselves at additional costs that would take more out of the food stamp budget, or require an increase to provide the same service???? This has to be the most backwards thinking I’ve seen in quite a while.
Another zinger:
Credit card processing fees are charged to businesses, not customers. Morgan is providing a service to the government…they should be paid for this service.
Like a junkyard dog biting the wrong person’s leg and after more careful reasoning, I want to pursue a different angle. It reaches the political heart of a debate this nation has heard since President Reagan. Said he:
Government is not a solution to our problem, government is the problem.
Now, the question is framed in terms of public vs. private rendering of selected public services. Which does the best, most efficient task at the least amount of cost?
I’m not a numbers guy so I will explain this in the broadest context of the real world as possible.
I have absorbed hundreds of state, county and municipal budgets in my lifetime and some of the more mundane services offered by them could just as well be farmed out.
First, public safety and databases dealing with private individuals is off the negotiating table. The exception might be rural areas contracting fire services but we recently saw a flaw in that when a Tennessee home burned while volunteer firemen watched because the guy did not pay his dues.
There are dozens other services that could be outsourced.
As a landscape contractor, I won a bid from a small city to maintain a city park. I earned a modest 10% profit because I was non-union, paid employees $2/hr. above scale but offered no health or pension plan other than paying for the mandatory state disability insurance in California and payroll deductions required by the feds.
The cost difference in my favor was the city employees’ entitlement perks negotiated in good faith with the city manager.
Within this equation is the ability of public administrators and private managers to milk the most out of their budget dollars as legally and morally as possible. To argue one sector’s management is better than the other is dog poop.
It is health care, pensions and a host of other less sexy perks that are the economic killers to both the public and private sectors.
Lee Iacocca, the former Chrysler chairman, once complained the company was not in the automobile manufacturing business but deep into providing unsustainable health care for its employees.
In the past quarter century, the power of labor unions negotiating sweetheart contracts has diminished more in Big Business such as the United Auto Workers and the AFL than in government.
The result is a continuing shrinking class of middle income wage earners fast becoming impossible to reach the American dream of home ownership and a college education for their children.
Their buying power for driving the economy is passing the torch to an oligarchy of the richest who produce more air balls in paper profits than investing in the nation’s future of stuff we need and sell the world.
Labor unions were the ticket to middle class ascendancy after WWII but they reached too far, promised too much for their beneficiaries and either by fraud, mismanagement or downturns in the markets became unsustainable in the public sector.
Congress is equally culpable for raiding from the Social Security Trust Fund and sending them an I.O.U. Thus, a double hit on the wage earner’s retirement benefits sometime soon.
I conclude this lecture by noting the cruel attitude among many that a government job that is lost is a good thing for the benefit of the private sector which they contend does better.
We are talking human beings. A public teacher spends his paycheck the same as a bank supervisor. They are equal partners despite whom issues the check.
The issue of a more limited government as a cross-the-board concept is good economic policy. Jobs in the private sector are exponentially more financially beneficial than a service rendered by a government bureaucrat. But, it is an apples to oranges comparison.
The irony is we live in a service-oriented economy where manufacturing, once the backbone of America, is rusted.
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EPILOGUE — I have wrestled with this problem longer than last Sunday. The few liberal vestiges of my upbringing seem to cling — but no longer — that the chain of custody of tax dollars should be the exclusive domain of the public and not for the redirection to benefit the profits of me, the landscaper, nor JP Morgan, the Wall Street titan.
Jerry Remmers worked 26 years in the newspaper business. His last 23 years was with the Evening Tribune in San Diego where assignments included reporter, assistant city editor, county and politics editor.