The Private Market At Work

Over at Open Left, blogger Paul Rosenberg the last few days has been obsessed with the apparent "pragmatism" of President Obama, who has been enticed by market-based solutions to our enormous, and growing, economic crises. If, however, one is to be obsessed by anything political, there is no better subject than the inadequacy of the neoliberal philosophy in confronting such challenges as education, energy, health care, and the availability of credit.

Rosenberg admittedly was inspired by Obama's Timid Liberalism, an enormously insightful article appearing in Salon on March 6 in which Michael Lind explains

Once upon a time in the United States, public goods -- from retirement security and energy research to public roads -- were provided by the government and paid for by taxes. As late as the Nixon administration, the provision of public goods by government was considered perfectly compatible with a robust market economy by so-called Modern Republicans like Eisenhower and Nixon as well as New Deal Democrats like Roosevelt, Truman, Kennedy and Johnson. In the intervening 40 years, however, free-market fundamentalists of the Chicago School have managed to change the debate, redefining "socialism" to mean not only public ownership of the means of production, but also public provision of public goods.

Rather than fight back, most Democrats in the last generation adapted to this hostile conservative political climate by jettisoning New Deal "big government" liberalism for "market-friendly" neoliberalism. Neoliberals shared the right's enthusiasm for deregulating industries that New Deal Democrats had regulated in the public interest. Jimmy Carter and Ted Kennedy supported the deregulation of trucking and airlines, while Bill Clinton presided over the dismantling of the New Deal era's banking regulations and declared: "The era of big government is over." Neoliberals and conservatives agreed that public goods should be provided by private, for-profit or nonprofit entities, rather than government agencies. If private corporations or universities had no motivation to provide public goods, well, then, they would be bribed with tax credits or other government subsidies.

Neoliberals are liberals in one sense -- they fret about unequal outcomes. But rather than help middle- and low-income Americans by regulating the prices of privately provided public goods, as the crude and direct New Dealers would have done, neoliberal Democrats have argued for allowing the "market" (translation: the publicly subsidized entities) to set prices and then promised to provide tax subsidies or grants to help middle- and low-income Americans pay for the expensive, privately provided public goods.

Lind decries the Obama approach to health care, credit, and education, which assumes "the best way to provide a public good is not necessarily to pour subsidies on middlemen, and then bail them out with more subsidies when they fail at their public function." And so we come to the curious case of criminal justice in the Commonwealth of Pennsylvania, where government subsidies have made the administration of justice quite lucrative for private entities.

Two juvenile court justices, Mark A. Ciavarella and Michael T. Conahan, in Luzerne County, Pa. have pled guilty to sending upwards of 2,500 youth between 2003 and 2008 to secure detention facilities from which they received $2.6 million in kickbacks. The judges, who had helped the private detention centers obtain more than $30 million in contracts with the county, have agreed to spend 87 months in federal prison.

Unfortunately, this comes a little late for the likes of Charlie Balasavage, notwithstanding the civil lawsuit now filed on behalf of his and 69 other families. Reportedly, 15-year-old Charlie in the summer of 2006 bought for $60 a scooter from his relative. One day police appeared at the Balasavage's doorstep and told him the scooter had been stolen. Charlie explained the purchase, as did his parents that night- at which time all three individuals were arrested. (Police later decided to charge only Charlie.)

In January 2007 the young man, now 16 years old, appeared without counsel before Judge Ciavarella who, without asking for an explanation or asking about guilt or innocence, sentenced adjudicated the defendant guilty and placed him at the Youth Services Agency, also known as Camp Adams. There, Charlie met with a psychologist (who, as luck would have it is Judge Conahan's brother-in-law), who decided that the youngster had several problems, among them an antisocial disorder, anxiety, and depression. And, via the state, charged the family $250.

When he encountered trouble sleeping, Charlie was placed on Seroquel, a mood stabilizer. A few months later, he was sent to a substance abuse program in northeast Pennsylvania, where he excelled at school.

Then it was back to his public high school, which would not accept the credits Charlie had earned at the treatment program. He began to spiral downward, overwhelmed in school, infant niece killed in automobile accident, using drugs, violating probation, Judge Ciavarella placing him in one facility after another.

With the budget cutting prevalent in the traditional media over the past twenty-five years, the decline in investigative reporting has been precipitous. And with it, the conventional wisdom that the private market, often with government subsidies, can provide public goods more efficiently than government has largely gone unchallenged. Establishment in Pennsylvania of the nexus between the judiciary and private interests, serving the interests of neither defendant nor the public, is but one example of this dangerous mindset.