By Vincent Navarro
In the elections to the Catalan Parliament in 2006 in one of the most conservative newspapers in Catalonia, La Vanguardia, a columnist ideologically close to the banks and large employers, interviewed the Socialist candidate, José Montilla, and with great arrogance wondered how a person like him (Mr. Montilla, from a working class family, has been elected to political office several times), who had never managed a private company, had the audacity to run for office as the president of the government of the Generalitat de Catalunya, which has great managerial responsibilities. Implicit in this question was the assumption that the best training for managing the public sector was having managed the private sector (Mr. Montilla had managed the public, but not private, sector during his career).
This view is widely held among business groups across the world. They believe the best way to manage the public sector is to be inspired by how private enterprise works. This mentality has played out occasionally even within the Left. The Catalan government itself convened a tripartite Commission to make proposals on how to improve management of the public health sector onto which it appointed many big businessmen and bankers to help with proposals to improve governance of Catalunya’s largest employer, the Catalan Health Service.
This position also assumes generally, though rarely explicitly, that private companies are better managed than public. This debate is also appearing with great intensity in U.S. elections. Republican candidate Mitt Romney questioned the credentials of President Obama, stressing that his nonexistent management experience in private companies hinders his management of the public sector. The candidate Romney is a man who considers himself successful in the business world and refers to his long business experience as the best guarantee that he will know how to manage the federal state.
The problems with the argument: a public body has different objectives to a commercial organisation
The biggest problem with this component of neoliberalism is to ignore that the objective of a company defines it and its management methodology. A private company’s main objective is to make money. One question that might arise is “money for whom?, For managers?, For shareholders?”. The evolution of large companies (especially financial) appears to show that those who run such businesses accentuate the benefits of the managers more than the shareholders. But whoever is the recipient, the fact is that making money is the primary objective of a business. And everything is geared to this objective.
The purpose of a public body, such as a public administration, is not to make money but to serve the public, a very different purpose to making money. This distinction is crucial to understanding the nature of each entity’s management needs. A businessman- such as the Republican candidate for the U.S. presidency, Mr. Mitt Romney – may have made a lot of money in the private sector (being one of the richest people in the country), but this doesn’t mean he’s going to be a better U.S. president than President Obama, who has no private business experience. Actually, seeing how Mitt Romney got the money, the opposite conclusion may seem the most appropriate. The candidate Romney got his money speculating in financial markets, deliberately ruining companies so they collapse, buying them cheaply (destroying thousands of jobs, in a strategy that has earned the name “corporate vulture”) and avoiding paying taxes. His proposals for when he rules include huge tax cuts to the very wealthy, large companies, and banks, privatizing Social Security and the vast majority of public services, measures that would benefit greatly higher income people who derive their income from capital income at the expense of lower income groups, who would see their incomes and quality of life clearly cut. Indeed, little has been said in the Spanish media of the business origins of Mr. Romney. The initial capital the candidate obtained for his business enterprises came from families of El Salvador (Poma, Dueñas, Sola and Salaverria) who financed paramilitary militias that imposed an enormous terror in the country, responsible for 35,000 Salvadorans assassinated in period 1979-1984. It was in 1984, when such families met Mr. Romney and invested in the activities of today’s Republican candidate (see Sandy Smith-Nonni “Romney’s Blood Money” Counter Punch. 24-26 August 2012 ). The sector that Romney represents in corporate America is the most reactionary of the country, today focused around the Tea Party.
The situation in Spain
You can see a similar situation in the conservative-neoliberal government of Spain, where there are a large number of private entrepreneurs who are promoting, once in government, policies clearly based on experience, which come clearly into conflict with the primary objective of public administration, which is to serve the public. There are many examples. But one of the most striking one is in health where, through a series of measures imposed by the regional government (which manages public-ally-provided health), the government is impoverishing public services, favouring private services, measures that address the conservative-neoliberal project that aims to dismantle public health. Never before has a public system been so badly attacked – with a threat that it could be dismantled. One reason for the cuts, which theoretically are presented as necessary to reduce the deficit, is precisely to achieve such a dismantling of the public sector.
You will say, rightly, that the public sector can and should learn from the private sector. But this argument, though valid, is constantly presented as a justification of practices that mean the introduction of private objectives, such as optimizing corporate profits at the expense of the objectives of public services: these should always be for the benefit of citizens’ welfare and their quality of life.
Vincent Navarro is Professor of Public Policy at the Pompeu Fabra University, Spain and The Johns Hopkins University, USA.
Translation Revolting Europe