Obama’s One-Sided Partnerships

Laura Gottesdiener Feb 22, 2013

The split screen during the State of the Union address was a nice touch. After all, what is more practical, more common sense — more bipartisan, perhaps — than charts? My favorite chart was the one illustrating wages versus corporate profits over time. Those two jagged lines — one shooting sky high over the last decade, the other plummeting steadily over the last forty years — are worth a thousand words, as the saying goes. Throughout the State of the Union, President Obama railed against the reality the chart revealed.

“Corporate profits have skyrocketed to all-time highs, but for more than a decade, wages and incomes have barely budged,” he boomed. “Today, a full-time worker making the minimum wage earns $14,500 a year. Even with the tax relief we’ve put in place, a family with two kids that earns the minimum wage still lives below the poverty line. That’s wrong.”

Wrong, indeed. But on the issue of income inequality, the president’s rhetoric was right across the board — that is, until he actually began unfurling his Grand Plans. That’s when his typical double-speak kicked in.

He promised to curtail corporate profits, but his vision for a new, “high-tech” America seemed to entail turning everything from our highways to our public schools into corporate-owned, public-private partnerships.

Missed that part of the speech? Let’s take a closer look at his lofty language.

“Now at schools like P-TECH in Brooklyn, a collaboration between New York public schools and City University of New York and IBM, students will graduate with a high school diploma and an associate’s degree in computers or engineering. We need to give every American student opportunities like this,” he said.

“Tonight, I’m announcing a new challenge, to redesign America’s high schools so they better equip graduates for the demands of a high-tech economy. And we’ll reward schools that develop new partnerships with colleges and employers, and create classes that focus on science, technology, engineering and math, the skills today’s employers are looking for to fill the jobs that are there right now and will be there in the future.”

In other words, let’s stop teaching to the standardized test — let’s teach straight to IBM’s computer repair manual.

Obama’s proposed public-private partnerships went far beyond public school classrooms. They also included the country’s most essential infrastructure: roads, bridges, rails and even the energy grid.

As the president said, “Ask any CEO where they’d rather locate and hire, a country with deteriorating roads and bridges or one with high-speed rail and Internet, high-tech schools, self-healing power grids. The CEO of Siemens America — a company that brought hundreds of new jobs to North Carolina — has said that if we upgrade our infrastructure, they’ll bring even more jobs. And that’s the attitude of a lot of companies all around the world.”

Okay, so now we’re bribing the same corporations whose exploitative profits we’ve pledged to better control by giving the U.S. a makeover. But he went further:

“So, tonight, I propose a fix-it-first program to put people to work as soon as possible on our most urgent repairs, like the nearly 70,000 structurally deficient bridges across the country. And to make sure taxpayers don’t shoulder the whole burden, I’m also proposing a partnership to rebuild America that attracts private capital to upgrade what our businesses need most: modern ports to move our goods; modern pipelines to withstand a storm; modern schools worthy of our children,” he said.

Couched as a way to save taxpayers’ money, the president actually dangled a considerable carrot in front of corporations: construction grants and partial ownership of nearly all of the United States’ infrastructure.

Public-private partnerships are essentially a stepping stone to full privatization of our roads, bridges, railways, power grids and — yes — even our public schools.

The implications of this proposal are so scary that they even startled a Fox News reporter who commented, “It’s unnerving to hear the suggestion that the best way to guard against corporate excess is by crafting ever-closer public-private partnerships.”

As a concept, public-private partnerships can be considered a metaphor for any type of privatization: they sound smart in a capitalist society, but they’re never what they’re cracked up to be.

As a trio of smart economics professors, including one at Yale University, wrote in a paper on using these partnerships to revamp U.S. infrastructure, “Public-private partnerships are often touted as a “best-of-both-worlds” alternative to public provision and privatization. But in practice, they have been dogged by contract design problems, waste, and unrealistic expectations. Governments sometimes opt for a public-private partnership, for example, because they mistakenly believe that it offers a way to finance infrastructure without adding to the public debt. In other cases, contract renegotiations have resulted in excessive costs for taxpayers or losses for private firms.”

A 30-year study of public-private partnerships in the UK concludes that the experiment’s track record has “led to an overhang of debt stretching some 30 years into the future and to constraints on the way public bodies are able to use their assets.”

On the issue of wages, which President Obama paid so much lip service to during his address, one of the biggest problems with public-private partnerships is that the work will be contracted to private companies rather than performed by unionized, public workers — a reality that will deal another blow to the dwindling power of unions and the public sector.

But an even graver problem is that pursuing public-private partnerships mirrors the financial impulse that got us into this deficit and recession mess in the first place: choosing short-term gains over long-term policies.

As a leader of the Service Employees International Union testified in a Senate committee hearing in 2006, “We believe governments that sign long-term concession agreements for essential infrastructure assets without retaining an ongoing interest in those assets [public-private partnerships] risk being perceived as the equivalent of the Native Americans who sold Manhattan Island to Peter Minuit for the equivalent of $24 in beads and trinkets.”

The historical analogy is striking, while somewhat insensitive to the fact that European colonists would have taken Manhattan even if the Native Americans had not signed the land over in exchange for beads. Then again, if the people of the United States do not soon demonstrate an actual commitment to controlling corporate power, then these multinational corporations will indeed become even more powerful, gutting the people’s land and infrastructure and carrying the profits far away from U.S. soil into off-shore bank accounts.

In this light, public-private partnerships appear to be no more than the false treaties before the real battle. Surely those same treaties shouldn’t be the president’s domestic agenda.

An earlier version of this article appeared on

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