Courtesy of Maersk Lines
To privatize or not privatize Wilmington’s own ocean-going port; that is the question now up for debate. Talks begin next week.
One the port loses money; turning it over saves money the very year it gets dumped.
Two, privatizing the port, will cost union jobs and their pension fund, dearly. There is no way any company will not want to “own” that pension fund.
Three, as a private business, the port must be taxed, earning revenue for the city.
Four, safety, upgrades, competitiveness with other ports, all take back seat to revenues acquired per quarter.
Five, the city will have another major business knocking its doors down asking for new major concessions.
Bottom line, is whether the city wants to sell out those working, taking the financial hit that will cost it, or to pay the extra each year to keep the port running….
In this day and age, it appears selling out the people, carries far greater risk and impacts the area with a greater negative, than simply paying for the shortfalls year after year.
Let’s us remind ourselves what actually “is” privatization….
In privatization schemes to outsource traditional governmental functions, taxpayer dollars are diverted from the building of public assets and institutions to create long-term revenue streams for corporations. Privatization has resulted in the loss of public sector jobs that have been crucial to the growth of the middle class, and instead has created a system that favors lower wage jobs and new profit centers for CEOs and investors.
Here is how privatization works. I buy a field next to your house. I live in a tent. I watch your house while you are away on vacations. You’ve paid off the house, and now, having retired, you live in Florida, and the house taxes are backing up here in Delaware. You sign the deed over to me, so you don’t pay taxes anymore….
I just stole your property. All that money you put into it, was essentially, wasted. Your assets, drop by $500,000. Mine jump $500,000. You could have put the house on the market… That is what most people do… But no. You just gave it away. Thank you, btw.
That is privatization. Giving something free to corporations, a handout, that they only get, because they just happened by at the right moment…. Here you go, bud… have $45 million dollars… Run a business! Welcome to corporate America.
That is privatization. Of course, it is framed these three ways: …. “let me take that off your hands…;” “I could take care of that awful problem for you;”…. ” You, know, I could make that “problem” go away..”.
And in the heat of the moment, that investment that years of hardworking people have put into, gets whisked away…. So of course privatization is going to be sold hard. Who wouldn’t want a free $50 million dollars?
Bottom line, there are some entities in public society that are there for the common good. The public funds them… Take roads for example. If Delaware privatizes 95 into to Wilmington, every commuter pays an extra $2 a day to make the trip. Every commuter pays $2 X 5 X 50 on the average, or $500 a year. At roughly 60,000 commuters a day, $30,000,000 is sucked from all other businesses in New Castle County per year, and given to the new owner of interstate 95…. Primarily to prevent that, was why a long time ago public funding and ownership, was deemed to the better approach. Furthermore, repairs and potholes, suddenly get low priority status; skimming off the top becomes number one…..
The choice of privatization boils down to the following…. Which is better? A choice of higher business activity, or a choice of keeping the wages of those working now?
This can best be seen in Greece. The Greeks farmed one half of this port, the container side, over to a Chinese company. They kept the lucrative part, the cruise ship side, for themselves. What has happened is that business on the Chinese side as doubled. It is becoming one of the busiest ports in the world. The Greek half is languishing. Lacking the money to invest, their side has, by not going forward, fallen backward.
The Chinese have invested in new ideas and new technology. But, being Chinese, one can rightly expect they don’t invest in human capital.
On the Greek side, some worker’s salary and benefits amount to $181,000 a year. Obviously a full work force paid that much would soon force closure of the port. The Chinese pay $23,000…. and have no job security plan. They also do not abide by Greece’s union regulations and safety requirements. Currently they have no trouble filling workers when they need them. (Greece is in the imploding stages)…
And there you have it. One simply has to plug in whether the lease amount and tax revenue from a thriving port on top of the diminished payroll purchasing power of all its ex-employees, is greater or less than…. the diminished tax revenue from a mediocre port, on top of the purchasing power all it’s unionized employees possess…..
It appears that the one best option, is to have Government upgrade the port, meanwhile keeping government ownership, thereby keeping its workers employed and their money flowing through their economy… That option maximizes the most money flowing out of the port, and into the city.
The problem for unions is, that as long as wages are consistently high across the Seaboard, then that is the price of doing business in America’s ports. But let one port hire 7/8th less per worker, then in all other ports to remain competitive, all workers will soon also have to be working at that level. 7/8ths less of economic clout per worker, needs to be quantified in dollars, before knowing the full economic benefit.
There is one more thing. If the business running the port loses money, even one dollar; they can just shut the port down and walk away…. Then there are no winners.
kavips 
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December 10, 2012 at 1:21 am
Julius Cephas
Sounds Like a Welfare Program for the Rich and subsidized by the tax payer. I agree that a Government Operated Upgraded Port will be better for the Delaware Community and the state in the long-run.
In Delaware! December 7, 2012,, Economic Development Multi-Millionaire Alen Levin, (previous) owner of Happy Harry’s is pushing to privatize or “outsource” the operations of the Port of Wilmington to oil and coal giant, Kinder Morgan. Kinder Morgan has had numerous violations for toxic spills and polluting our water and now may plan to bring their operations to Delaware. In addition, 2200 unionized workers may loose their jobs and/or find more labor being outsourced to other countries. Delaware has one of the highest cancer rates in the nation. Let’s have open and transparent discussion about the oil giant Kinder Morgan plans to ensure the state does not move in a direction to lease operations to a private energy coal and natural gas company with numerous EPA violations. This would work great for Kinder Morgan if they hire non-unionized workers. Wake Up Delaware!! Governor Markell-what are you hiding behind? The question becomes whether the US will continue to be a great industrial nation without a strong healthy and working middle-class. What will be the effects on the housing, automotive, and the retail industry? Local 1694 and 1694-1 needs your help!
December 18, 2012 at 9:11 pm
Julius Cephas
Spotlight from: Economic Policy Institute: The State of Working America
DECLINING COLLECTIVE BARGAINING
For much of the 1950s, roughly one-third of employees belonged to unions. In 2011, only 12 percent did. Among public-sector employees, more than one-third (37 percent) are unionized, while in the private sector, only 7 percent are. This reduction limits the number of good quality jobs with union wage and benefits premiums. It also reduces the role of collective bargaining in setting standards in particular occupations and industries that benefit workers not directly covered by collective bargaining.
Workers covered by collective bargaining also have better benefit packages with lower health care deductibles and better access to family health coverage.
The decline in collective bargaining coverage accounted for 1/3 of the growth of wage inequality among men and 1/5 among women between 1973-2007.
The Chinese side pays significantly lower wages with no job security plan and regulations. Once again back to who benefits from this deal?
December 29, 2012 at 12:31 am
Norinda
This is from-In the Public Interest.org
The American Legislative Exchange Council has been a major force in pushing for the privatization of public services and assets. This organization, which boasts of having more than 2,000 members, brings together state lawmakers, corporations, and conservative think tanks in an effort to push an agenda of “free markets, limited government, federalism, and individual liberty.”1 As ALEC succinctly laid out in its 2011 publication, State Budget Reform Toolkit, “policymakers should embrace privatization and the competitive contracting of government services.
This agenda directly benefits many of its corporate members, who hope to increase their revenues and profits by dismantling public services and taking over the work through lucrative government contracts.
As numerous privatization efforts show, handing over control of public functions to corporate entities can have disastrous results. In the quest to increase corporate profits, the quality of public services suffers, public costs may increase, and the ability to provide meaningful oversight over our public structures is greatly compromised.