HoltesThoughts: Privatization Historically is a tool of Privateering

...And Privateering is Legalized Piracy

Privateers wage private war, They:

Raise Private Armies
Privatize and Extract Resources
Privatize and loot Government Services
Sell their looting as Good for the looted.

Privatization an Old Tool of Piracy

Privatization has been a tool of privateers since the days of Thomas Roe and Nuruddin Salim Jahangir. See [Pirates Loot and East India Company] most visibly illustrated when Robert Clive, backed by a private army, forced Shah Alam to cede Tax collection duties to them for the entire of Bengal Province (Now Bangladesh and adjacent parts of India). Now they are looting the United States.

East India Company as the Model for Modern Piracy

Indeed the East India Company is a model for most modern efforts to subvert and loot governments. And it in turn was a piratical organization whose sole purpose was to turn a profit for it's administrators and investors -- by any means -- including piracy, smuggling, privateering, privatization, filibustering and any means possible. There are legitimate ways to raise money and illegitimate ones, and sometimes the only difference is the integrity of the contract governing them.

Appropriate versus inappropriate privatization

Appropriate Privatization

There is an appropriate place where services provided to the government can be done by private actors. Such business is legitimately 'privatized" when private persons can perform on contracts effectively, deliver what is contracted for and with better quality than government employees can do the same service. If the product is one that normally would be regulated well by market forces then the government is best off acquiring it taking advantage of the ability of Government procurer's entering markets. Privatization only works when the contracts are to individuals, competitively and openly bid for, have term limits, and purely executive.

Inappropriate Privateering

When Government agencies start having people with divided loyalties run them, they enter a gray area. When Private entities, as illustrated by what happened to India, take over government functions, chaos and looting ensue.

Roman Economy

The Romans practiced a privateering strategy in governing provinces and in procuring military supplies. That kind of privatization was often win/win for both the folks getting the government contracts and the Government. It wasn't always a net win for General Subjects. Rome, and its successor Constantinople, was a giant vacuum cleaner sucking up resources.

Coin As Tokens to Pay Taxes with

Still, in its heyday, The Romans paid for goods and services with coin, used those services and goods. They then taxed back the coins and a portion of the produce, after they'd circulated in the economy. When the government builds roads, mints coin and builds, that stimulates commerce and communication as well. The roads carry soldiers and merchants, musicians and performers. There are no markets without commerce and both are built by Government. When the Roman government, markets and commerce collapsed, Western Europe collapsed.

Rome's Privateering Faults

Private economy is dependent on Good Government. With Good Government citizens participate and get something back for their resources of time and money. Had Rome not been a single point of failure, the Roman Empire might have endured. But the Romans turned everything over to private citizens and the whole system collapsed as a result of the resulting misallocation of resources and strife. They practiced the wrong sort of privatization, privateering. The Roman Empire collapsed due to bad government, bad economics, internal conflict and invasion. We can do better by learning from history. Unfortunately people like mythology over facts, and privateering is very popular.

Privatization as Privateering

While Privatizing functions that can be regulated using market mechanisms are appropriate, privateering is profiteering, looting and enriches the few at the expense of the taxpayer, consumer, markets and society as a whole. Privatization is anything but win/win because it results in the ceding of economic and military power to individuals at the expense of the public good. It is never legitimate, no matter how legal it is on the surface and is actually a form of Piracy.

Privateering is Kakistocracy

Privateering is Kakistocracy, rule by the worst, and results in a system governed by raw power, oppression, and conflict. The word "privateering" refers to a form of "legal piracy" where the original privateers would receive a "letter of Marquee" allowing them to wage private warfare. The difference between a privateer and a pirate, was whether there was a war going on and the whether the pirates were fighting the enemy, or stealing from allies or "their own." Captain Kidd was hung for taking as a prize, Ships belonging to a British Ally. For more see [Captain Kidd]

Corporations as Privateering on a Larger Scale

The East India Company established a private corporation, a private government actually, with a letter of marquee written into its charter. This allowed them to raise private armies, usurp agency (act as if they were the British Government) usurp local government powers through contracts and force and use violence, wage war, to enforce those contracts. This made pirate companies like the East India company powerful worldwide actors, while allowing the chartering Country (Britain) to distance themselves from their piracy.

Modern Corporations as Privateering

Modern Corporations are often similar as the current example of Rex Tillerson and his private separate Russian Policy on behalf of Exxon, illustrates. For years Exxon was cultivating Russian contacts and circumventing US law, treaty and the State Department. Now he's running the US foreign policy, for Exxon and its ally. Exxon has been doing this sort of thing for years. For example; they knew about Climate Change — since the 80s, but pushed climate change to delay action. For more on Exxon: [http://holtesthoughts.blogspot.com/2015/07/anyone-surprised-that-exxon-new-about.html]

Privateers are Pirates

Privateers like all pirates, thrive on dysfunction, conversion of public goods to private or club goods and sometimes outright theft, usurpation and bribery. They convert of what should be public goods to private coffers, goods that should be available to all into club goods, only available to the few. Therefore this kind of "privatization" is "privateering" or piracy, while perfectly legal is often a cover for illegal behavior or, due to corruption, legalized theft. These kinds of companies are pirate outfits. They just don't have to share the loot!

Why Privateering then?

While Privateering is bad both for both the general citizenry, Government and private actors it is really good for the pirates and pirate captains. Private Government tends to evolve into oligarchy, private fortunes and monopoly. It also has its own ideology, myths, propaganda, pretend economics, advocates; paid or volunteer. Despite being thoroughly destructive everywhere it is practice. Why?

Privateering Creates Private Fortunes

The reason is, that while the confidence men seeking to get their hands on resources like oil or minerals, tax farming or property they can extract rents from, sell the idea that "private actors can do any public function better than bureaucrats" they are usually saying this because this is a way to get stinking rich. Robert Clive went home from India Stinking Rich.

The Failures Get Hung the Successful Pirates become Peers

Indeed many of the descendents of early pirates are now peers who sit in the house of Lords because an ancestor was a successful Pirates. Indeed the Originators of the East India Company, included some folks who had gotten their sea careers started as "Sea Dogs" or British Pirates. It was very Lucrative. Unsuccessful or low class pirates hung. Pirates formed a rough democracy because they depended on each other to survive. But privateers only share with those they have to share with. Privateers usually don't share their loot.

Privateering is an Effective way to loot societies

While those who shared power with the East India Company prospered from its systematic looting of India, pretty much everyone else lost out. And the East India company specialized in looting. If Bengal was once one of the most prosperous places on earth and is now a basket case, there are people whose ancestors built their fortunes looting it. Privateers don't have to share the loot with the crew.

Privateers As Grifters

Thus whenever a privateer comes to the halls of the legislature or a neighborhood promising easy money or to solve economic travails, they come salivating at getting their hands on what is in public coffers or belongs to the commons. The only difference between such privateering and outright piracy or theft is that it is usually conducted under the cover of a legal seeming contract. Thus they are grifters rather than outright thieves. Privateering in the old days was the waging of war under contract by private citizens. The men earned patches over their eyes and peg-legs from injuries in actual fighting. Nowadays the warriors wear suits and ties and carry brief cases rather than sabers. They give powerpoint (or Twitter) presentations to convince their marks to willingly part with their treasure.

A Little history

Privatization has been a tool of privateers since, at least, the days of Thomas Roe and Nuruddin Salim Jahangir. But it has been refined since then. Privateers still sometimes raise private armies, but they put the risk on Government to avoid being accountable for the costs. The East India Company is a model for most modern efforts to subvert and loot governments, but it has been imitated world wide. The Russians broke up their empire in a fit of privateering. None of the benefits of de-sovietization were shared among all the people. Instead nascent Oligarchs like Deripaska fought to dominate Industries formerly run by the government. The people thought they were getting free enterprise and a say in Government. Instead they got Oligarchs. The Pirate Captains of Russia run Russia and it's corrupt satellites under the captaincy General oversight of Vladimir Putin. It shouldn't be surprising that "mavericks" like Paul Manafort helped birth the Privateers of Russia. For more read [We Gave Russians Oligarchs]

John Paul Jones the Notorious Pirate"

We have an old tradition of piracy and privateering right here at home. "The Notorious Pirate" John Paul Jones was my hero as a kid and a Navy Brat. My Grandmother used to show off his tomb at the Naval Academy proudly. I grew up on his battles and the battles of the Early Navy. From the Point of View of the British our Navy in the Revolutionary War and the War of 1812 was a pirate fleet. We called them privateers. John Paul Jones, when our Navy was junked after the Revolutionary war was over, went and served in the Russian Navy. Privateering was a European Industry, not just British. The Brits just perfected it, exported it to the world, and we inherited from them.

Two Generations of Pirates

Privateers Are Grifters, Opportunists and Pirates

Looting and Dysfunction

Privatization is privateering and usually winds up looting whatever is privatized. However they come in promising the moon. The premise of their arguments is that the private grifters who come in can run the system or resource better than the folks running it before them. Then once they are given ownership (temporary or permanent) over the resource along with considerable privileges. Then they give the moon to their marks. Their promises always prove to be fraudulent or unsustainable. and the ones making them prove grifters. Most systems require sustained investment to avoid depreciation degrading them to malfunction. Privateers typically run the systems they run into the ground, hunt resources to exhaustion and flee once resources are depleted. This has happened with Turnpikes, canals, stage-coaches, rails, and a host of other systems in this country.

Further Reading:: Organizing Communities Around the Post Office; Using the Post Office to Organize

Definition of Loot

Private government is at best oligarchy and at worst pure tyranny. And privateers have been using privatization as a tool for looting since Sir Thomas Roe used a treaty with Nuruddin Salim Jahangir to create a base of operations in India that eventually tried to run India into the ground and gave us the English Word "loot" in the process.