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S.C.
Statehouse Report
Aug. 1, 2004
VIEW: http://www.statehousereport.com/columns/04.0725.election.htm
 COMMENTARY
Privatization
not always a good solution
By
Andy Brack
SC Statehouse Report
 AUG.
1, 2004 - - Privatization - - the practice of paying big business
to handle services traditionally provided by government -
- may start to rear its ugly head more in South Carolina.
Gov. Mark Sanford "has never stated publicly" that
he believes big quasi-governmental agencies like electricity-generator
Santee Cooper or the S.C. Ports Authority should be privatized,
according to spokesman Will Folks.
But in a recent story in The Augusta Chronicle, Folks
admitted the governor's office was "willing to entertain
the idea" to privatize Santee Cooper: "Any discussion
that's focused on maximizing value and efficiency to the taxpayer
is a good discussion."
Not necessarily.
Privatization of some government services, such as garbage
collection or running school buses, are successful because
the scale isn't overwhelming. Sometimes it makes sense to
enter public-private partnerships to run toll roads or build
specific projects.
But privatizing massive agencies that provide huge public
benefits would have a detrimental impact on the state.
Sure, selling off agencies like Santee Cooper or the Ports
Authority would generate a lot of cash. But that shouldn't
be the only factor to be considered when looking at privatization.
In these two cases, privatization is wrong because it would
take control of significant economic functions of the state
and tie them to decisions made by people outside of South
Carolina.
"Government is a democracy," points out state Sen.
Tom Moore, D-Clearwater. "Business isn't."
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In other words, agencies like Santee Cooper and the Ports
Authority ultimately now answer to state lawmakers and the
people Because of the very structure of the agencies, both
of which are generally considered self-sufficient, they have
to perform in the best interests of the state of South Carolina.
If, however, they become answerable to a board of directors
and shareholders, decisions likely would be made that may
not in South Carolina's interests.
The consequences could be disastrous. For example, the Ports
Authority's annual operations are responsible for an estimated
281,660 jobs in the state. Water-borne commerce that flows
through the Ports Authority equals $23 billion annually, or
almost 17 percent of the state's total.
Currently, the Port, considered a model by many for its flexibility
and the professional service it offers, is a public resource
charged with maximizing benefits for South Carolina and its
businesses. But if a private company is put in charge, it
may decide to send ships to other ports that it runs instead
of sending business through South Carolina.
In other words, the Ports Authority currently steers jobs
to the state. A private entity might find business reasons
to steer them away, which is not in the state's best interest.
Another consequence: higher rates. If Santee Cooper, which
generates $1.1 billion in revenues and $69 million in annual
profits, were to be sold to the highest bidder, electricity
rates likely would go up.
The 765,000 people and business in the state who get their
electric power through Santee Cooper know it is relatively
inexpensive, stable and reliable. As one observer put it,
Santee Cooper's power is the one of the best deals citizens
get in South Carolina.
But if a private company took over the state's power business,
higher rates would result because the company would have to
service the big debt it took on to buy the company.
There's another reason the state shouldn't lose control of
this valuable asset: the Enrons of the world. Remember the
big scandal a few years ago when California couldn't provide
enough summer power to residents? Its power had been privatized
by a company that made some bad decisions.
Another way to look at the whole privatization debate is
to think about how you feel when you phone technical support
for help with computer problems. When the person on the other
end of the line is in India, it rankles. You immediately know
the computer company outsourced the job because it was more
interested in the bottom line than the customer.
Outsourcing services provided by Santee Cooper or the State
Ports Authority are bad ideas that need to be shelved.
Remember the old maxim, "If it ain't broke, don't fix
it?" These two agencies have challenges ahead, but letting
outsiders direct their economic clout shouldn't be one of
them. Fortunately, most lawmakers probably agree.
RECENT COMMENTARY
McLEMORE'S WORLD
81/: Another kind of convention
This week's cartoon by our Bill McLemore:
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