Profit is squeezing services
The still simmering row about the firefighters’ strike in Canada has thrown into sharp relief a global reality: around the world, essential services are under pressure as local, state and national governments seek to cut costs.
Even in Canada and the US, where the International Association of Fire Fighters is a well-established and militant union, there is a constant battle against creeping privatisation – a fight against turning a service that prioritises public good into one that serves profit.
In the UK, where city populations have grown – along with, presumably, the fire risk – the Fire Brigades Union reports having shed more than 7 000 jobs in recent years.
Even in Scandinavia, with its history of social democratic governance, firefighting and related emergency medical services are under pressure.
Everywhere, private companies – many with their bottom lines squeezed – are hovering, keen to pick up any lucrative pieces that may be on offer as various levels of government try to offload their service delivery obligations.
In so doing, the companies are often accused of behaving like vultures.
They are, but only because this is what they are compelled to do.
It would, for example, be foolhardy for any company offered the opportunity of new revenue streams to turn these down.
And it would probably be illegal – and certainly actionable – for companies to deprive their shareholders of dividends to provide free or cut-price services to poor households.
The same applies should companies retain those workers who are deemed to be an unnecessary cost.
This sums up the fundamental conflict of interests within our society.
The economic framework in which we exist is dominated by shareholder companies and transnational corporations.
The executives, managers and supervisors merely police the system to ensure the flow of profits and dividends, while governments exercise varying degrees of power to regulate this.
Here history provides us with some important lessons, one being the landmark 1919 case of Dodge v Ford in the Michigan Supreme Court.
The Dodge brothers, before they started making their own cars, were 25% shareholders in the Ford Motor Company.
When Henry Ford decided – as a goodwill gesture in a virtual monopoly market – to reduce the price of his cars, the brothers took him to court, arguing that it was the fiduciary duty of the company to maximise rewards to the shareholders, not the consumers.
The Dodge brothers won. And, despite some latter-day legislative tinkering, that ruling remains, basically, the legal duty of companies.
The other lesson goes back to 1720 and the South Sea Bubble scam, which saw the finance minister jailed and involved more than 500 MPs and members of the House of Lords. Bankers facilitated the corruption. The response of the British government was to ban shareholder companies for the next 105 years, on the grounds that they were inherently prone to corruption.
It may seem ironic, but this ban was supported by Adam Smith, father of modern laissez-faire capitalism.
Given this history, and the fact that the firefighters have highlighted the apparently increased international drive towards the privatisation of essential services, we should all be very concerned.