Wednesday, August 27, 2014

Predatory Capitalism

Predators usually focus their attention on the most vulnerable prey to which they have access.  Predatory capitalism is the name given to businesses which earn profits by taking advantage of vulnerable human prey.  Our recent financial crisis was partially the result of predatory capitalism.  Lenders provided mortgages to vulnerable households who did not have the income to service their debt.  The sold the mortgages to bankers who packaged them into securities which they sold to poorly informed investors.  This article describes another form of predatory capitalism.  The public sector has found a way to shift the cost of government services to the poor.  It is a form of privatization in which the private sector performs the services that were once performed by government, and the cost of those services is shifted to the poor.  For example, some of the costs of monitoring citizens on probation are shifted to those on probation.  The are required to pay fees for some of those services and the penalties for non-payment are very high.  The services providers then act like bill collectors who have a powerful weapon.  They can send those who can't make the payments to jail.  Similarly, many judicial services are provided by private firms and the costs are shifted to the poor.  For example, some courts require the poor to pay for public defenders.  Furthermore, in many states private firms run some of the prisons.  They receive funding from the government for those services but they charge prisoners for some of the services that are not funded by government.

This article only touches on the extent of the privatization of government services that are essentially predatory.  The growth of for-profit colleges and trade schools is perhaps the major form of predation.  The poor take out education loans that are subsidized by government in the hope of getting jobs that are promised.  Most of them either fail to graduate or fail to get the promised jobs upon graduation.

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