Private Sector is the Way to Go

As I reported to you last time, it is highly problematic for the federal government to balance its budget by shedding its baggage and dumping it onto the states, which have debt of their own to deal with.  We must assess each service of the federal government extracurricular to the inception of the Constitution in 1789 and test them against three questions: (1) do we really need this service?  Less than half will actually be eliminated this way because what we did not need in 1789, we need now.  There is a good argument for not having something like Social Security prior to FDRs New Deal; I think with more onuses to save in a savings account or investment portfolio for retirement, young Americans entering the workforce in their twenties would do it out of necessity.  Unfortunately, we cannot leave the elderly and disabled who are not financially well off with no means of support.  (2) What combinations of two or more departments of the federal government can be colsolidated?  My Social Security and Medicare consolidation example in the previous post explains that.  (3) What services of the federal government can be turned over to the private sector?

All presidential candidates including President Obama desire to create a better environment to enable the private sector to create more jobs.  Looks like we can balance the budget and create jobs with this one action.  I am not prepared to say the United States is ready for an investment firm to take over Social Security, a health insurance company to take over Medicare, of for a technology type company to take over education.  Rome wasn’t built in a day.  But I can think of one example right off the bat, something the federal government can do right now, it can get out of the railroad business.

This is no slur on Amtrak, I have no axe grind with anyone who works for them and most of their trains are quite comfortable.  But they are heavily dependent of federal subsidies to stay afloat.  Before Amtrak was a gleam in anyone’s eye, there were a lot of privately owned railroads.  In my neck of the woods, the New Haven Railroad Company provided the commuter rail service I use today now owned and operated by the New York City MTA, and the Pennsylvania Railroad Company, who handled service between Boston and Washington, DC.  As private for profit businesses, they updated their cars and equipment in a timely fashion (MTA Metro North Railroad still using 1971 vintage rail cars on New Haven line), and were able to create lots of private sector jobs.  In addition, we would never have to bail out General Motors again. The new M-8 rail cars arriving in stages to the New Haven line are Japanese imports, built by Kawasaki, the motorcycle company.  Privately owned railroads can give the contracts for updates to General Motors instead and we can ride the rails in Made In America cars.  This will add more private sector jobs at General Motors and the railroad contracts will keep them in black ink for decades.  And it will have a domino effect on other industries such as steel making, vinyl and such materials for the seating, and the like.  More private sector jobs and more financially stable private sector companies that never need bailouts.  In the 2008 presidential debates, Republican candidate John McCain made reference to Joe the Plumber, in an attempt to make a case that overtaxing the rich makes it too hard to get rich and live the American Dream.  How about Joe the Railroad Tycoon?  Any Vanderbilts out there?

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