In this uncertain economy, whether you think the glass is half full or half empty, you probably take for granted the fact you can fill it by turning on the tap. Last summer, that basic service vanished for Detroit’s working-class households: neighborhoods awoke to the humiliating reality that in the world’s richest nation, this impoverished city’s water had run dry—the city’s stopgap “emergency” response to fiscal collapse.
Detroit’s devastation seems freakish, but we may soon see more resource crises nationwide if pro-business officials decide water isn’t so much an essential entitlement as a commodity to be traded like corn and crude oil. According to research by Corporate Accountability International (CAI), the experience of dozens of communities that have experimented with privatizing their water infrastructures illustrates the danger of prioritizing cost concerns over human rights.
Water privatization in poorer countries has been criticized for leading to exploitation and destabilization of local infrastructures, particularly under “free trade” systems that encourage pro-market reforms. But in US cities too, water systems are being bled by market forces. And in nations rich and poor, when water is corporatized, CAI warns, injustice tends to flow freely:
Private water corporations frame water in business terms, placing economic outcomes over social objectives, preventing prioritization of the poor and vulnerable. Treating water as a mere commodity also relegates it to the whims of the market and bypasses the accountability and transparency of the public sector.
But the cruel effects of water commodification are felt worldwide. With the water shutdown, Detroit exhibited the sort of neoliberal politics that foster both “austerity” and the usual policy response—privatization. When the water got shut down last summer—collectively punishing supposedly “delinquent” customers who were behind on their bills—CAI and community groups expressed fears about the city’s move to consult with a premiere water multinational, Veolia, about revamping the water system and cutting costs. CAI Media Director Jesse Bragg believes Veolia may be looking to seize control of its public water infrastructure, as it has done in other regions, and that with Detroit’s finances in a desperate state, “Veolia may recommend privatization and use this contract as a foot in the door.”
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Until now, much of the anti-privatization advocacy has centered on the Global South. For example, in regions of India and the Philippines, neoliberal foreign investment combined with impoverished infrastructure has led to a World Bank water scheme that CAI blames for high costs, constraints on access, polluted water and failing infrastructure.
CAI in 2012 called for a United Nations investigation into the role of a major World Bank financial institution, the International Finance Corporation, in “promoting private sector control over water services.” Advocates warned that in addition to feeding inequities in resource access, “direct investments in private corporations bypass public budgets and accountability measures while distracting from the real need for funding water infrastructure.”
Advocates stress that historically, water infrastructure has been controlled by public authorities and, while the system is certainly not perfect, public finance has allowed for steady extension and modernization of urban water infrastructure. And this was done under the oversight of public officials, not CEOs who by definition prioritize the interests of moneyed shareholders over those of taxpayers and voters.
But in recent years, water companies have been giving a hard sell to US lawmakers. As with many privatization schemes, the entry of private companies is often sold as an “innovation.” The industry has rebuffed accusations of privatization, sometimes arguing they have simply contracted to provide services or consultation with the city. Just as charter schools promise magical performance-boosting reforms for public education systems, water companies promote public-private partnerships as a win-win for the public and business, by streamlining management and slashing red tape to cope with massive underfunding of water infrastructure.
CAI observes that the private water industry has lobbied for federal legislation to link public funding streams for private water management projects, a move that critics say would open the floodgates to fiscal instability. The industry is also pressuring state lawmakers to make the water sector more business friendly: in New Jersey, the water-industry lobby pushed to defeat bills that CAI says “would have safeguarded cities and public health.”
In reality, studies of privatization schemes have yielded no clear evidence that they bring efficiency or technological improvements. Mostly they bring free-market mentality to a public institution:
Private water corporations have a fiduciary obligation to maximize returns to shareholders. To meet this obligation, they focus on a) weakening their greatest competitor, the public water sector, b) opening up the water market and creating business opportunities for themselves, and c) removing as many obstacles as possible to the profitability of their operations.
Moreover, activists say that such deals can precipitate an erosion of regulations on public health and environmental standards. “Public utilities are far more likely to prioritize conservation because their mandate is equitable access, which benefits from conservation,” Bragg tells The Nation via e-mail. “Private utilities can, in some ways, benefit from scarcity. Increased consumption and high rates are incentivized when profit is the primary motive.”
And there’s another way that privatization can undermine a community: municipal water systems run by civil servants are one of the last bastions of public-sector unionism in the country. The workers of AFSCME Local 207, which handles Detroit’s Water and Sewerage Department, have fiercely protested possible privatization as they try unsuccessfully to resist city officials’ attempts to unravel union contracts as part of the financial overhaul.
As officials scrambled for private solutions to the city’s “financial emergency,” a water worker named Ryan told WSWS in August:
From the standpoint of a capitalist perspective, who wouldn’t want the water department? They figure they can triple the water bills and people will have to pay it. It’s like liquid gold.… Privatization has been a long-term process and they are finally getting their people in place to put it together.
The water shutdown in Detroit was a haunting portent of what could happen when a city government is so concerned about “cost cutting,” it is willing to let its communities go thirsty. Even in a “wealthy” country, critical social institutions can make easy prey for the free market’s monstrous appetite.
