There are so many possible things to write about…the fact that North Minneapolis residents probably aren’t going to get FEMA assistance (http://minnesota.publicradio.org/display/web/2011/06/14/tornado-housing-folo/) or the frightening prospect of Michelle Bachman running for president (http://minnesota.publicradio.org/display/web/2011/06/13/michele-bachmann-presidential-announcement/). But instead of writing about either of these topics, I would like to focus your attention on something that Former Minnesota Governor and Presidential Candidate Tim Pawlenty said the other day at the University of Chicago:
At least Tim Pawlenty trims his nose-hairs.
“There are some obvious targets. We can start by applying what I call ‘The Google Test.’ If you can find a good or service on the Internet, then the federal government probably doesn’t need to be doing it. The post office, the government printing office, Amtrak, Fannie and Freddie, were all built for a time in our country when the private sector did not adequately provide those products. That’s no longer the case.”
Okay, I recognize that this line of argument has traction with people. However, it is a flawed assertion and based on unsound assumptions of organizations. Let me explain what I mean.
Organizations–whether public or private–are made up of people. Human beings are quite varied, but even the best of us are prone to mistakes and errors in judgment. Now, let us consider the fact that public organizations have much more oversight and “sunshine” shining into them (by which I mean that they have greater accountability and open information to the public). So, when people in public organizations make mistakes or errors in judgment, the public and the media find out about it–usually pretty quickly–before the mismanagement or abuse spirals out of control.
Unfriendly monsters apparently have scales and beady eyes.
Now, what about the private sector? Well, the private sector has a lot less oversight and “sunshine.” But since private organizations are also populated with human beings who are sometimes prone to mistakes and flaws in judgment, this means that private-sector corruption and mismanagement often festers in secret for a lot longer–and when it does come to light it has often turned into something very ugly.
Not sure why he's smiling.
So what do these private-sector catastrophes look like? Let’s start with one close to home–Petters Group Worldwide. Minnesota businessman Tom Petters was convicted after nearly 10 years of running his business, Petters Group Worldwide, as a $3.65 billion Ponzi scheme (the largest Ponzi scheme in U.S. history). This lead to the bankruptcy of Sun Country Airlines and investors in Petters’ company were lucky to get pennies back on the dollar for their investments. Now just to put this in perspective, $3.65 billion is MORE than the entire Gross Domestic Product (GDP) of the South American country of Guyana (among others).
Guyana--here it is.
Some might claim that the free market will weed-out corrupt and inefficient companies. Yet that wasn’t the case with Petters Group Worldwide–it was the Federal Bureau of Investigations (FBI) and Federal prosecutors who put an end to Petters’ Ponzi scheme–not the market.
Home of the colossal collapse.
Exhibit 2: Enron. Oh where oh where to start with this one? The cooked books? The late-night paper shredding? The cheering of the rolling energy blackouts in California? The price-gouging? Oh heck, you can just read about it if you really want to know all the gory details: http://en.wikipedia.org/wiki/Enron.
Still not convinced? There’s plenty more where that came from. Why don’t you do what Tim Pawlenty suggests and “Google it” to see just how rampant corporate fraud really is?
