The Environmental Catastrophe at Pondicherry’s Kurumbapet Dumpsite: More Disturbing Revelations
Since my previous post, I’ve learned that on 22 January The Hindu reported that the Pondicherry Pollution Control Committee (PPCC), acting on a complaint from the Puducherry Environmental Protection Assocation, issued a notice to Puducherry Municipality for openly dumping medical and solid waste at Kurumbapet, on a site that was designated to be developed as a sanitary landfill.
Pondicherry's unsegregated waste smolders at Kurumbapet dumpsite
The Hindu reports, “In its notice, the PPCC said, ‘the activity leads to severe environmental degradation and is a gross violation of the Environment (Protection) Act, 1986, Bio-Medical Waste (Management and Handling) Rules, 1998 and the Municipal Solid Waste (Management and Handling) Rules 2000.’”
According to The Hindu, Special Secretary to Government (Science, Technology and Environment) G. Theva Neethi Dhas said that the municipality has been asked to take steps to stop dumping of waste immediately, and that action would be initiated if the local body fails to do so.
On 29 March, The Hindu reported that Puducherry Municipal Services Private Limited (PMSPL), a joint venture between the Bangalore-based firm, Kivar Environ, and Puducherry Urban Development Agency (PUDA), continues dumping mixed municipal waste at Kurumbapet, more than two months after the PPCC’s notice to stop the dumping. The article quotes Deputy Conservator of Forests Anil Kumar as saying that although the dump is within 5 km of a bird sanctuary, the Ossudu lake, the Environment department was never informed about the dumping.
The article quotes Mr. Dhas, “as the yard is located within five km of the protected lake, it was mandatory for the Municipality as well as the company [PMSPL] to conduct an Environment Impact Assessment and a Public Hearing before converting the land into an area for garbage segregation. We do not have information on whether they had approached the Ministry of Environment and Forests for any clearance. However, the process would take long time to complete as it involved a lot of technicalities.”
These articles create the impression that officials in the Puducherry Government are surprisingly uninformed about the municipality’s waste management practices, and that there may have been considerable irregularities in the process of approving the Kurumbapet site for dumping. Mr. Dhas, Special Secretary to Government (Science, Technology and Environment), doesn’t know if PMSPL received clearance for dumping waste near a protected area, and Deputy Conservator of Forests Anil Kumar states that the Environment Department was never informed about the dumping of waste at Kurumbapet.
Meanwhile, the PPCC’s notice to stop dumping has been violated by PMSPL for over two months.
What is going on here?
Recently, the news magazine, Pondicherry Voice, reported that PMSPL’s tipping fee — the amount that Pondicherry pays PMSPL to dump garbage — is Rs 2,300/ton. This works out to Rs 33,350 for every 14.5 ton load that each of PMSPL’s 14 compactor trucks dump at Kurumbapet.
weighing the windfall before a compactor enters Kurumbapet dumpyard
Could this astonishingly high tipping fee explain why dumping at Kurumbapet started without a genuine environmental impact assessment, public hearing, and permits?
Does it explain why the PPCC’s notice to stop dumping has gone unenforced?
I certainly hope The Hindu and Pondicherry Voice will continue to investigate the government’s handling of this environmental disaster.
Yesterday, while I shot photos at the Kurumbapet dumpsite in Pondicherry, a man called out to me. “We can barely breathe,” the veterinary professor shouted over the wall that surrounds the campus of the Rajiv Gandhi Veterinary College, 10 meters downwind from the garbage dump. “Ever since they created the dump, we are suffering terribly.”
Here’s the reason for his lament:
scavengers hunt for recyclable waste while smoke blows over the veterinary college
dense smoke from the dump drifts toward the Rajiv Gandhi Veterinary College
The dump has transformed the college campus into a gas chamber. Every day, the garbage of Pondicherry’s one million residents is dumped in the 25-acre Kurumbapet dumpyard. As organic matter in the waste decomposes, it generates heat and highly flammable methane gas. The gas combusts, igniting other materials: paper, plastics, rubber, cloth. The waste then smolders in a low-temperature fire, producing massive amounts of smoke, and generating persistent organic pollutants (POPs), including dioxins, furans and polychlorinated biphenyls (PCBs), which rank among the most hazardous substances known to man. Such toxins are consumed by and accumulate in wildlife and livestock at the site. Livestock, such as cows, pigs and chickens, then transfer the toxins to humans through eggs , meat and milk. Human breast milk tested at dumpsites in Chennai and Kolkata has been found to be alarmingly contaminated by such toxins, increasing infants’ risk of cancer and many other illnesses. Unfortunately, the most alarming research reports are not freely available on the internet.
despite a 12-foot high wall around the dump, many children are inside
Summarizing the findings of three decades of research on POPs in India by scientists at Ehime University, Japan, Dr. Annamalai Subramanian and Dr. Shinsuke Tanabe write, “The levels of many of the persistent toxic chemicals in the Indian environment, food stuff, wildlife and human are one among the highest in the world . . . . This is certainly high time for the government and related agencies to take a serious look on the matter and take urgent necessary steps. The data available on the Indian Persistent Organic Pollutants pollution scenario shows need for every concern.”
a boy in Kurumbapet garbage dump
Research by Community Environmental Monitoring found a cocktail of toxic chemicals in air samples collected from open dumpsites in Chennai. And studies of groundwater around open dumpsites in India have found pollution by heavy metals and other dangerous contaminants.
The situation raises several questions:
What were Pondicherry’s authorities thinking when they decided to create another massive open dumpsite? The site violates several provisions of the government’s garbage management regulations, namely, the Municipal Solid Wastes (Management and Handling) Rules, 2000 (MSW Rules). The rules prohibit the open dumping and uncontrolled burning of mixed waste. In other words, the dumping and burning of mixed waste are punishable offenses.
Why does Pondicherry’s Pollution Control Board permit this massive environmental catastrophe? Why has the PCB not shut down the site?
Why has a sanitary landfill not been constructed? The 19-year contract between Pondicherry and Puducherry Municipal Services Private Limited (PMSPL), a joint venture between the Bangalore-based private firm, Kivar Environ, and Puducherry Urban Development Agency, stipulates that PMSPL will build and operate a sanitary landfill, as required by the MSW Rules. The contract pays PMSPL to construct a sanitary landfill, but Kurumbapet is an unsanitary open dump.
a PMSPL compactor defecating at Kurumbapet dump
PMSPL compactor empties itself before another shift
a PMSPL compactor gives something back to Mother Nature
After visiting the Kurumbapet dumpsite, I checked another crime scene, the open dump beside the truck stop at Mettupalayam. There I found cows and dogs rummaging through black, red, yellow and green plastic bags. Colored plastic bags immediately tell me one thing: hospital waste. A medical facility has meticulously sorted its waste, but the firm that the facility hired for disposal has illegally dumped the waste in the open. Half-burned bloody bandages, latex gloves, I.V. bottles and tubing, vials, syringes and all sorts of other medical detritus was scattered over the landscape.
mixed medical waste dumped in the open in Pondicherry
i.v. bottles and assorted other medical waste dumped in public in Pondicherry
medical waste illegally discarded in Pondicherry
cows rummage through illegally discarded hospital waste in Pondicherry
Again, this is a crime and a public health disaster.
Is Puducherry’s Pollution Control Committee permanently on vacation?
Week after week, India becomes visibly dirtier. Conflicting priorities inherent in the government’s drive to privatise municipal solid waste management (MSWM) deserve much of the blame.
The government aims to protect the environment and public health by minimizing municipal solid waste (MSW), yet the government expects the private sector to manage MSW as cheaply as possible. Here’s the catch: in this era of rampant consumerism, it’s increasingly expensive to protect the environment and public health from the public’s use-and-throw lifestyle, which values convenience over conservation.
The government’s privatisation drive fails to acknowledge the inherent contradiction between the government’s expectation of cheap service from the private sector, and the private sector’s determination to maximize profit. The consequences of this contradiction are demonstrated at the doorsteps of residents of Pondicherry’s Raj Bhavan neighborhood. Every morning, employees of PMSPL (Puducherry Municipal Services Private Limited), a joint venture between Kivar Environ (a Bangalore-based firm) and Puducherry Urban Development Agency, collect segregated biodegradable and non-biodegradable waste from homeowners and then combine the wastes in a collection vehicle. Handling and transporting combined waste violates the government’s MSWM regulations, but is far cheaper, and hence more efficient, than managing segregated waste.
For several years, an NGO named Shuddham worked diligently in Pondicherry’s Raj Bhavan ward to educate residents about the importance of segregating garbage, so that the wastes could more easily be composted and recycled, minimizing the amount that was sent to Pondicherry’s dump. Shuddham’s employees visited homes each morning and collected segregated waste in separate containers. Shuddham then composted the biodegradable waste and, after additional sorting, sold recyclable materials — plastic, metal, glass — to scrap dealers. Shuddham’s efforts brought waste management in the ward into compliance with the nation’s Municipal Solid Wastes (Management and Handling) Rules, which make daily, segregated waste collection mandatory. Again, the purpose of segregating the waste was to facilitate composting and recycling, which minimize the amount of waste that must ultimately be disposed at a dump yard. This approach, although labor intensive and certainly not the cheapest, minimized dumping and maximized the recovery of precious resources, yielding significant benefits in terms of safeguarding human health and the environment.
But in January, Pondicherry’s government terminated its contracts with Shuddham and other small, local waste haulers, and awarded a 19-year waste management contract for the entire territory to PMSPL. The contract pays PMSPL according to the weight of waste they dump at Pondicherry’s new dumpsite in Kurumbapet, so, as far as PMSPL is concerned, the more waste, the better. To streamline collection and transport, PMSPL brought in 14 compactor trucks, dozens of mechanized mini-tippers, and hundreds of plastic dumpsters. With 14 compactor trucks delivering an average of 14.5 tons of waste to Kurumbapet per trip, the dumpsite is filling up rapidly.
The problem here is not primarily with PMSPL. The problem is the government’s waste management policy, which treats privatisation as an off-the-shelf solution to India’s solid waste crisis, disregarding privatisation’s dismal track record, and the colossal disjuncture between the imperatives of private enterprise and the nature and characteristics of public goods. As Patrick Dorvil, a solid waste economist at the European Investment Bank, explains, “it is difficult to compare the performance of private firms and municipal management in the field of solid waste management, since these organizations pursue different goals . . . Private firms are indeed interested in maximizing profit, whereas the objectives of municipal management are much more complex.”
I wanted to learn more about PMSPL’s operation in Pondy, so I spent an afternoon accompanying a crew of a compactor truck on their route. PMSPL’s PR blitz is as bitterly sarcastic, disingenuous and contemptuous as the tobacco industry’s. Each compactor truck, filled with Pondicherry’s unsegregatable compacted mixed garbage, is decorated with a billboard proclaiming, “Let us segregate the waste & save our environment.”
Bamboozling the public?
I watched as PMSPL’s employees filled the truck with every kind of garbage imaginable, from florescent tube lights and car tires to banana trees and coconut branches discarded by a wedding hall.
Feeding the beast
Although their contract stipulates that PMSPL will build and operate a “scientifically engineered sanitary landfill,” the compactor trucks transport the garbage to a 27-hectare enclosed lowland in Kurumbapet, where the trucks empty themselves like defecating monsters. As organic material in the waste decomposes, it generates methane gas and heat. The gas combusts and the hillocks of waste smolder, perpetually emitting thick noxious smoke, and generating dioxins, PCBs and furans as plastics burn in the low temperature fires.
A PMSPL compactor truck enters Kurumbapet dump yard
According to the Ministry of Environment and Forests, “land disposal [is] the most expensive option for solid waste management anywhere in the world.” But the high price of dumping mixed waste isn’t reflected in the cost of PMSPL’s contract. Rather, the price for such mismanagement is “externalized,” or paid by the public in the forms of polluted groundwater, lost land value, and ill health from pollutants like smoke, dioxins, furans, heavy metals and PCBs.
The residents of Kurumbapet and vicinities downwind and downstream reap the collateral damage of privatised solid waste management. By outsourcing this public service, the public buys mismanagement of solid waste, for the highest possible price.
Kurumbapet dump yard
I want to thank the employees of PMSPL. Their staff have been extremely cooperative with me in all of my investigations. PMSPL is a private firm, and they’re doing what private firms do: they strive to maximize profit. PMSPL’s priority is stated in the job description for a chief operating officer, announced on Kivar Environ’s website. The ad informed applicants, “You will be responsible for effective and profitable delivery of services by the operating business units.”
The problem is the government’s determination to privatise public services.
Privatisation is not the solution to India's solid waste crisis
Privatization of Public Services: A Way to Cut Costs and Improve Performance, or a Fast Track Surefire Formula for Failure?
As I learn more about the political economy and history of privatization, it becomes clear that proponents of privatization have some things in common with folks who assert that prayer or exorcism will cure homosexuality. By this I mean that neither group can distinguish between utterly preposterous wishful thinking and reality. In a word, they’re delusional. Another thing these groups have in common is that their delusions are disastrous for innocent bystanders.
The recent decision by the Corporation of Chennai (ironically, “corporation” in this instance means “the government”) to terminate the contract of Neel Metal Fanalca, a private firm, to manage solid waste in several parts of Chennai is one more indictment of the privatization of public services. How many such calamities must taxpayers endure before the advocates of privatization concede that privatization does not deliver either the efficiency or the low costs promised?
Undoubtedly, privatization’s proponents (a.k.a. economic hit men) will spin the Neel Metal Fanalca episode as evidence of the wondrous accountability of self-correcting free market forces. Rather than acknowledging that this is one more train wreck in privatization’s disastrous track record, privatization’s proponents will argue that the termination of NMF’s contract proves that privatization is a way to make service providers responsive to public scrutiny. Proponents of privatization will fail to recognize that this has been an extremely costly waste of taxes, and, more importantly, that this boondoggle has squandered several precious years on a wild goose chase for cheap services. In an era of rapid urbanization, climate change, fossil fuel depletion, and sharply increasing garbage production, we can’t afford to waste any more time indulging people who fantasize that solid waste management can be done by the private sector cheaply.
The delusional illogic of the case for privatization is clear in the World Bank’s toolkit, Guidance Pack: Private Sector Participation in Municipal Solid Waste Management. The toolkit makes several bizarre assurances:
- public officials who have failed to manage garbage will miraculously be able to effectively design, negotiate and vigilantly monitor complex contracts
- localities that can’t afford to manage garbage themselves will miraculously be able to afford to hire for-profit companies to perform such work
- the public will save money by contracting out work to the private sector because such contractors will invest and spend their own money to create infrastructure and perform the work
- despite centuries of failure, privatization will work
Such assurances are laughable to everyone who isn’t paid hundreds of dollars per day to propagate such nonsense. Have privatization’s proponents guzzled so much Kool-Aid that they actually believe their own sales pitch?
The public would be much better served by listening carefully to the conclusion of Elliott Sclar, an economist at Columbia University. Sclar’s book on privatization, You Don’t Always Get What You Pay For: The Economics of Privatization, concludes, “public contracting continues to be a cumbersome and expensive instrument for delivery of public service.” Sclar calls privatization, “a problematic course at best.”
New Video About Exnora Green Pammal’s Green Generation Programme
A new video about Exnora Green Pammal’s Green Generation Programme has been posted on YouTube. The video shows Exnora Green Pammal’s partnership with schools to teach students about recycling, conservation and waste management.
The video can be viewed at this link.
The video was produced by Rosie Sanderson, an Engineers Without Borders-Australia volunteer, who is spending a year with Exnora Green Pammal.
A Meeting with Kate Hanisian and Ramsey Ford of Design Impact
Read here about my recent meeting with the directors of Design Impact, Kate Hanisian and Ramsey Ford.
Privatization’s Dismal Track Record of Solid Waste Management
In my previous post, I explained that the World Bank, USAID and other lenders of development aid grant loans on the condition that borrowers — governments of low and middle-income nations — privatize public services and infrastructure. One of the public services affected by this is municipal solid waste management.
In India, privatization obstructs efforts by Indian authorities to implement the nation’s decade-old waste management policy because privatization’s incentives and imperatives defeat and override the objectives of the government’s waste management regulations. The lenders’ insistence that services be privatized considerably constrains the options or leeway of India’s leaders in formulating and executing policy.
A disjuncture or rift between the goals of lenders and borrowers is clearly evident. According to USAID, “Various approaches to privatization exist, offering cost savings, new technologies, improvements in efficiency and effectiveness and reduction in the need for permanent sanitation staff. . . . Private sector participation (PSP) in solid waste management offers several advantages, the first of which is cost savings, which are closely related to improvements in the efficiency and effectiveness of services. Privatization can also open the door to introduction of new technologies. Moreover, it can reduce the establishment costs of keeping and managing a full complement of permanent staff.”
These ostensible advantages of privatization do not serve the primary objectives of India’s solid waste management policy, the Municipal Solid Waste (Management and Handling) Rules. According to the Ministry of Urban Development, “the most important aspect in solid waste management (is the) reduction of waste and the segregation of waste at source.” According to the Finance Ministry, “The objective of SWM is to reduce the quantity of solid waste disposed off on land by recovery of materials and energy from solid waste in a cost effective and environment friendly manner.” The Ministry also states, “The goal of any integrated solid waste management (ISWM) plan is the recovery of more valuable products from the waste with the use of less energy and more positive environmental impact.”
This conflict comes as no surprise to those who recognize that the actual paramount objective of privatization is to generate profit for the private sector—particularly for firms of developed nations. Profit is achieved primarily by shifting the service’s cost to labor through layoffs and steep wage cuts. Rather than sharing such savings with the public, the profits are exported. For example, when the government of Puducherry in southern India outsources solid waste management to the Indian firm Kivar Environ, Kivar, which has no experience in solid waste management, forms a lucrative tie-up with the American waste management firm, Waste Connections.
I have been unable to identify any Indian scholar who is studying the evolution, terms and consequences of this trend in India. In the absence of Indian studies, to better understand the track record of privatized waste management we must look to studies from the USA, where privatization of waste management has been failing consistently for over 200 years.
Moshe Adler, an economist at Columbia University, has studied and written about efforts to privatize street sweeping and rubbish removal in nineteenth-century New York City. Adler found that privatization of services, although cheaper than governmental production, routinely resulted in unsatisfactory performance. (The following quotes from Adler’s work are from Adler 1999.)
After reviewing repeated attempts to privatize services between 1823 and 1881, Adler concludes, “contracting failed because enforcement failed. If enforcement did not take place it was because the city government lacked the courage to go beyond protests to impose meaningful penalties on the guilty. Every breach of contract brought about a study of how to fix the system, but rarely did any bring about the punishment of the corrupt. This inaction, which cannot be explained either by a profit motive or by moral feebleness, may be impossible to fix.”
Certainly, in some cases public officials responsible for monitoring the performance of contractors succumbed to the temptation to accept rewards for overlooking shoddy work by the contractors, but Adler insists that corruption was not the norm. Adler reports that: “By the end of the 19th century . . . The realization that every possible improvement to contracting out had been tried led city after city to declare its failure. . . Practically all American cities discarded contracting out at that time and switched to governmental production.” In May 1849, after several unsatisfying attempts to contract out waste management services, the new Mayor, Caleb Woodhull evaluated the performance of the latest round of contracting: “The system of cleaning the streets by contract has signally failed of fulfilling public expectations, and I assume that it is no longer entitled to public favor. At first it seemed to promise important advantages, both as to economy and efficiency, but in its operation it has proved entirely inadequate to accomplish either of these desired results. . . . I would therefore recommend an abandonment, as soon as practicable, of the contract system, and the entrusting of the entire business to the Superintendent of Streets, under the supervision of the proper department.”
In 1860, following yet more unsuccessful contracts, the New York City Inspector concluded that the contract system “has in every instance proved a failure.” Adler reports that other cities had the same experience: the head of the Chicago Board of Health declared in 1892, “there are few if any redeeming qualities attached [to the contract system]. No matter what guards are placed around it, the system remains vicious.” Mayor Pingree of Detroit expressed the same view in 1895: “Most of our troubles can be traced to the temptations which are offered to city officials when franchises are sought by wealthy corporations, or contracts are to be let for public works.”
Adler concludes, “Contracting out creates a conflict of interest for the government officials who are in charge of it, and this fact cannot be changed. The picture that emerges from the record is that contracting out failed because enforcement failed. . . . If enforcement did not take place it was because the city government lacked the courage to go beyond protests to impose meaningful penalties on the guilty. Every breach of contract brought about a study of how to fix the system, but rarely did any bring about the punishment of the corrupt. This inaction, which cannot be explained either by a profit motive or by moral feebleness, may be impossible to fix.” Adler points out that efforts to contract out the work failed despite the presence of all the safeguards and principles that economists today prescribe for successful privatization.
Privatization fails to deliver improved performance, and it also often fails to achieve cost control. Elliott Sclar, an economist at Columbia University, has studied the performance of privatized social services. A study of privatization by Elliott Sclar, K. H. Schaeffer, and Robert Brandwein concluded, “Competitive contracting is appealing in theory but less so in practice. Our actual experience with such arrangements from defense procurement to scandals in school bus contracts must make us aware that this approach to goods and services procurement is imperfect at best.” (Quotes in this section are taken from Sclar, Schaeffer and Brandwein 1989)
Advocates of privatization “seldom take into account the real-world market strategies of public contracting in which establishing monopolies, influencing public officials, and obtaining hidden subsidies are commonly used to enrich private investors at public expense. When contracting is examined against these real world constraints, the evidence indicates that the market for contracted services operates less like textbook competition and more like textbook monopoly or oligopoly, in which prices are driven as much by relative bargaining power and political considerations as by underlying production cost. Contrary to the claim that privatization will lessen the political factor in operating urban transportation systems, developing experience suggests the opposite is true.” (Sclar, Schaeffer and Brandwein p. 2) The empirical record indicates several counterintuitive outcomes from privatization. For example, the cost to the tax payer goes up (Sclar, Schaeffer and Brandwein p. 3), not down. More political influence occurs, not less. (Sclar, Schaeffer and Brandwein p. 2) “
Available evidence indicates that true cost comparisons would show that privatization has not been successful as a general strategy to contain costs, and may actually force increased cost onto the public.” (Sclar, Schaeffer and Brandwein p. 2)
“Privatization establishes the wrong priority for urban transportation systems.” (Sclar, Schaeffer and Brandwein p. 1)
“We are moving forward with a policy favored for its ideological purity, rather than its practical content and realism.” (Sclar, Schaeffer and Brandwein. p. 19)
“There are two fundamental problems with the model of competitive bidding as a cost-containment strategy: it ignores political and economic realities, and it takes a myopic view of efficiency.” “The textbook model of competition is devoid of politics and social constraints; the real world is crammed with them. In the world of textbook economics, prices and quality are the outcome of noncoercive, competitive market forces. In the world of real actors, competitors do not simply win or lose on the basis of product and price. They use any and every social and political advantage at their command to maintain market share.” (Sclar, Schaeffer and Brandwein Pp. 22-23)
“Efficient expenditure of public money should always be an important policy objective, but such considerations should not be allowed to distort our focus from the purpose of the expenditures.” (Sclar, Schaeffer and Brandwein p. 4)
It’s important to note that the privatization agenda shifts the purpose or primary aim of policy execution from providing waste management services that protect public health and the environment, to cost control. Under a privatization regime, cost control takes precedence over public health and environmental protection. Concerns about efficiency and cost control are valid, but should not become primary policy objectives. “Efficient expenditure of public money should always be an important policy objective, but such considerations should not be allowed to distort our focus from the purpose of the expenditures.” (Sclar, Schaeffer and Brandwein p. 4) “The issue is not public service versus private service but maximization of broader public policy goals. We must recognize that the public versus private question should not be decided on the basis of ideology but according to what works best for broader public policy goals of safe, efficient, cost-effective, and convenient movement of people in the service of enhanced economic productivity.” (Sclar, Schaeffer and Brandwein p. 33)
“It is far better to allow those charged with providing the transport service to make their own decisions and hold them accountable for the outcomes, not the inputs.” (Sclar, Schaeffer and Brandwein p. 32)
Privatization is misguided because it is based on false theories about how people behave and about biophysical reality. The real world is more complicated and corrupt than economists believe it to be. A good example or economists’ simplemindedness is the remark by the 2005 Nobel economist, Thomas Shelling, who said that climate change is not much of a threat to society. His reasoning for this assertion was that climate change will impact mainly agriculture and forestry, which represent only three percent of gross domestic product.
Privatization fails to deliver proper solid waste management because it never really intends to do so.
Privatization Prevents Proper Solid Waste Management in India
A client has asked me to develop a position paper on the privatization of solid waste management in India. Privatization, a right-wing tactic to downsize government by transferring public money, public assets and public work to the private sector, became popular in America under the Reagan administration, and is now being imposed on low and middle-income countries as a condition attached to loans from the World Bank, the IMF, and other lenders of development aid. Proponents claim that privatization will achieve considerable cost savings through increased efficiency. This really means that savings, if any, are achieved largely by shifting the cost of an activity or service to labor through steep wage cuts and layoffs.
Privatization is often advocated by economists, who always endorse privatization for reasons that are more paranormal than rational, reasons which at best are unsubstantiated empirically, but more often are utterly counterfactual. They embrace privatization on the basis of an enormous leap of faith, and they expect their audience to do the same.
A typical example of economists’ perverse reasoning on privatization is found in the doctoral dissertation of Louigueur Patrick Dorvil, now an economist at the European Investment Bank. Dorvil, a prominent proponent of privatization, has a habit of endorsing privatization while simultaneously acknowledging its dismal track record. In his dissertation, Dorvil acknowledges, “very few experiences in the field of solid waste privatization in low and middle-income countries have shown solid waste management to have been successfully implemented so far.” But that doesn’t discourage him from endorsing it. I find this cognitive disconnect perplexing, but I suspect that I might begin to see the sense in it if I was paid hundreds of thousands of dollars to spread it.
Dorvil repeatedly asserts, “The decision to privatise a public service should not be based on ideological considerations but rather on economic merits.” Dorvil fails to understand that this assertion itself is ideological–it is a product of his beliefs about what is good, what exists and what is possible. He fails to recognize this because his education has been for the most part an indoctrination in the theology of economics. His faith in the infallible judgment, omniscience and beneficent intentions of the invisible hand lead him to affirm the sanctity of “economic merits,” as if they are somehow immaculate, or free from the sin of ideology, which might tempt one to consider noneconomic matters such as public health or environmental impact.
The fundamental problem that arises from privatization is goal divergence. In the case of solid waste management in India, the goals of the government and the private sector diverge to the extent that the objectives of privatization not only deviate from, but actually contradict the objectives of policy. Dorvil acknowledges this problem, writing, “it is difficult to compare the performance of private firms and municipal management in the field of solid waste management, since these organizations pursue different goals . . . Private firms are indeed interested in maximizing profit, whereas the objectives of municipal management are much more complex.”
In his dissertation, Dorvil repeatedly concedes that the tendency of contracts to pay contractors on the basis of the quantity of waste collected and transported creates a strong incentive to maximize waste. Tipping fees for private companies that operate landfills create the same incentive. Dorvil calls this a “contradiction of the hierarchy principle”—the principle that makes waste minimization paramount. But despite acknowledging this contradiction, he nevertheless advocates privatization. He acknowledges other problems with privatization: the shortage of municipal administrators qualified to manage, monitor and enforce contracts, and the shortage of bidders, defeating the supposed advantages of competition. These too he dismisses, insisting that all this can be solved by “good inter-organisational relationships” and “flexibility”–a solution that sounds naïve, sure to fail, murky and conducive to corruption.
Economists regard efficiency as the paramount objective of public policy, yet economists avoid definition or clarification of its precise meaning. Economic writing is notable for its ambiguity, or the absence of specificity. The word “efficiency” functions as smoke that economists blow in one’s face to cloud discussion. An example of this is an article by Ioannis Kessides, a lead economist at the World Bank. In his article, “Infrastructure Privatization and Regulation: Promises and Perils,” the words efficient, efficiency, inefficient and inefficiencies are mentioned 33 times. They function as placeholders for substantive, precise meaning. Efficient and efficiency appear 26 times, as efficient prices, efficient pricing levels or efficient natural resource exploitation. Inefficiency, inefficiencies, and inefficient appear seven times, as inefficient taxes, inefficient public utilities, inefficient subsidies, and inefficient restrictive labor practices.
Unsurprisingly, economic efficiency is portrayed as being in tension with social equity: it’s a tradeoff, either one or the other. In the economist’s mind, social equity compromises efficiency.
Equity is mentioned four times in the sense of “return on equity” (meaning the money value of property), but only three times in the sense of distributional or social equity (meaning an arrangement that is equitable).
Equitable occurs once, as “equitable tariff setting”, which in the World Bank’s mindset probably means rich and poor pay an identical tariff. Variations of the word competition (competition, competitive, competitiveness and uncompetitive) are mentioned 49 times.
The ritualistic chanting of the words efficiency and competition makes the article sound like more of a prayer than a serious policy prescription.
By insisting upon the privatization of solid waste management services as a condition of development aid, World Bank economists and their fellow travelers have brought the implementation of India’s decade-old solid waste management policy to a standstill. While Indian authorities engage in a distracting exercise of trying to comply with the ideological strings attached to such loans, garbage piles up on street corners.
In junkets held in fancy hotels, India’s officials and authorities are subjected to the expert advice of World Bank staff such as Shubhagato Dasgupta, who package their economic mumbo jumbo into sermons accompanied by colorful, cryptic, confusing, crowded PowerPoint slides like this one on private sector participation in India’s waste management sector.
Shubhagato Dasgupta's Mindnumbing PowerPoint Slide
In my next post, I’ll review findings of some studies of privatized services in the US.
More Photos of the Playground Clean Up
I’ve posted more photos of last Thursday’s playground clean up on Exnora Green Pammal’s blog. Exnora Green Pammal teamed up with staff from Disney (India) and students from the Sri Sankara Vidyalaya Matriculation Higher Secondary School. You can see the post here.
I spent last Thursday at a wonderful school for children from disadvantaged families on the edge of Chennai. The school is run by Shriram Social Welfare Trust. You can read my blog post about the experience here.
Clear Impression Documentation Services 