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According to the Collins English Dictionary 10th Edition fraud can be defined as: "deceit, trickery, sharp practice, or breach of confidence, perpetrated for profit or to gain some unfair or dishonest advantage".[1] In the broadest sense, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation. Defrauding people or entities of money or valuables is a common purpose of fraud, but there have also been fraudulent "discoveries", e.g. in science, to gain prestige rather than immediate monetary gain
*As defined in Wikipedia

Friday, November 2, 2012

Goldman Sachs's "Profit Motive" and "Public Good" Don't Mix

What comes out of the financial crisis when banks do not pay the price for their fraudulent behavior?  For one thing, privatization as a means to pay debt may arise.  We must not forget that Goldman Sachs is all about the profit and not much about the public good. 

So when a University hires and pays Goldman to advise them on privatization, we already know Goldman has a bias.  Goldman already has expertise in privatization including for a rail service, for toll roads and for university management.  Indiana University hired Goldman because of this expertise. 

But there are others who view privatization of the public sector as not a good idea:

Privatization of Public Services and Natural Resources
"Public Good" and "Profit Motive" Don't Mix
Looters Turn Public Goods and Services into Private Profit
By Paul Bucheit - Occupy The Debates (Buzzflash at Truthout)

The privatization of public goods and services turns basic human needs into products to buy and sell. That’s more than a joke, it’s an insult, it’s a perversion. It generally benefits only a privileged group of businesspeople and their companies while increasing inequality and undermining the common good.

Various studies have identified the ‘benefits’ of privatization as profitability and productivity, efficiency, wider share ownership and good investment returns. These are business benefits. More balanced studies consider the effects on average people, who have paid into a long-established societal support system for their schools and emergency services, water and transportation systems, and eventually health care and retirement benefits. These studies have concluded that:

Privatization has generated large profits for new owners but these have not been shared with the general public. The potential benefits of privatization are often outweighed by high contracting costs and opportunism.

Most privatization programs appear to have worsened the distribution of assets and income, at least in the short run. While privatization may lead to efficiencies in producing goods, it is generally only true under conditions of competition and regulation. The New Jersey Privatization Task Force asserted that “States that have had the most success in privatization created a permanent, centralized entity to manage both privatization and related policies aimed at increasing government efficiency.”

In the U.S. and around the world, privatization has simply not worked in industries that provide essential public goods and services:
. . . .


The League of Women Voters takes the position that “Privatization is not appropriate when the provision of services by the government is necessary to preserve the common good, to protect national or local security or to meet the needs of the most vulnerable members of society.”

President Obama helps us understand the business point of view: “If you’re a head of a large private equity firm or hedge fund, your job is to make money…It’s not even to create a successful business — it’s to make sure that you’re maximizing returns for your investor.”

“Public good” and “profit motive” don’t mix. It’s a cruel joke to put them together, except in the distorted world of people who view the needs of society as products to be bought and sold.

Read the whole article here


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