WEA Film Study Group, ‘Documentaries with a punch’
Sydney, Australia, 11 March 2012
The Big Sellout
Germany 2007 94 minutes colour
Directed and written by Florian Opitz
Source: NFSA. On deposit from the Goethe-Institut. Production Companies: Discofilm, Arte, Bayerischer Rudfunk (BR), Westdeutscher Rudfunk (WDR). Producers, Felix Blum, Arne Ludwig; cinematographer, Andy Lehmann; film editor, Niko Remus; sound recordist, Christoph Mohr; original music, Marcus Schmickler (as Pluramon).
With (as themselves) Joseph Stiglitz, Bingani Lubisi, Simon Weller, Minda Lorando, Delphin Seriano Jr., Rosa de Turpo, Oscar Olivera.
The Big Sellout is a warning to the world about the downside of privatisation – an ideology that has been sold to the general population as a social benefit because everybody knows, don’t they, that private enterprises always run services more efficiently whereas public servants have no incentives to work hard, etc. Privatisation is also attractive to governments as it frees them from the bother of providing essential services to its citizens, and they can deflect the blame when things go wrong.
The World Bank and the International Monetary Fund (IMF) were established by representatives of the 44 nations that signed charters at Bretton Woods, New Hampshire in 1944. The main aims of the signatory nations at that time were currency stabilisation, the funding of post-war reconstruction, promoting healthcare, reducing corruption in third world nations and assisting them out of poverty.
The World Bank has an international board of 24 with a president chosen by the United States. (The head of the IMF is chosen by Europeans.) Under President Reagan the American relationship became strained. He was sceptical of ‘poverty alleviation’, which he regarded as ‘giveaway programs’ and stated that the U.S would oppose the Bank’s traditional support of government-led, public sector-oriented development. Furthermore, he told the Bank’s president that he would oppose any initiatives he deemed detrimental to U.S. commercial interests. The impact of Prime Minister Thatcher’s privatisations in the 1980s travelled across the Atlantic to the World Bank and IMF headquarters in New York which, under the influence of Thatcher and Reagan’s policies, adopted a free market ideology, making privatisation a pre- condition for granting credits to developing countries.
Governments too began embracing privatisation. Many took the short-term view that selling a public asset counts as revenue in the current year, thereby making it easier to balance the national accounts. But it also means forgoing forever the future profits of the enterprise and, depending on how smart the agreement drafters were, sometimes agreeing in advance to subsidise any losses the enterprise might sustain. The day may soon arrive when some governments have no more public assets to sell off.
Developing nations became highly critical of the change, as they perceived the Bank becoming a tool of developed countries rather than the champion of those it was set up to develop. Further, privatisation is often harder on the poor as government functionaries can be corrupt and exercise no alleviation of hardship caused by rising prices and, in fact, sometimes help enforce them. Although there may be overall economic benefits, these are usually distributed unequally with often unforseen or disregarded effects on the poor.
The Big Sellout takes four typical cases from around the world, revealing how privatisation adversely affected the lives of four people.
Soweto, South Africa
Bongani Lubisi was an activist working against ESKOM, the seventh biggest power utility in the world which the Nelson Mandela government has been contemplating privatising for years but has not yet sold it off. ESKOM claims to charge the lowest rates in the world, although it did raise tariffs in the 2000s, even in Soweto, the poorest district in Johannesburg where people have to pay up to one-third of their income for power. Those who cannot pay have their power cut off. A pre-pay system introduced in 2001 was even more ruthless: those who use up their credit have their power cut, even in winter. In one month ESKOM cut power to 20,000 homes.
Bongani was a member of SECC (Soweto Electricity Crisis Committee) who reattached power illegally to people’s homes and tampered with meters. Bongoni had spent time in gaol for his activism. He planned to stand for local council but died in mysterious circumstance, leaving a wife and two children. He was 34. Opitz has dedicated The Big Sellout to him.
Manilla, the Philippines
Minda Lorando had to sell her house to pay for the dialysis her son needs twice a week at the National Kidney and Transplant Institute. The Philippines once had a first-rate medical service that included free health care for the poor. The country has excellent medical training facilities but because salaries are so low in public hospitals, 5,000 doctors and 100,000 nurses trained in Philippine hospitals now work abroad.
As a pre-condition for a loan from the World Bank the government gradually sold off the best hospitals, leaving a few badly funded hospitals for the poor. But they are no longer free. Minda, her savings gone, now depends week by week on donations. Her social worker tells her to face reality and let her son die.
Simon Weller, a train driver on the London to Brighton run, says that like most of his colleagues he used to be proud of his job, but no more. The Atlee Labour government had nationalised Britain’s four major train companies in 1947 but the John Major (successor to Thatcher) government had privatised them between 1994 and 1997 into, according to one reference, 150 separate companies, a fluid statistic due to continuing takeovers and amalgamations. One company Railtrack, responsible for all tracks but with a small staff, had subcontracted all its maintenance contracts out to another company that in turn subsubcontracted them out to others. Railtrack and its subcontractees may have achieved cost efficiencies on paper but accidents started to happen – the third major pile-up, at Hatfield in 2000, was traced to a cracked rail that nobody had taken action to replace — that was enough for Tony Blair. Railtrack was renationalised.
To think, Simon says, Britain used to own British Rail, British Petroleum, British Airways, its power generating capacity and much more. He looks at the demoralised condition of Britain’s railways today: travelling across Britain is a logistical nightmare of separate companies and timetables, working conditions are downgraded, wage rates cut, rest breaks eliminated, service to customers has deteriorated.
Ken Loach’s film The Navigators, shown at the 2001 Sydney Film Festival, painted a grim picture of the breakdowns in railway work safety and morale.
A report from the think tank Just Economics released in February found that UK rail services were slower, less affordable, less comfortable, more inefficient and more expensive than those in France, Germany, Spain and Italy. Train frequency was the one area in which the UK performed better.
Cochabella Municipality, Bolivia
In 1999 Cochabella, the third largest city in Bolivia, sold off most of its assets to private companies including its water services to the international company, Bechtel, which tendered under a pseudonym. When Bechtel won the contract, it raised water rates to pay for future improvements. The government closed village community wells and forbade the population from taking water from rivers and even their own rainwater tanks.
The film Even the Rain, shown at last year’s Sydney Film Festival, pointed out an historical irony by contrasting a film unit on location in Bolivia to make a film about Columbus’s aggressive search for gold, who are caught up in the battle between the government’s protection of Bechtel against agitators. The government brought in the police, then the army – six people were shot dead, many wounded. The government finally capitulated, and community leaders now run the restored state utility, SEMAPA. Water supply has not improved as SEMAPA is unable to secure international funding for infrastructure.
Like Outfoxed, The Big Sellout is biased. It does not deal with any IMF initiated privatisations that have benefited the general population but makes its point that the free market ideology now followed by the World Bank can result in foreign corporations in control of essential services whose executives and shareholders are remote from, and mainly indifferent to, the effect of their operations on the living standards of the people affected and who can probably depend on protection of the country’s military and police if the locals get tough. Opitz warns that privatisation is ‘an insidious and dangerous development that concerns all our lives.’
Joseph Stiglitz, featured in the film, is an American Nobel Laureate for economic science who was once Chief Economist of the International Monetary Fund but resigned when its retrogressive economic ideology of market freedom was adopted and he saw its adverse effect on the farmers and poor people of emerging countries. He says that the IMF and World Bank today are interested only in profits and make poor countries completely dependent.