What Do You Think? Privatizing Public Services
Jul 19, 2016 04:46PM ● Published by Cate Reynolds
About 30 years ago, Government entities began what was called a public-private partnership. Sometimes referred to as outsourcing, privatizing defines the process of transferring ownership of public service from government common use to the private sector that operates for a profit. The rationale was that private corporations could provide management efficiency and save government dollars by downsizing government, a priority of the Reagan administration.
Does it? Who gains and who loses in privatizing schemes? Is there a fundamental conflict between public service common to all and private for profit gain of a few? In a capitalist economy, what is the proper role of government? Is less government really better government if public information, deliberation, and accountability, essential to a democratic government, is diminished by third-parties incentivized by profit?
A recent article in the Washington Post by John J. Dilulio, Jr. author of “Bring Back the Bureaucrats” and Peter Verku author of “Outsourcing Sovereignty,” former administrators under President Bush, cite five decades of research that question the wisdom of privatization. They note that since 1960 the number of federal employees at 1.8 million has remained the same; note that there is no evidence that outsourcing federal work saves money; note that federal spending in five decades has increased fivefold and that, according to recent oversight studies, contractors are paid twice as much as would have been accomplished by federal workers.
They also noted that the most persistent performance problems for programs at high risk for waste, fraud, and abuse involved private contractors. Similar findings have been noted in reports in Governing, the Harvard Business Review, and by author Donald Kettl, in his book “Escaping Jurassic Government.”
Public services most often privatized are prisons, parking and traffic ticketing, health services, IT, and trash collection. Consider prisons for a moment, built and maintained by for-profit corporations. America is notorious for the number of people incarcerated. In a fever to punish criminals for minor offenses, states have passed laws for mandatory sentences, three strikes for petty theft and you are out, longer sentences, Arizona's notorious immigration detainee incarceration, and the recent Pennsylvania scandal of “Kids for Cash,” measures that meet the corporate need for profit and drain the State coffers for a private business dependent on public funding.
Ticketing for parking meter or traffic violations often leads to collection notices for moneys far in excess of the original violation. Communication from the ticketing agency is often slow, driving up the penalty to an offender. Whose interest is being served by, for example, a failure of timely communication for collection of a fine or refusal to acknowledge a payment made by check by uncertified mail?
Trash collection promises a reduction in cost to the consumer. There is also a reduction in service. When Annapolis moved to once per week collection, free mulch from the city (accumulated from yard waste pick up) was no longer available to citizens. Trash from special programs, such as Earth Day or Greenscape, was to be carted away by volunteers who were already providing thousand of dollars of volunteer help in spring clean ups and beautification.
Despite the horror stories on privatization programs (Chicago lost control of its streets), a private partnership will work when private managers understand it is in their interest to serve the public interest. However, it is incumbent upon government to define the public interest to be served when it enters into a contract to sell its assets and services. If the contract for transfer of goods and services to for-profit entity is shoddy and not well thought out, accountability falters, the public coffers are drained, and the value to the public interest declines.
Who gains and who loses in privatization schemes?