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Lawrence Reed Columnist

Published Thursday, March 07, 2013

Getting the job done better – privately

By LAWRENCE REED

Special to The Newnan Times-Herald

Privatization — turning over the management of an asset or delivery of a service to a private agency or company — is becoming an important tool in the toolkit of local governments. That’s good news at a time when cash-strapped localities and hard-pressed taxpayers deserve a break.

Just about every asset or service any local government owns or provides has been privatized somewhere in America, partially or wholly. That includes fire protection, security services, wastewater treatment, street lighting, tree trimming, snow removal, parking structures, railroads, hospitals, jails and even cemeteries.

Steve Goldsmith was a leader in municipal privatization in the 1990s, when he served as mayor of Indianapolis. He subjected more than 60 city services to competitive bidding and other forms of privatization. City employees were given the opportunity to reorganize and enter the bidding too, in competition with private firms, and quite a few times they won back the right to perform certain services. When public employees have to compete, they discover they really don’t need as many supervisors, make-work rules and coffee breaks.

The very idea of privatization can prompt officials to think about government in ways they never considered before. It forces them to find out, for instance, how much it is actually costing them to provide those services. If government simply applies a Yellow Pages test to what it does (“if it’s in the Yellow Pages, government probably shouldn’t be doing it”), it will find good reasons to privatize.

Objections to privatization are often raised. Here are three common ones, along with a brief response:

“It is anti-public employee.” Government does not exist for the benefit of those who work for it; it exists for the benefit of those who pay its bills or need its services. Governments that employ more people than necessary, or that pay their employees more than their market will bear, are not doing any favors for the citizens — including the poor — who are picking up the bill.

“It is a back-door way to destroy government.” Goldsmith once said that before he privatized city services, it was extremely difficult to resolve citizen complaints or get the bureaucracy to move on anything. Once a service is privatized, accountability is almost instantaneous. If performance suffers, the city can quickly cancel the contract and find a better provider.

“There are instances where it didn’t work, so we shouldn’t do it anywhere.” I have yet to see a case where a failure was really an indictment of privatization itself. Failures are almost always arguments for avoiding poor practices, such as noncompetitive bidding in smoke-filled backrooms, sloppy contract writing, or nonexistent monitoring of performance.

Competition, choice and accountability are almost always superior to monopoly. That’s why every town and county in America owes it to their citizens to privatize when and where it makes sense, or at least to seriously consider it.

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