Privatization Of Government Services

[Sojourner]

I've contemplated starting this thread off and on for a while ... my home state (Indiana) has privatized a bunch of services over the past couple of years (Republican governor) and I have been wondering about the wisdom of it. Then, in the Open Mic thread about the discovery of an Earth-like planet 20 light years away, Lounge Daddy said:
[quote name='Lounge Daddy' post='1255614' date='Apr 24 2007, 08:08 PM']I really really wish that the US government would privatize NASA.

If NASA became a privately owed company you know we would be sending people to Mars right away.[/quote]

While he may or may not have been serious, I'm interested in discussing the concept of privatization and government services. Indiana has outsourced certain welfare and Medicaid services, among other things. My main concern with it is that it takes the accountability for providing taxpayer-funded services further away from taxpayers, but even aside from that it doesn't sit well with me. Thoughts? Comments?

[desertwoman]

Ive been wondering about this as well. When did having public funded things become bad and privatized things become good.

[Sojourner]

yeah ... and the other thing that bothers me is that these companies are all turning a profit providing these services. It doesn't make sense that they can do them and turn a profit, and they couldn't be done more cheaply in the public sector.

The one thing that I could maybe see is that it is easier for private business to line up financing for big projects like jails and such. But then, there is always the temptation (I would think) to cut corners on things in order to maintain the profit margin.

[homeschoolmom]

What about private schools? They aren't for profit and they usually are run more cheaply.

[Sojourner]

[quote name='homeschoolmom' post='1256255' date='Apr 25 2007, 04:53 PM']What about private schools? They aren't for profit and they usually are run more cheaply.[/quote]
yeah that's because they pay teachers next to nothing. Which I think is not the direction we want to go ... lowering wages means you get less qualified people (although you will always have people who do these types of jobs because they are called to do it, admittedly) but that you will also have more turnover. Again not good. Having people with experience on staff is a good thing.

[Katholikos]

From personal experience, it's a bad idea. The nation's fifth largest county had to fire the company that took over computer operations and spend big taxpayer bucks undoing the damage that was done. Privatized jails and prisons are another problem.

Companies typically submit a bid for the work at a fraction of the cost that government requires to do it. So the contract is signed. Then, after the company is so entangled in the government's business that it can't be easily disentangled, three things happen: their performance drops and they demand more money. Government is caught between a rock and a hard place. Hard to get rid of the company, and it becomes a parasite. And government services take a nosedive.

It's one of the worst things ever to happen to government, in my experience.

Likos

[Sojourner]

[quote name='Katholikos' post='1256262' date='Apr 25 2007, 05:00 PM']From personal experience, it's a bad idea. The nation's fifth largest county had to fire the company that took over computer operations and spend big taxpayer bucks undoing the damage that was done. Privatized jails and prisons are another problem.

Companies typically submit a bid for the work at a fraction of the cost that government requires to do it. So the contract is signed. Then, after the company is so entangled in the government's business that it can't be easily disentangled, three things happen: their performance drops and they demand more money. Government is caught between a rock and a hard place. Hard to get rid of the company, and it becomes a parasite. And government services take a nosedive.

It's one of the worst things ever to happen to government, in my experience.

Likos[/quote]
See, that is what I would think would be the outcome. The welfare work that Indiana bid out was to a company who has a track record like what you describe ... seems like a recipe for disaster.

[Azriel]

I need to gather my thoughts on this, because Michigan is one of the states that has done this. Specifically, our Unemployment system.

But right now, I'm solidly behind what Likos has said.

[Era Might]

What do you mean by privatize? Give public tax money to private companies?

[hoosieranna]

Terra,
Would you include Gov. Daniels's attempt to lease/sell the toll road part of privatization? Just from experience it had my grandparents up in arms and wanting to go to Indy.

Edited April 25, 2007 by Nadezhda

[Sojourner]

[quote name='Era Might' post='1256326' date='Apr 25 2007, 06:06 PM']What do you mean by privatize? Give public tax money to private companies?[/quote]
It's more than giving money -- it's transferring ownership. Contracting for services alone can be legitimate, but when you give control of an entire department or agency to a private provider, that's privatization.

Examples: Indiana is paying ACS $1 billion to administer welfare in the state.

And Az's example of the unemployment system in Michigan -- same idea.

Also, several companies run private prison or jail systems. Private companies provide the buildings and personnel for incarceration systems.

[quote name='Nadezhda' post='1256330' date='Apr 25 2007, 06:09 PM']Terra,
Would you include Gov. Daniels's attempt to lease/sell the toll road part of privatization? Just from experience it had my grandparents up in arms and wanting to go to Indy.[/quote]
Yes, I would include that. The lease transferred complete control of the toll road to a private company. And I think that's a perfect example of creating distance between taxpayers and accountability for tax revenues. The consortium that leased the toll road will be hiking up toll rates over the next several years (which is how they're going to profit from the lease). That's money that we (or you, rather) will be paying to drive a publicly owned road that is going straight into private pockets. Legislators just didn't have the cajones to raise the tolls themselves. Now, they can blame the increases on the private company. And guaranteed that $3.6 billion will not last the full 75-year-term of the lease. (yeah I wasn't so much in favor of that either)

[dairygirl4u2c]

...

Edited April 26, 2007 by dairygirl4u2c

[Sojourner]

Just to be clear:

not money to charities to do work for the public good -- I have no problem with supporting altruistic enterprises

what I'm talking about is money to private industries to administer public programs for profit

attaching profit to providing services for vulnerable classes of people (prisoners, the poor, etc.) is particularly problematic, in my book. But maybe there is solid justification for it?

Edited April 26, 2007 by Terra Firma

[Socrates]

Privatize 'em all, I say!

But I'm leary of simply turning tax moneys to privately owned businesses - once something becomes a recipiant of tax money, it is on its way to effectively becoming a puppet of the government, and becomes as bad as the government systems it is intended to replace.
I am for drastically reducing taxes and government spending across the board. Our semi-socialist big-government system merely feeds bloated beauracracy and incompetence, and this problem has been steadily growing. Both Democrats and Republicans are part of the problem. We need a genuine reduction in government, yet this will never happen, because as soon as government jobs or pay get slashed, those dependent on them start howling.
Our obscenely high taxes pay for all manner of wasteful, incompetent, fraudulent, and morally-questionable programs which we must support whether we want to or not, and these taxes crush small business and intiative among those of limited means.

Everything which can, should be handled by private enterprise and initiative.

We need a genuine revolution against socialism and bloated government, but don't expect much help from the politicians.

Edited April 26, 2007 by Socrates

[Socrates]

[quote name='Terra Firma' post='1256259' date='Apr 25 2007, 04:55 PM']yeah that's because they pay teachers next to nothing. Which I think is not the direction we want to go ... lowering wages means you get less qualified people (although you will always have people who do these types of jobs because they are called to do it, admittedly) but that you will also have more turnover. Again not good. Having people with experience on staff is a good thing.[/quote]
Depends on the private school. Teachers in some private schools can make very good money, and there are schools without money where the teachers work for low pay, yet still provide quality education.

Quality of public schools varies - but overall have a worse track record on education than private schools. Many public schools are miserable failures, and like other public systems are not subject to the laws of competition.

The idea that teachers must have ever higher salaries to be effective educators is just NEA propaganda.

[Sojourner]

[quote name='Socrates' post='1256551' date='Apr 25 2007, 10:24 PM']Privatize 'em all, I say!

But I'm leary of simply turning tax moneys to privately owned businesses - once something becomes a recipiant of tax money, it is on its way to effectively becoming a puppet of the government, and becomes as bad as the government systems it is intended to replace.
I am for drastically reducing taxes and government spending across the board. Our semi-socialist big-government system merely feeds bloated beauracracy and incompetence, and this problem has been steadily growing. Both Democrats and Republicans are part of the problem. We need a genuine reduction in government, yet this will never happen, because as soon as government jobs or pay get slashed, those dependent on them start howling.
Our obscenely high taxes pay for all manner of wasteful, incompetent, fraudulent, and morally-questionable programs which we must support whether we want to or not, and these taxes crush small business and intiative among those of limited means.

Everything which can, should be handled by private enterprise and initiative.

We need a genuine revolution against socialism and bloated government, but don't expect much help from the politicians.[/quote]
So ... how do you see privatizing cutting costs? What about Katholikos' suggestion that privatization actually puts government (and therefore us) in a vulnerable position?

I am also concerned about what is being cut to make private business be able to provide these services more efficiently. And, like I noted above, about the fact that we are putting some of our most vulnerable citizens in a situation where serving them is done for a profit. What do you say to that?

[quote name='Socrates' post='1256556' date='Apr 25 2007, 10:30 PM']Depends on the private school. Teachers in some private schools can make very good money, and there are schools without money where the teachers work for low pay, yet still provide quality education.

Quality of public schools varies - but overall have a worse track record on education than private schools. Many public schools are miserable failures, and like other public systems are not subject to the laws of competition.

The idea that teachers must have ever higher salaries to be effective educators is just NEA propaganda.[/quote]
I would agree that some private schools do pay very well. However, I'd say that's the minority of schools.

As far as good pay making teachers better -- that's not my contention (and I'm really not all that familiar with the NEA's arguments here). I'm not saying that good pay will make a bad teacher better, but rather that a higher paying position will attract a more qualified individual and persuade them to stay. It's a fact of life (and business) that people are motivated by money. I'd personally prefer to pay a little more and keep a good teacher longer than save money and have high turnover. Like I said, you will have some teachers who are there because they're called, but money is always a motivation.

Or, we could introduce competition into the system. I've long been a fan of vouchers and a (tentative) fan of charter schools. But I really think that schools are a whole nother animal than the type of privatization I'm talking about. If you really want to debate that, I think another thread is in order.

[The Joey-O]

I'm just gunna throw this out there. (I don't know if it will be helpful or not.)

It seems to me that it doesn't matter if its publically or privately funded. It seems to me that the smaller the organization is and the more connected it is to the community, the better the odds for its success. Perhaps the answer is subsidarity. Maybe it doesn't matter whether its government or public funded. Just a thought.

[Sojourner]

[quote name='The Joey-O' post='1256768' date='Apr 26 2007, 10:17 AM']I'm just gunna throw this out there. (I don't know if it will be helpful or not.)

It seems to me that it doesn't matter if its publically or privately funded. It seems to me that the smaller the organization is and the more connected it is to the community, the better the odds for its success. Perhaps the answer is subsidarity. Maybe it doesn't matter whether its government or public funded. Just a thought.[/quote]
well, it's not about being publicly or privately funded -- all the instances I'm talking about are publicly funded.

the question is whether government or a for-profit business should be administering services. I think if government were contracting with many small private for-profit companies to provide, say, welfare services that might be a slightly better situation than what is actually happening because it would be easier for a local community to exercise accountability. But it still doesn't sit right.

[The Joey-O]

[quote name='Terra Firma' post='1256779' date='Apr 26 2007, 11:29 AM']well, it's not about being publicly or privately funded -- all the instances I'm talking about are publicly funded.

the question is whether government or a for-profit business should be administering services. I think if government were contracting with many small private for-profit companies to provide, say, welfare services that might be a slightly better situation than what is actually happening because it would be easier for a local community to exercise accountability. But it still doesn't sit right.[/quote]

I love the idea of subsidiarity, but, ironically, it must be instituted on a federal level. For example, if some community/state instituted a great program to help the homeless, then there'd probably a little abuse of it, jacking up the cost a bit. As the word spread, there would be a lot more abuse, as not-so-good-people from around the country come to take advantage of it. This puts an unfair burden on this otherwise great system and greatly increases the cost of payout. Now, if the federal government required that some program be in place with certain qualifications placed on it, but did not seek to institute the program themselves (there would be a balance that needs to be achieved here. The government couldn't run the program or over-regulate it, but it would need to keep the programs accountable to a certain standard.) There would be approximately the same amount of abuse in these various programs, but the weight of carrying that burden would be spread out.

I think major companies could be involved in this, but they'd be forced to be appointed by local communities or states (I'd really prefer local communities in most instances). Unless they win bids in a lot of different areas, they wouldn't have access to lots of money. They wouldn't win the bids, unless they had a compelling case. And with greatly restricted access to cash, it would reduce abuse from private and public sectors.

[Starets]

Depends on the service, maybe? Alberta has privatised licencing and land titles info. That seems to be working out well for them. Or at least it was in the late 90's when I lived in Calgary. You could walk into anyone of a couple dozen places in Calgary and ask for a title search on a given address. Then pay a fee and boom you have your results.vb

btw, its scary what you can find on a title search!