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.