Definition and origins
Bob Zadek offers what he calls his own helpful, handy, non-dictionary definition: privatization describes the process or the approach to government that says most functions of government can be better performed by the government outsourcing them and hiring private business to perform the function rather than by doing it themselves with civil servants. He adds that it suggests the product will be cheaper and better for all concerned and calls it the sensible way to run a government. Adrian Moore, vice president of policy at the Reason Foundation, agrees and dates privatization’s start to the 1960s, describing it as a response to the growth of government. Moore says that even going back as far as Mayberry RFD, typical towns had police and maybe a fire department and little else, but that over time governments kept doing more and more, so that now there is virtually nothing done by the private sector that some government somewhere does not do as well. Privatization, on his account, reverses that trend by having government focus on the few things only government can do and letting the private sector handle the rest instead of competing against it Fire All Government Workers (2011).
Why government monopolies expand
Zadek frames the question as how governments came to deliver services through civil servants who are mostly union members belonging to AFSCME and other public sector unions, with virtually life security and a monopoly given to them by government. Moore answers that no city ever sits down and decides it needs monopoly public servants. Instead, a problem arises — too much trash on the street — and residents call City Hall demanding action. The pressure on any elected official to do something is enormous, and an official who says a problem is not really the government’s problem is out of office. So the city starts collecting trash, hires a couple hundred people and buys a few dozen trucks, and extrapolates that to every other service. Moore notes it need not be a majority demanding action; a tiny minority can drive it, because everyone else is busy living their lives and not going to city council meetings. Zadek separates two questions: whether government should provide the service at all, and, if so, whether government should do it with its employees or put it out to contract and give it to the low bidder Fire All Government Workers (2011).
The Sandy Springs model
Zadek calls Sandy Springs, Georgia, the shining city on the hill and a city with no civil servants whatsoever. Moore describes it as a suburb of Atlanta that was an unincorporated part of Fulton County with about 80,000 people, whose residents had for at least a decade and a half been upset with the quality of services from the county government. After getting legislation from the state allowing them to form a city — Zadek interjects that they first had to get a Republican majority in the statehouse — they held an election. State law required that they provide police and fire, so they did, plus a small number of employees for law-enforcement-like functions such as building inspections, permits and licensing, and a few employees whose job is to monitor the private companies that do everything else. They originally hired one big engineering company, CH2M Hill, to run water, wastewater, trash, streets and everything except police and fire, managing the whole city. When the three-year contracts came up for re-bid, they chose several companies for different services to get more competition. Moore says four other cities in Georgia and a couple in Colorado have since incorporated using the same model. Zadek puts the figure at about $25 million a year to outsource almost all functions except police and fire and associated services, for a city of 78,000 — which he says Sandy Springs estimates to be half of what they otherwise would spend, at no compromise in quality Fire All Government Workers (2011).
Union opposition and the quality debate
Zadek argues the change is not an attack on workers, since in many cases it is the same worker employed by a company under contract rather than by the municipality, but a readjustment of the system of delivering city services. He says Democrats opposed to privatization are primarily in league with the public service unions, and that unions attack privatization with the phrase an attack on the middle class. To illustrate the heat, the episode plays a commercial about a municipal hospital in Rhode Island considering turning its management over to a private business; the commercial warns that the jobs of dedicated public employees are in jeopardy along with the quality care they provide and urges listeners to tell legislators to prevent a faceless out-of-state for-profit company from creating another Walter Reed scandal. Moore responds that in this job he has worked on privatization since doing his PhD dissertation on it, and that this is the level of discourse much of the time. He calls it partly pure special interest, noting the commercial led with jobs and treated quality as secondary, and asks why the private sector can be trusted to build cars, manufacture pharmaceuticals, produce food and, in about a third of the United States, produce drinking water, but not to care for veterans — adding that the other community hospital across town is a private nonprofit hospital run by Catholic Healthcare West Fire All Government Workers (2011).
Zadek compares this to his own area, saying the local hospital is owned by a for-profit group, and asks whether anyone picked up by an ambulance would refuse it because it is for-profit. He says most of what people get in life, from life-supporting services to pleasant ones, is provided by for-profit corporations, and that no one clamors for a government-owned laptop manufacturer. Moore contrasts the DMV with a bank: both involve paperwork and sitting down with somebody, and the bank is a much more pleasant experience. He says competition and choices give better results, and that being able to fire somebody who does not do a good job produces better service Fire All Government Workers (2011).
Competitive contracting and trash collection
Moore says the debate is wrongly painted as two extremes — that privatization is pure evil and all about corruption, or that the private sector never provides bad service — and that both are false. Choice and competition are the crucial thing: with a bank you can quit and go to another, while with government services you cannot. He notes a problem with contracting, the form of privatization mainly under discussion: when a city hires one company to pick up the trash, that company is still a monopoly, so the government as customer, writing the checks, must make sure the service is good. What cities like Phoenix and Charlotte have done is divide the city into four parts and sign four separate contracts with four different companies, so that a year later the best-performing company can be given two parts of the city and the worst one dropped. That puts competitive pressure on to keep quality up, producing something like the situation when choosing banks, grocery stores or gas stations Fire All Government Workers (2011).
The Pennsylvania liquor store example
Zadek says anyone who attacks privatization as a concept must, to be intellectually honest, attack all private business, since the free market either works or it does not, and if it works for clothing, computers and motion pictures it works for picking up trash and administering the DMV. He says there is no intellectually honest basis to oppose privatization except for functions so purely and inherently governmental, like police and fire, that they are what government is all about. Moore agrees that opposing privatization means arguing the private sector does a worse job than government, and that if that were true of trash it would make sense for government to run gas stations and groceries. Zadek then raises Pennsylvania, where he says all the liquor stores are government-owned and government-run, with not much selection, high prices and limited hours. He says a study found Pennsylvania could save or earn $2 billion by privatizing them, and that the New York Times, in a news piece rather than an op-ed, reported this would potentially bring $2 billion for state coffers but also layoffs of several thousand state workers — treating the layoffs as a minus. Zadek asks how that could be a minus if the state saves the salaries of those workers, and Moore calls it the politics of privatization in a nutshell Fire All Government Workers (2011).
Across episodes
The excerpts come from a single episode, the 2011 discussion with Adrian Moore, and show no development across episodes.
What the sources do not cover
The excerpts do not state the outcome of the Pennsylvania liquor privatization effort, the fate of the Rhode Island hospital proposal, or any results from the Phoenix and Charlotte trash contracts beyond the design Moore describes. They give no figures for Sandy Springs beyond the $25 million annual estimate and the 78,000 population, and no independent evaluation of the claimed savings or service quality. The commercial’s Walter Reed reference is left unexplained, and the episode breaks off mid-sentence in Moore’s closing remark about liquor.