Privatization of Government Services
In municipalities around the United States, taxpayer dollars are used to fund a variety of public works services such as carting and recycling, public park maintenance; street sweeping and street repairs; 911 and fire department services. Pressure from taxpayers has forced public works entities to analyze their operations to determine where cost savings can be realized. One cost-saving measure has been the privatization of public works services. Instead of a government agency providing certain types of services, the process or service is outsourced or sold outright to a private or non-profit entity. Privatizing public services has its share of pros and cons.
The pros of privatizing public services include improved efficiency and effectiveness. The cons of privatization include lower quality services and higher costs; a lack of government oversight can lead to fraud, abuse, and misuse. Privatization of public services can save government entities a considerable amount of money due to reduced overhead, equipment, and maintenance costs, and lower labor costs, such a base pay, overtime, benefits, etc., since the jobs for those services have been privatized. Since the 2008 global economic crisis, Wall Street private equity firms have taken over former public services, including utilities and emergency services (Ivory, Protess, and Bennett paras. 6-7). The New York Times described how a woman fell into a coma and died waiting for an ambulance, and a man watched his house burn down as he waited for the fire department to arrive (Ivory, Protess, and Bennett paras. 1-3). In these instances, private equity firms took ownership of formerly public services; as a result, response times for emergency services have declined (Ivory, Protess, and Bennett para. 9).
The ownership of former public utilities by private equity firms have also resulted in the losses of critical emergency services: 25 percent of ambulance companies that were recently acquired by private equity firms filed for bankruptcy over the last three years; one ambulance service provider, TransCare, permanently closed (Ivory, Protess, and Bennett paras. 19-20). Another example of the failure of privatizing public services is the privatization of prisons. County and state-owned and run correctional facilities are highly expensive taxpayer-funded operations; many government agencies are getting out of the business of running prisons by allowing private, for-profit companies to assume the day-to-day responsibilities. Correctional facilities operated by the public sector have a considerable amount of oversight and are required to maintain certain standards. Privately run correctional facilities have a primary objective of earning money for their shareholders. One of the easiest ways to reduce costs is to reduce the amount of money spent in these facilities. Private prison companies slash costs by paying their employees to lower salaries than their government counterparts; cutting the length of training programs by as much as half of the training received by government-employed corrections officers; and reducing the number of prison guards (Williams paras. 14, 17).
Privatizing public services provides relief to taxpayers by shifting costs to private entities; however, it comes at the cost of reduced services and potentially dangerous working conditions for employees. Critical services such as emergency response and correctional facility staffing should remain under government control, but with measures to control expenses without sacrificing service quality and delivery. This benefits all parties and ensures taxpayer and government worker safety, which should be the primary goal.
Ivory, Danielle, Ben Protess, and Kitty Bennett. "When You Dial 911 and Wall Street Answers.” New York Times, 25 June 2016.
The Editorial Board. "A Pricing Scheme to Unclog New York’s Arteries.” New York Times, 22 Jan. 2018.
Williams, Timothy. "Inside a Private Prison: Blood, Suicide and Poorly Paid Guards.” New York Times, 3 April 2018.