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Slowing the Mad Dash to Privatization




What if we had no government services and everything we used to get from government was run by private corporations?  McDonald’s could be running the welfare system, Target the public schools and Walmart our mass transportation networks.  What would be wrong with that?

According to Donald Cohen, director of the nonprofit research and action group In the Public Interest, there’s a long list of problems we face when private companies take over government services.  For one, it’s hard to find out how much money is being paid to the company’s employees and corporate heads.  And, once a formerly public system is taken over by a private company, there’s often no way that voters can set standards for those salaries, the quality of the work done or the cost of services to the public.  Right now if you don’t like McDonald’s corporate policies, you can pick another restaurant.  But when private companies take over government services, they effectively have a monopoly, and there’s no other system to use.

The privatization of government jobs usually results in lower wage jobs with fewer benefits and no pensions.  Research shows that privatized services often lead to reduced service quality and frequently lack the cost savings that were promised.  And the loss of public control means a diminishment of the ability of the public to impact how those services are delivered and to whom.

There’s always been contracting out of some government work to private companies in areas like trash removal, health care and transit, but, according to Cohen, there’s currently a “mad dash of private companies” to accelerate the practice. That “mad dash” is fueled by a 40 year campaign to discredit the idea of government, which has created a pretty negative public image of the quality of government work.  Added to that, the fiscal crisis faced by many municipalities has made the claim of cheaper, faster and better programs offered by a private company very enticing to struggling legislators.

Private corporations have also built massive lobbying operations aimed at influencing legislators to expand the involvement of for-profit companies in running services that were previously seen as the task of government, like water, welfare, and school systems.  Conservatives in control of many state and local governments have pushed the privatization agenda in statehouses across the nation.

It’s not hard to visualize the problem of putting basic services into the hands of private companies when a group like the Corrections Corporation of America (CCA), which runs prisons in a growing number of states, lobbies for longer prison sentences and against leniency, hoping to keep the prisons full.  If the public wanted to know about staffing levels, in-prison rehabilitation programs or staff-prisoner ratios, that information might not be available from the private prison operator due to the “proprietary” nature of the information that they wish to keep from competitors.

While contracting in some areas is inevitable, given the current climate, there are some ways to avoid the worst-case outcomes. Cohen explains the concept of “responsible contracting,” which involves setting up a fair process to award contracts, then including standards and accountability in the contracts themselves. With enforceable standards in areas such as wages, environmental impacts, and worker safety, as well as clear benchmarks for service delivery, the negative pressures of contracting can be somewhat mitigated. With responsible contracting, the public can avoid seeing their services sold out to cheap and substandard companies or those with the best lobbyists.

Cohen’s group, In the Public Interest, has launched a Taxpayer Empowerment Agenda to inform and activate residents and government at all levels to build protections into the contracting relationship, assuring the public’s interests are protected in this growing marketplace of basic services.  For more information visit their website at:

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