Is America Almost Done Being Suckered by Privatization?
Mounting evidence shows failure of outsourcing public services
A new piece in The Atlantic suggests that in cities and states across the country, more public officials are expressing "new skepticism" towards the privatization of public goods and services—a trend that community activists have long criticized.
In her new article, entitled "The Privatization Backlash," journalist Molly Ball argues the tide is at least beginning to turn against the attitude, which has dominated for decades, in which "city and state governments have seen contracting as a cost-saving panacea."
Ball suggests this possible political shift is a result of growing public skepticism towards privatization after its repeated failure to deliver promised cost-savings or superior services. What she hints at, but does not credit, are the numerous community organizing efforts against privatization—from charter schools to private prisons—that have emerged across the country.
Chicago's privatization of its parking meters a few years ago is a prime example of "privatization backlash," argues Ball. The deal was pushed through by then-Mayor Richard Daley with no public hearings and little scrutiny, despite city-wide protests against the move.
Yet, Ball suggests that some city officials came to regret a move that not only hurt Chicago workers, but also dealt a giant financial blow to the city. Ball writes,
An inspector general's report found that the deal was worth at least $974 million more than the city had gotten for it. Not only would the city never have a chance to recoup that money or reap new meter revenue for three-quarters of a century, clauses buried in the contract required it to reimburse the company for lost meter revenue. The city was billed for allowing construction of new parking garages, for handing out disabled parking placards, for closing the streets for festivals. The current bill stands at $61 million, though Mayor Rahm Emanuel has refused to pay and taken the case to arbitration instead.
Ball writes, "Laws to rein in contractors have been introduced in 18 states this year, and three—Maryland, Oregon, and Nebraska—have passed legislation, according to In the Public Interest, a group that advocates what it calls 'responsible contracting.'"
Yet, according to Ball's own sources, if the tide is turning, there is still a long way to go. Donald Cohen, executive director for In the Public Interest, told Ball that out of the America's $6 trillion in annual federal, state, and local government spending, approximately $1 trillion goes to private companies.