July 1, 2009

Privatization track record sparks backlash

Cities and states ill-served by the profit motive

As San Diego County supervisors seek to privatize more services, public officials elsewhere are reading the danger signs and starting to move in the opposite direction.

Like many other local and state governments desperate for budgetary quick fixes, the county board fell back on the old knee-jerk assumption that private companies can perform public services "better, cheaper and faster."  The facts show that quite often the opposite is true.

The track record on privatizing government functions is becoming harder to ignore as real-life examples of tragedies, cost fiascoes, more cost fiascoes, corruption, fraud and service failures pile up.

The evidence dates back many years, and includes well-known abuses by federal contractors such as Halliburton and Blackwater in Iraq.  Recently the spotlight has been on horrific stories arising just in the last few months from privatization of regional and municipal services:

• In Washington, nine people died in a Metro train crash.  The crash was blamed on aging rail cars that had not been replaced as recommended because private leasing deals required longer depreciation.
• In Philadelphia a 14-year-old girl starved to death after a social-service contractor skipped visits to her home and others, and faked records to bill taxpayers for the nonexistent services. 
• In Chicago, parking meter rates are at $3.50 an hour and rising, while broken meters and parking tickets have surged, since the city turned over its meters to a private company.
• A stellar high school student got three months in a private detention center for making a spoof MySpace page.  The detention center operators had drummed up business by paying kickbacks to judges to send teenagers their way.

The cold facts about privatization are creating a new understanding, in some places, that the profit motive often is not compatible with the public good.   Some agencies are taking action to limit privatization:

• Last week, the Metrolink commuter rail agency in the Los Angeles area voted to stop outsourcing and hire its own train crews, after a crash last September killed 25 people.
• On June 11, Indiana House Speaker B. Patrick Bauer called the privatization of the state's Family and Social Services Administration "a disaster" and demanded an audit.  "People are not getting their medicine. Their lives are put in danger by this privatization of FSSA," Bauer said. "And it's only to try to squeeze profit out of the poor."
• A week earlier, the Chicago City Council decreed that future proposed privatizations will get much more stringent review, after an inspector general report that the city lost $1 billion by privatizing parking meters.

Even the staunchly pro-business editorial board of the San Diego Union-Tribune saw the light when the governor suggested privatizing Del Mar Fairgrounds.  "It's doubtful a private developer would preserve the fairgrounds as they are today," but would convert it to a "more profitable use," the U-T warned.

The San Diego County Board of Supervisors, which already outsources many functions, is hoping to save money by asking its staff to privatize more services.  That request ignores increasing evidence that, as NPR reported this month, "there are some things government can and should do well." 

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