Our Path Forward: Stop Mindless Privatization of Public Goods and Services

Wisconsin should stop the mindless privatization of infrastructure and government services, and to restore the public provision of quality goods and services that are fundamental to a decent and prosperous society. Before handing over public services to private providers, we should get real numbers on claimed efficiency and quality gains, compare to comparably funded public services, and maintain or increase employment and performance standards.

What’s the Problem Addressed?
Privatization is the transfer of ownership and control of key government functions, such as transportation infrastructure or education, from the public sector to private companies that seek to make a profit from them. This idea has been promoted by billionaires and their bought politicians as a way to cut costs and improve quality. But there is little evidence that privatization reliably does either, and much evidence that the public is abused by the corporations that immediately benefit from it. The Federal Government spends almost twice as much to privatize something than to keep it in-house,[note]  Chassy, P., & Amey, S. H. (2011). Bad business: Billions of taxpayer dollars wasted on hiring contractors. Project on Government Oversight, 1-42. Chi, K. S., Arnold, K., & Perkins, H. (2003). [/note] and state governments typically cannot show either cost-savings or quality improvement from privatization.[note] Chi, K., Arnold, K., and Perkins, H. (2003). Privatization in State Government: Trends and Issues. Spectrum: The Journal of State Government 76 (4): 12-21.[/note] At the same time, examples of disastrous reductions in quality, often amounting to criminal negligence, abound.[note] For many examples, see In the Public Interest [/note] The example of privatized and poisoned water in Flint Michigan is not alone, only better known.[note] Felton, R. (2016). Michigan sues companies for allowing Flint water crisis to ‘occur and worsen’. The Guardian.[/note] Privatization usually, though not only, represents a triumph of business-backed market-fundamentalist ideology over common sense and good practice. And call for it usually follow the deliberate degradation of public services through funding cuts.

Predictably, Scott Walker’s administration has ceaselessly promoted privatization, while predictably promoted privatization with predictably bad results. Its state-wide voucher program has diverted hundreds of millions of dollars into private schools while slashing public school spending – with no improvement in student performance.[note] Caldwell, P. (2017). Who moved my teachers? Mother Jones.[/note] Its replacement of the Department of Commerce by a new Development Corporation has led to more corruption and waste, but again no improvement in performance. Similar stories abound throughout our county and other local government. 

How OWR Proposal Addresses It
A mindful approach to private contracting for public services, which is what OWR proposes, would deal with these abuses in several related ways. That begins by giving public serves a fair chance with adequate funding – something we’re not doing now for education, transportation, broadband, the environment, or a host of other essential. Then, instead of accepting with no evidence that private contractors are cheaper and more efficient, it would demand that evidence. That means a full cost-benefit according of services offered by different providers, where “full” means follow-on costs and benefits not just immediate ones. Third, it would focus on the quality of the service, and the productivity of the provider; that’s not the same as focusing on “least cost” provider, which is commonly just an invitation to squeeze workers. Finally, it would insist on transparency, from all governments in the state, at whatever level of government, on the share of their budgets and by-contract terms going to private contractors, the quality and other standards to which those contractors were held, and an annual report on which contractors met those terms and which did not. This might naturally be allied with state law that barred certain firms, statewide, from further bidding on the public’s money.

Who Else is Doing This?
New York City’s Outsourcing Accountability Act strengthens existing anti-corruption laws by mandating that city agencies’ use thorough cost-benefit analyses prior to privately contracting for services. The act also requires that city agencies publish a contracting plan at the beginning of each fiscal year, giving both city workers and private contractors more time to prepare quality bids. The legislation is not meant to quash private contracting, on which the city spent nearly $10 billion in 2010, but to ensure that outsourced services address the city’s best interests.

Why Not Wisconsin
Scott Walker is one of the nation’s leading proponents of privatization, and until he and the Republican establishment are voted out of office, there is little hope for returning to the public sector the vital government functions that his administration has privatized. However, the serial failures of privatization in Wisconsin and around the country are opening eyes in state government: in 2016, the Wisconsin Senate scrapped a vote on a bill to help corporations buy municipal water systems after approximately 20 groups, including the League of Wisconsin Municipalities, came out against it.[note] Verburg, S. (2016). Senate vote on drinking water privatization bill scrapped. Wisconsin State Journal.[/note] With new leadership in Madison, we can insist on excellence in public serves and provide the money needed for that – while recognizing that money alone does ensure quality. We can also hold private contractors to higher standards. Above all, we can and should put aside the silly and dangerous idea that private business always knows better than the public itself what is good for people of Wisconsin.