Tuesday, February 06, 2007

Privatizing government functions does not increase efficiency

Nathan Newman writes about the myth that privatizing government functions saves money.
"Research Shows...No gain from Privatization: If you think these are anecdotal headlines, broader research has found no net financial advantage for states from handing over work previously done by public servants to profit-seeking contractors. A study by Rand Corporation released last week found that privately-run schools in Philadelphia did no better in raising student test scores than did publicly-run schools, adding to a range of evidence that privatization of schools is no panacea. Despite New Mexico having 43 percent of its prisoners in private prisons, the highest in the nation, there is little evidence that this saves the state money and has left state officials with few experts qualified to monitor the private contracts. As Paul C. Light of New York University, who has long tracked the hidden contractor work force, writes, “We have no data to show that contractors are actually more efficient than the government.”
So if privatizing government functions does not save monye, why to politicians persist in privatizing things?

Let's be charitable. Many are simply suckered in by conservative "The Market is Everything" ideology. But the fact it that in most cases it is special interests who have determined how to rip the government off and who share their rip-off gains with the politicians they have bought.

Go read the article. It is excellent. Especially, look at the Rand Study the articl refers to. For the most part, privatization of large government functions is little more than theft of government tax money. The government winds up paying more for inefficient and ineffective services, while watching private individuals build personal fortunes from money they skim from the process.

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