Wednesday, August 25, 2010

How Not to Reinvent Government: Long-term Municipal Privatization Contracts and the Desperate Need for Legislation to Stop the Practice

Last night, I pulled off my shelves "Reinventing Government" by David Osborne and Ted Gaebler. The book, copyrighted 1992, is the privatization bible for privatization. During the 1990s, I was a big privatization supporter and still am if done correctly. I've found out that's a mighty big IF.

The book talks about how government monopolies are not efficient and that government should leverage the power of the marketplace to provide services to the people. The book discusses how governments can play off one vendor against another to get quality services cheaply. The book's theme can be wrapped up in one word: COMPETITION.

Where is the market competition is in giving a contractor a 50 year no bid contract, like the Ballard administration is proposing to do with ACS to run the City's parking? That is not privatization - it is substituting a government monopoly with a government-sanctioned private sector monopoly.

What if it turns out ACS isn't doing a good job running the City's parking? (It's not like ACS has a good track record in this state.) How do we rid ourselves of ACS? Pray tell, why would ACS even worry about the City contracting with another parking vendor if it fails to provide quality service? It will have a 50 year contract.

Osborne and Gaebler were right on the theory. But theory often gets lost when put into practice. They missed the problems with no-bid contracts, the influence of political contributions from contractors, and the tendency for politicians living in the present to enter into long-term contracts mortgaging the future for up-front cash.

Regarding the latter, the Indiana General Assembly needs to take action to prohibit municipalities from entering into lengthy privatization contracts. Future generations need to be protected from greedy politicians who want to tap future revenue to spend today.

I'd like to see someone write a follow-up to "Reinventing Government." Perhaps it can be entitled "Privatization: The Noble Experiment That Failed."


Sean Shepard said...

Ideally, if they are going to outsource in this way, there would be multiple vendors competing against each other based on several verifiable metrics (including meter repair times, meter options [like credit card swipe], cost of parking and others).

Then, award a split 60/30/10 [or something] in order each year or maybe 2-year period. The company getting the bottom rating is automatically considered for replacement if another vendor can be found.

That's just one thought/idea. I'm sure there are better ones.

dcrutch said...

I think Paul & Sean are on it re competition versus government. But, unless the law is written to mandate it and enforce when violated, you're trying to defy gravitation toward an "easier", less bumpy way to do things- usually a self-serving monopoly.

Don't we bring this upon ourselves from too little vigilance of our elected representatives? I believe Bauer, Crawford, Vaughn and other state and local political figures should recuse or abstain from some of their political tasks that represent a conflict-of-interest with their employment. Have they chosen to do so voluntarily? Do we call them on it and do something about it?

We face the prospect of re-electing a mayor who does not appear to favor multiple competitive vendors vs the spoils-of-victory mentality. However, do you really think electing Melina Kennedy of Baker & Daniels & associated players represents a step-up from Mayor Ballard's seemingly close association with Barnes & Thornburg and associated players? Is the average taxpayer going to be served by either candidate versus the bloc of legal & construction firms, unions, sports teams, and media associated with each?

As Gary is writing in Advance Indiana, the incumbency of government in general vs competitive free enterprise seems to be continually ascending. The extremes of people like Glen Beck & the Tea Party may be off-the-charts at times, but their core belief of too much goverment spending too much money seems to be shared by a majority of polled America.

Perhaps not for long if we don't get participative in the next couple of elections.