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Privatization of Public Works

Privatization of Public Works

The New Federalism of the Ronald Reagan administration called for a reduction in government spending and an increased role of the private sector. This process was exemplified by the privatization of services that had formerly been provided exclusively by governmental entities and government employees. Increasingly, many private companies contracted with governments at all levels (federal, state, county and city) to provide such things as transportation, space services, maintenance, administration of prisons, and ambulance and other emergency services. Various cities and states experimented with privatization in an effort to reduce their expenses. Frequently, these moves towards privatization were spurred by the desire to reduce future increases in taxes from a public that was becoming more aware of the escalating tax bite from their income.

State and local governments increasingly are relying on the private sector as an alternative to providing goods and services that traditionally have been their own responsibility. It is not uncommon to find in the platforms of political candidates from presidents to city mayors a promise to consolidate fragmented systems, reduce needless duplication of services, and streamline public bureaucracies upon election to office. The basic assumption being expressed is that the government that governs best is one the has zero redundancy as the government agency strives to be "mean and lean." Part of the solution to dealing with the perceived problems of redundancy, waste, inefficiency, and ineffectiveness of an entrenched bureaucracy has been to privatize many services.

Over the years government has taken a great deal onto itself.

  • Some of the activities can only be done by government
  • Some were taken over by the government from other societal entities due to national crisis and just never given back
  • Some have fallen to the government by default.

An example of a service successfully given back to the private sector is one of municipal refuse and garbage services. The experience with contracting of municipal refuse and garbage services has resulted in cost savings of 40% to 60% when local governments have selected this alternative. Contracting has worked well with other municipal services, such as wastewater and sewage treatment, in which the costs of contracting these functions have been half of what they were when the municipality or local council provided them. The cost of municipal hospitals has been significantly reduced by contracting out services such as ambulance, maintenance, laboratories and food services. Municipal recreation facilities such as golf courses, swimming pools and stadiums are desirable possibilities for privatization through contract operation. Although the facilities still remain under municipal ownership, the actual service provision is in the hands of a private contractor

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