The cult of privatization

It's all the rage, but where's the accountability?

Delta and AirTran effectively killed any talk of privatizing Hartsfield Airport last week.

Without support from the airport's two heaviest hitters, any talk of turning over Hartsfield to a private company seems pure folly.

Of course, that probably won't stop John Sherman of the Fulton County Taxpayers Association and WSB talk jock Neal Boortz from continuing their quixotic quest to force a vote on the issue. Such is the mania of privatization, a movement to turn over certain government services to the private sector and, supposedly, reap the benefits of lower taxes and greater efficiency. On his website, for example, Boortz features a petition to privatize the airport, saying property taxes would be lowered. Problem is, no such correlation exists.

In fact, the discussion about allowing a company to run the airport was a case study in what's wrong with how government, its constituents and companies talk about privatization. To Sherman and Delta, it was all about the money. What was missing was a discussion about accountability, citizen input and oversight. That's probably not surprising.

In the next few years, the Bush admini-stration hopes to allow private companies to compete for 850,000 federal jobs — nearly half the workforce. So far, no one's said who will monitor the companies that take on the federal jobs.

Meanwhile, states, counties and cities all over the country, faced with recession-year budgets, are considering privatizing government services. California, for example, faces a $21.1 billion gap next year. Maryland and Virginia have both cut spending, while the latter has laid off nearly 2,000 employees and drastically reduced dollars for higher education.

Comparatively, Georgia finds itself in relatively sunny shape, because of its rainy day reserve fund. But that doesn't mean it will escape painful cuts. Tax collections are already down $276 million through the first five months of the fiscal year. That's led to plenty of speculation about just how Gov.-elect Sonny Perdue will steer the state through one of its worst budget crunches since World War II. Perdue, after all, didn't get elected by telling Georgians exactly what he planned to do about projected shortfalls. Instead, he got by on generic promises of eliminating waste and bureaucracy.

Perdue is clearly looking for some answers. Transition team spokesman, state Sen. Bill Stephens, R-Canton, says the governor-elect has already sat through more than 140 hours of budget talks since Election Day. So far, there's been no talk about privatizing specific government services, but it remains a possibility.

"A lot of options will be looked at, and I'm sure privatization will be looked at along the way," Stephens says.

Pro-privatization groups, not to mention the free-market wing of Perdue's own party, may put pressure on the governor-elect to consider out-sourcing some services to save money.

Stephens is optimistic the state could make it work if it chooses to. "Georgia has a history of doing privatization such as the management of state parks. The track record is pretty good."

Well, that depends on who you ask. The privatization of Atlanta's water system is deeply troubled. United Water, which runs the system, continues to lose money and has been put on probation by Mayor Shirley Franklin for poor service. Many Stone Mountain Park users have complained loudly about Branson, Mo.-based Silver Dollar City Inc.'s stewardship of the landmark, and even privatization pioneer Cobb County had to buy back its composting operation, after a private company failed to turn a profit with its operation.

Privatization's sometimes dismal track record is mirrored nationwide, in which private firms have embezzled taxpayer money — as one company did in California's state park system — or exposed taxpayers to unforeseen liabilities. In Missouri, for example, the state faced the likelihood of defending itself against a suit from a prisoner who was beaten in a privately run prison.

There have been savings and improvements in inefficiency in a number of privatizations, but the opposite has also occurred. Other times, there have been no statistical changes, says Mildred Warner, a Cornell University professor who has written extensively about privatization.

"My sense would be that the positive and negative case studies kind of balance each other out," she says. "In my own work, I've had all three results occur. That leads me to say that I cannot tell you that empirically that there are efficiency gains [from privatizing]."

The problem, says Ellen Dannin, a law professor at Wayne State University, is one of putting too much faith in private business and too few safeguards into contracts that privatize essential government services. Dannin actually set out to write an article about the laws states have passed to regulate companies that win government work. She couldn't do it, because "very few states had enacted comprehensive legislation" to guide privatization.

Warner argues that the privatization discussion needs to be framed differently, to shift the focus from money.

"Right now, we're in this phase of 'The market can do it better. It's more efficient, and we don't need to worry about corruption or monitoring,'" she says. "If anything, over this past year, it should show us that the private sector itself doesn't have adequate review and control mechanisms.

"We have this notion of market superiority ... but we forget that one of the reasons why government is less efficient is that we wrote rules for civil service protection and for graft and corruption prevention." Add to that citizen input and accountability.

If Sherman had considered privatizing Hartsfield from those angles instead of focusing solely on taxes, maybe he wouldn't have, as Hartsfield manager Ben DeCosta put it, wound up wasting the city's time. Maybe Perdue will take a more global approach if he considers the same.

Or, as Dannin describes it: "Hardline ideology, simplistic theories, and slogans make it easy to draw lines and make decisions, but not necessarily good ones."