The Future of "Privatization"
It seems that recently there has been an increasing number of discussions around privatization of government services. From our local municipalities taking over and privatizing their libraries to the discussions around privatizing the Shelby County jail, there has been a conscious effort by some to save the Shelby County tax payers money. I have a few questions of my own around the issue of privatization.
1) Why is it that private entities are so much more efficient than government run entities?
2) How far do we go with privatization?
The answer to question one is very simple - accountability. Private entities are accountable to shareholders or business owners. Efficiency and profitability are necessary to survive in a competitive environment. If you own a business and run it reckless and inefficient manner, you will not be able to survive. Government entities, however, are not in a competitive environment and answer only to the voters. And, as we all know, in local races we seem to average no more than 15% turnout, and incumbents rarely face a serious challenge. Citizens must hold our elected officials (and those they appoint to leadership positions) accountable for running our government like a business. If they are not doing the job, we need to fire them by voting them out of office.
The answer to question two is a little more difficult to answer. If we could elect the right leaders to run our government like a business, I am not sure we would need privatization at all. However, given the current state of affairs, I think we could save the taxpayers a substantial amount of money by privatizing many other aspects of government services. I believe we should study this issue further, and begin to create a sense of "competition" with our local government run services.
I leave you with a few thoughts, and I would like your feedback. How far should we go in investigating potential areas of privatization? Should the public school system be off limits?
1) Why is it that private entities are so much more efficient than government run entities?
2) How far do we go with privatization?
The answer to question one is very simple - accountability. Private entities are accountable to shareholders or business owners. Efficiency and profitability are necessary to survive in a competitive environment. If you own a business and run it reckless and inefficient manner, you will not be able to survive. Government entities, however, are not in a competitive environment and answer only to the voters. And, as we all know, in local races we seem to average no more than 15% turnout, and incumbents rarely face a serious challenge. Citizens must hold our elected officials (and those they appoint to leadership positions) accountable for running our government like a business. If they are not doing the job, we need to fire them by voting them out of office.
The answer to question two is a little more difficult to answer. If we could elect the right leaders to run our government like a business, I am not sure we would need privatization at all. However, given the current state of affairs, I think we could save the taxpayers a substantial amount of money by privatizing many other aspects of government services. I believe we should study this issue further, and begin to create a sense of "competition" with our local government run services.
I leave you with a few thoughts, and I would like your feedback. How far should we go in investigating potential areas of privatization? Should the public school system be off limits?
posted by Mike Rude at 3:01 PM
1 Comments:
As I discussed with the Commercial Appeal in an interview (that they did not use, figure that), the motives of government are different than private industry. Private industry has a singular goal, to make money. From the top (CEO’s, Presidents) down to the bottom, every task and performance incentive is based on making money. If an employee’s job performance is such that it meets the goal of the entity making money, then the employee makes more money. Obviously, government services don’t work with the same incentive/rewards structure. In private industry, the result is increasing productivity and efficiency to survive in an ever increasingly competitive environment.
I believe that every government agency should have a goal structure in place. For example, a department responsible for roads may have the goal of providing a certain traffic capacity of a geographic area. Well, no doubt there are metrics out there somewhere that say how much on average it should cost to provide that capacity. Now, let’s say that the department head has specific criteria to attain (such as capacity/dollars). For that department head, his pay and bonuses are based on maximizing the criteria. The benchmark could be say the national average of that criterion. Exceeding that criterion should result in a bonus for the manager. Now, the manager’s compensation is tied to his department’s ability to perform in a competitive environment. He/she may be tasked with a specific capacity and rewarded for how efficiently he/she meets that capacity. It would only be natural for him/her to set up reward structures for the department employees that help meet those goals. Excess money in the department budget gets returned to the government (which normally agency managers spend on nonsense so they don’t get their next budget reduced) since holding or spending the money will negatively impact the metric, and reduce the manager’s compensation.
At any rate, those are my thoughts on the subject.
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