Selling off government

Of the many issues facing state and local governments, one of the most fundamental is privatization: the transfer of public assets and resources to private interests. It raises some of the most basic questions of why we have government, and who should be in charge of it -- people and their elected representatives, or companies who ultimately answer only to their owners and stockholders.

It's also a hot issue for local officials because so many privatization schemes have gone awry. As the latest Statewide Dispatch -- newsletter of the Progressive States Network -- notes:

A number of state leaders have been promoting what seems like a free lunch. Hand over control of government services to private industry and those companies promise better service at a lower price. Like most promises of a free lunch, privatization has mostly ended up being a deceptive boondoggle, a point the non-partisan news source emphasized this past week:

"[I]n practice, privatization has failed more than it has succeeded, says Mildred Warner, a privatization expert at Cornell University. In an analysis of privatization of state and local services over the last 20 years, Warner concluded that the majority of projects failed because of deteriorating quality of service. And in more than half the cases, the projects did not save taxpayer dollars, she said."

The poster child for the failure of privatization has been Texas' attempt to hand over management of social services in that state to Accenture, a Bermuda-based consulting firm. Computer systems have failed, costs have mounted, and, worst of all, the result has been tens of thousands of children being dropped from health insurance rolls because of bungling by the private contractor. After the initial takeover of the system by Accenture, 30,000 children were dropped from CHIP [the children's health program] just since last December with the total enrollment in the state health system seeing its lowest numbers -- below 300,000 -- since the program's earliest stages five years ago.

You can read more about the Texas Accenture boondoggle here.