A new report says privatization isn’t delivering the goods in the United States – yet many state governments are blundering ahead with the schemes.
The Progressive States Network (PSN) studied the way state governments handle privatization - and what it actually delivers. They found privatization “wastes tax dollars by fostering corruption, inefficient management, increased costs, and a disincentive to quality service.” PSN also singles out state governments for their lax oversight and scrutiny of privatization schemes.
The report documents numerous problems with privatization schemes, including:
- no savings to taxpayers
- lost money and degraded services
- weak oversight and lost expertise
- the sale of public assets for short-term gains
- corruption of the political process
- a lack of unbiased data on privatization
The billion-dollar flop of Accenture’s contract to manage social services in Texas is a prime example of privatization’s pitfalls. But the PSN warns of many other privatization failures lurking below the radar, and calls for tough transparency and accountability laws.
The report makes it clear that privatization is bad public policy. PSN policy director and report author Nathan Newman says “we’ve got this myth floating around that privatization is some kind of free lunch that’s going to save us all from inefficiency. But the fact is that – like most promises of a free lunch – this just doesn’t stand up to the test of reality.