Fuzzy Privatization Math

[liberal N proud]

On May 31, 2010, Governor Chris Christie’s New Jersey Privatization Task Force reported that more than $210 million would be saved by privatizing work that had traditionally been performed by government workers. The report even set out specific figures for some of the cost savings it identified, while others said savings were “TBD” – “To Be Decided”.

Who crunched the numbers to show that private contractors would do a better job or at least the same job for less money than public employees? The Privatization Task Force Report says that no one did. On page 14 the report says it did no analysis “due not only to the fact that the actual cost of a privatized alternative will often not be known until the end of a full fledged competitive bidding process, but also because New Jersey state government agencies have difficulty calculating with precision the full cost of functions currently performed at the state level.” So, the sunny claims of big savings for the people of New Jersey are a guestimate, at best. and “To Be Decided” is the most accurate statement in the report.

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The truth is that in all too many cases work is privatized without any comparison at all of the cost and nature of public versus private work. And, according to studies by the Government Accountability Office and others, even when there is a cost comparison, major costs that the public bears are not taken into account. One study found that costs not included were costs of hiring consultants to conduct the cost comparisons, costs for unemployment benefits when employees are replaced by contractor employees and vice versa when work is contracted back in, declines in productivity associated with the process of deciding whether to contract out work, declines in productivity when new employees are learning how to provide services and operate in a new system, the loss of institutional memory, and accountability oversight to ensure that the contractor is not shirking, to name just a few.

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Before rushing to privatize, we need to remember what math teachers tell their students, “Show your work.”
For example, we need know: Will the work cost less because it is done more efficiently, or because wages are lowered and benefits are eliminated? Paying workers less does not provide better quality. It just impoverishes workers. And having workers unable to get health care for themselves and their families means coming to work too sick to do a good job and being worried sick about medical care for their families. It also means pushing costs off on hospitals, doctors, charities, and, ultimately, on the government and taxpayers.

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http://www.truth-out.org/fuzzy-privatization-math68612

[deaniac21]

1. Truth-out had a great article about Karl Rove's indictment.