Question 1: Many people argue that privatizing public services can make government spending more efficient and reduce costs. How? Why might it be more cost-effective to contract out, for example, road maintenance, to a private firm than for a government to maintain roads itself? (Don’t need to use this example in answering the question)
Putting services on the open market, under competitive bidding, does keep costs down no matter what business you are in. There is a lot of down time and waste in road work. Waiting for the weather to cooperate; managing material costs; hourly wages that may not be so closed guarded by a nameless, faceless government, these things can cause cost overages that will ruin any budget. So instead of absorbing the costs of this, the contractor who is responsible for delivering the product will have to see that the job is completed efficiently. By capping the cost, and handing over the day to day responsibilities to a private firm, the government will be able to budget better, and keep costs down. Also, if there are any materials left over after the job, the company who specializes in that kind of work can use leftover materials, thus saving some money on the purchase of new materials. The costs of storing and maintaining left over materials, much less their effective utilization, probably would not be worth the effort if left to a government office.
Question 2: What are some reasons why privatization might fail to reduce costs or lead to other unacceptable outcomes?
If there are few qualified contractors, or only 1 or 2 companies that can do the job, they may establish a monopoly on the market, and feel that they can charge outrageous sums for work that should not really cost that much. An example of this would be how security was privatized in Iraq, shortly after the fall of Hussein.
There were few companies that had the skills, or manpower to go overseas and provide these needed services, so 1 or 2 companies gained a foothold, and dominated the market for the first few years. They were charging the government inflated prices because they knew nobody else would be able to do it, and they would have no competition. Only after a public request for investigations did prices fall more inline with their actual worth.
Currently, Planned Parenthood is under investigation for overcharging the government for the costs of birth control pills. There are several companies that are operating under the law that allows the government to subsidize these costs, but because the government is so large, and nobody in it really has the final word, companies like Planned Parenthood can get a contract, then gradually inflate prices in order to profit in a questionable manner. Not only should privatizing be looked at closely, examining whether or not the government should even be involved with these jobs should also be in question. I believe it is the churches job to take care of moral issues.
Question 3: Charging user fees for some state and local government services, rather than financing them from broad-based taxes, might also make government more efficient. Why? Choose an example of a service for which user fees are charges or have been proposed (Public higher education, public recreation facilities, water, and trash collection) and discuss the pros and cons of user fees.
User fees are a perfectly acceptable way to recover some of the costs that government incurs. I believe the only problem would be when they start charging costs for things that are basic to the societies function.
Security, education, trash disposal, these things and services like this are basic to the proper functioning of a society, and should not be impeded with ‘user fees’. Things like public park entrances, road tolls, museums… these things that are considered an option in a society would not burden anyone wanting to use them. However, if someone could not afford the user fee for removal of their trash, it would not be long before we started seeing mountains of trash piling up along roads, and in public places causing health hazards wherever they existed.
The government has lots of responsibilities, primarily to protect and defend the Constitution against all enemies foreign and domestic. Somehow over the years, they have managed to become involved with every faucet of our society.
Like I said before, it is the churches job to take care of the sick and elderly and moral issues. In light of all the recent financial problems America is facing, we should all take a good look at who really is responsible for what, and then hold them accountable to it. The advances we have made in computers and communications have made this daunting task much more plausible.
Life News.com. Steven Ertelt. Sept. 29, 2008. Planned Parenthood Accused of Overcharging Govt by Millions. Oct. 11, 2008. http://www.lifenews.com/nat4380.html