May 24, 2013
Possible Cause of Death: Privatization
Posted on Jul 15, 2010
By Moshe Adler
When a branch fell from a tree at the Central Park Zoo in New York City last month, killing a 6-month-old baby and severely injuring her mother, who had been holding the infant, Mayor Michael Bloomberg declared it “an act of God.” But in all likelihood it was the act of a mayor.
The Central Park Zoo is public, but its management has been contracted out. Surely the mayor should be familiar with the repeated failures of contracting out in New York City over the past two centuries. The City Council ordered an investigation of these failures in 1825, and the investigation concluded: “The contracting system has not given satisfaction to the public.” In 1826, a follow-up committee decreed that contracting out should be discarded and explained why: “Private interest is too frequently at variance with public convenience and therefore ought to be abandoned.”
The problems are the same now as they were then: Contracting out diminishes the level of know-how of the government on the one hand, and contractors save money by cutting corners on the other.
The rationale for contracting out is always the same: cost cutting. The taxpayer will save money, it is argued, because the workers of private contractors get lower wages and fewer benefits than city employees get, and because the workers of these contractors have no protections against arbitrary dismissals. But there is no reason why a contractor who cuts his costs by paying low wages will stop there. When the client is the public, nobody really owns the store and supervision is inevitably lax. It is too easy for the contractor to cut costs by cutting corners under such conditions.
Public concerns about the problems with contracting out are often allayed by the depiction of the contractor as worthy; indeed the contractor for the Central Park Zoo is the august-sounding Wildlife Conservation Society, founded in 1895. But a contractor cannot defy the rationale for its contract in the first place, and in order to bring its costs down, the Wildlife Conservation Society did not hire its own workers to prune the trees, but instead hired a subcontractor.
When asked about the role of contracting out in the baby’s death, Mayor Bloomberg responded that “the city can’t do everything.” But who in the New York metropolitan area owns more trees and who has owned them over a longer time than the city? The city government is the most fitting keeper of its trees, yet even within Central Park the responsibilities for trees is not only privatized but also fragmented: The zoo is entirely within Central Park, yet, despite the ambiguity it appears that the zoo’s trees are the responsibility of the private Wildlife Conservation Society while the trees in the rest of the park are the responsibility of the private Central Park Conservancy. Regardless of the official lines of responsibility, each private organization makes its own decisions about how to maintain the trees and each is trying to do so on the cheap. With no continuity of service and no centralization, knowledge and expertise cannot be developed. On a sunny, calm summer day branches do not simply fall off properly maintained trees, but to defend privatization the mayor would have us believe in the supernatural.
Why do public employees provide better public services than those provided by private contractors? Are they more scrupulous? Like employees in any other type of work, most public employees deliver a good job for fair pay and think nothing of it. And like employees in any other type of work, some public employees game the system. The problem with contracting out, and the reason it so frequently fails, is that it gives an advantage to the unscrupulous minority. The body that awards the contract is not a private party acting on its own behalf but officials acting on behalf of the public, and the level of vigilance is not the same as that which occurs between private parties. As a result, the contractor who has no compunctions about cutting corners is more likely to get the contract both because his price is lower and because he can afford to spend more money lobbying for the contract.
Contracting has been known to fail for 200 years now, yet Bloomberg insists on continuing the practice. In April, he appointed Stephen Goldsmith, a former mayor of Indianapolis known as a preacher of privatization, as deputy mayor. The death of an infant is too high a price to pay for an ideological commitment to privatization. Enough is enough.
Moshe Adler teaches economics at Columbia University and at the Harry Van Arsdale Center for Labor Studies at Empire State College. His book “Economics for the Rest of Us: Debunking the Science That Makes Life Dismal” (The New Press) won a 2010 IPPY (Independent Publisher Book Awards) Gold Medal.
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