Outsourcing Government

In another country also called America, there were no credit cards and excessive debt was seen as a character flaw. In that America, my grandparents and their parents had discussions when they wanted to buy almost anything. The conversations focused on two questions: can we afford it and do we need it? If the answer to either question was "no," they didn't buy it.

So much of our personal and public debt in modern America comes from a refusal to ask these questions. We don't need much of what we have and we certainly can't afford it. But we buy it anyway.

The recession may be forcing us to come to our senses, however reluctantly. A Wall Street Journal headline on July 19 could be interpreted negatively, but to me it is a positive: "Cities Rent Police, Janitors to Save Cash."

The gist of the story is that increasing numbers of cities are outsourcing some of the most basic functions of local government because they can no longer afford to provide them. This has the potential of reducing costs, improving efficiency and reducing the size and reach of government. What's not to like?

Why do local governments need to pick up trash, run libraries, or even enforce laws if the private sector can do it just as well, or better, and at less cost to taxpayers? Unions are one reason and control by politicians is the other.

The senior policy adviser to the mayor of San Jose, Calif., Michelle McGurk, is quoted in the Journal story: "These are cases where the question is being asked, 'Is this a core service at the city level?' "Faced with a $118 million budget deficit," writes the Journal's Tamara Audi, the city of San Jose dropped its custodial staff and hired "outside contractors to clean its city hall and airport." Estimated savings: $4 million.

Maywood, a tiny city southeast of Los Angeles, is dismissing its entire staff and contracting with outsiders to perform all city services, including the police. A major reason for the police layoff was a decision by the city's major insurance carrier to cancel coverage because of the high number of lawsuits against the Maywood Police Department, which amounted to $21 million in legal expenses and judgments. "Without insurance, Maywood is prohibited from hiring people who work directly for the city."

What if this practice were to catch on in other cities? It would surely boost employment in the private sector, as more businesses would take over services now performed by government. Politicians are probably not going to like this much because it will likely erode their power and perks. But taxpayers should love it because it means saving money and there will be fewer excuses for not reducing taxes.