Privatizing Public Services

The Seven Common Myths of Social Services Privatization

1. Myth: Privatization improves quality of services and ensures equal treatment. Reality: Quality is uneven at best, with many private companies limiting services to clients to protect their profit margins. This can lead to unequal treatment among recipients of services.  

2. Myth: Privatization saves money. Reality: The added layers of bureaucracy necessary to set up competitive bidding and monitor contracts is expensive, and cost overruns by successful bidders are common. Where money is saved, it is often due to contractors paying their employees low wages and benefits, or cutting corners on services. In child welfare, for example, cost savings can result in bigger costs (both financial and societal) when children who do not receive adequate services end up in juvenile or adult detention.  

3. Myth: Privatization enhances flexibility. Reality: Once a public agency divests itself of the employees, expertise and other capacities to deliver services, it becomes vulnerable and beholden to whichever private contractor is delivering services.  

 

4. Myth: Privatization reduces bureaucracy. Reality: Privatization necessitates new, costly bureaucratic structures including writing and evaluating Requests for Proposals (RFPs) and monitoring contractorsí performance.  

5. Myth: Contracting is objective and fair. Reality: Political connections and nepotism continue to distort the contracting process, giving companies multimillion dollar contracts that are not merit based.  

6. Myth: Privatization prevents waste and abuse. Reality: Contrary to popular belief, the private sector is more awash in waste and abuse than are public agencies, at least in part because the profit motive often distorts decision-making.  

 

7. Myth: Privatization contributes to the greater good. Reality: Privatization reduces public accountability and can result in contracts that cost more and deliver less than originally promised.