That’s the question the New York Times asks today in its online “Room for Debate” series. I’m up there with a contribution (answer: “maybe”). Harvard’s Jack Donahue puts the right answer most succinctly:
Some things government should do itself. Some things it should outsource. The rules for smart contracting aren’t mysterious. Tasks that are well-defined, easy to monitor and available from competitive suppliers — call them “commodity tasks” — are prime candidates for privatization. Tasks that are complex and mutable, lack clear benchmarks or are immune from competition — “custom tasks” — should be kept in-house.
Alas, as Donahue notes, states and cities consistently privatize the stuff they shouldn’t, and don’t privatize the stuff they should.
This outcome is not much of a surprise. Private-sector privatization proponents seek out opportunities for out-sized profits (hey, who doesn’t?), and it’s easier to make such profits where there are few competitors and where nobody’s watching because watching is hard.
Read the whole debate!
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