Two big stories in the Detroit Free Press recently: 1) the Aramark company is in trouble with the Department of Corrections for various shortcomings in fulfilling its contract to provide food services for prisoners and 2) Michiganís charter schools are spending nearly $1 billion in state funds with little accountability and uneven success. Both were attempts to reduce costs through privatization.
The problem with privatization is that private companies are in it to make major profit and are willing to cut corners to do so. This means government has to devote considerable time and expense to the supervision of these contractors or deal with failures such as those described in the Free Press.
The privatization push is in response to collective bargaining. Since the National Labor Relations Act of 1935 did not apply to public employers ó FDR was against it ó collective bargaining for Michiganís public schools and local governments was optional until 1965, when a Democrat-dominated state Legislature passed the Public Employment Relations Act. Fifteen years later, the Civil Service Commission extended collective bargaining rights to state employees.
Unionsí success in negotiating wages and benefits has left state and local governments with personnel and legacy costs they canít afford, and although they canít reduce wages and benefits without union agreement, they can fire employees and replace them with contract employees (the Aramark agreement eliminated 370 state jobs).
None if this would be necessary if there were no forced collective bargaining, leaving state and local governments free to pay no more than necessary to attract qualified employees. The government workers could then do the job as cheaply as contractors ó actually, cheaper, since the extra expense of selecting and supervising the contractor would be eliminated.