Zadekpedia2011-09-03 · Guest: Adrian Moore (Vice President of Policy at the Reason Foundation) · 53:34
Filed under: Markets and money · Taxes, spending and debt
Topics: Market Economics · Privatization · Public Sector Unions
Economic and social benefits of privatization
Bob Zadek and Adrian Moore of Reason Magazine discuss the economic and social benefits of privatization, using the successful model of Sandy Springs, Georgia, as a primary example. They explore why public sector unions and certain political ideologies oppose outsourcing government functions, arguing that competition and market forces consistently provide better services at lower costs than government monopolies.
Topics: Privatization, Outsourcing, Sandy Springs Georgia, Public Sector Unions, Government Efficiency, Competitive Contracting, Noam Chomsky, Market Economics
Speakers:
- Bob Zadek: Host and business attorney
- Adrian Moore: Vice President of Policy at the Reason Foundation
Introduction and the Match.com Theory [00:00]
Bob Zadek: Welcome everyone, welcome to The Bob Zadek Show, Sundays at noon on 910 AM Fox News Radio. With that gracey, slick introduction, thank you, Tim. It is my favorite rock and roll song of all time. And it is quite appropriate, Tim, whether you know it or not. Gracey Slick was about to sing, “Don’t you want somebody to love?”
In a recent study on the participants of match.com and other major computer dating services, it was discovered that the main reason, the leading reason why match.com participants were rejected by somebody they sought to date—this is according to match.com—the major reason was the person who was trying to date me did not have an intense knowledge of privatization.
Well, all you folks who have been rejected and could not get to first base on match.com, this show is for you. We will make you utterly charming and a scintillating conversationalist when your date, the one you are seeking to have love you, changes the topic from your golf score to privatization. You will not have to excuse yourself and go to the men’s room or the ladies’ room; you can join right in.
To help you in your dating success and to build upon your knowledge of privatization, I am oh-so-delighted to welcome Adrian Moore. Adrian, welcome to the show.
Adrian Moore: Thanks, Bob. Glad to be on. So I have to say, if I was talking about golf scores on my first date, I would have a big hole to dig out of. I don’t know if privatization is even enough to get out of that hole.
Bob Zadek: It makes women weep when you even raise the subject. They wilt. It’s better than flowers, better than diamonds. Women love privatization. And we’re here to help the lonely hearts listening audience of The Bob Zadek Show to achieve social success with a knowledge of privatization.
Defining Privatization [01:21]
Bob Zadek: Now, I should say, don’t touch that dial—and I will—don’t touch that dial. What is privatization? Privatization is an issue which is about as American and as free enterprise as issues can be. Privatization—and this is sort of my own helpful, handy, non-dictionary definition—privatization describes the process or the approach to government that says most functions of government can be better performed by the government outsourcing them and hiring private business to perform the function rather than by doing it themselves with civil servants. It suggests the product will be cheaper and better for all concerned. It is the sensible way to run a government. Is that a fair starting point, Adrian?
Adrian Moore: Yeah, absolutely. I mean, it’s really—privatization really got started in the 1960s as a response to the reality. I mean, if anybody thinks about history, I mean, even if you just go back as far as the beginning of the century, or even only as far back as, you know, Mayberry RFD, it wasn’t that long ago that typical towns had police, maybe a fire department, and that was about it. I mean, town government didn’t do a whole lot except for those two functions. But over time, they keep doing more and more and more, and now there’s virtually nothing done by the private sector that some government somewhere doesn’t do as well. And so privatization is sort of the reversing of that trend, saying maybe government would do a better job if they focused on a few things that only government can do and let the private sector do things that the private sector can do instead of constantly competing against the private sector as a government agency.
Why Government Monopolies Expand [02:40]
Bob Zadek: And one would ask—it seems so obvious, Adrian, to you and I—how in the world do we get into this fix where governments, which means civil servants, which means union members mostly belonging to AFSCME and the other public sector unions, with virtually life security and a monopoly given to them by government—where do we ever get this idea that that is a better way to deliver services?
Adrian Moore: You know, it doesn’t really happen that way. I mean, no city sits down and says, “You know what we need? We need monopoly public servants, all the things you just described, providing services.” That’s never how a city council or a county board of supervisors—or even, maybe this is not as true of state legislatures, but generally—it’s there’s a problem. And we all know how the sort of the huddled masses react to a problem. You know, there’s too much trash on the street. Well, nobody thinks about, “Well, how do we solve that problem among ourselves?” No, everybody says, “Call City Hall and say, ‘Hey, there’s trash all over the sides of the roads, you’ve got to do something.’”
And there’s a problem, the pressure is enormous on any elected official to do something. Whenever there’s a problem, you’ve got to do something. You can’t just say, “I see there’s a problem, but that’s not really the government’s problem. That’s really a problem of the people who live on the street,” or whatever. If they say that, boom, they’re out of office. So they do something. So they go to a city council meeting and they say, “We’re going to start collecting trash because the private sector is failing because there’s trash on the sides of the road.” Never mind that there’s no connection between those two things; it’s irrelevant. And so they go out and hire a couple hundred people, buy a few dozen trucks, and start picking up the trash. And you just extrapolate that to every other service. Every time there’s a problem, people demand that the government takes care of it. And it doesn’t have to be a majority; it can be a tiny minority of people who demand the government does something. But because everybody else is busy living their lives and not going to city council meetings, that’s what drives the train. And lo, the city expands year after year into service after service over and over again.
Bob Zadek: And there are two issues, though. Number one: Should government provide the service at all? And then if the answer to that is yes, government should pick up the trash, then should the government do it with its employees, or should the government put out contracts, give it to the low bidder under a contract which says, “Here are the requirements, you must do this, how much will you charge us?” and let the private free market bid on the job, give it to the low bidder.
So we can discuss—but it’s not very much fun—whether the city should pick up the trash if that’s what the voters want. Fine. But then the question is: Who does it? And if you were organizing a country from scratch, would you say, “Well, let’s see. Let’s have private business, who is driven by the profit motive, bid, trying to get the job, figuring out a way to do it the best for the cheapest? Or should we create a monopoly, make sure they are unionized, give them civil service protection, and let them do it?” Would anybody who is sane, other than Noam Chomsky, who I’ll get to in a moment, would anybody who is sane…
Adrian Moore: Well, there is somebody, but he’s not sane, so that solves that problem.
Bob Zadek: Well, if you want to know whether privatization is a hot-button issue, Noam Chomsky, who is let’s say not exactly a right-winger, Noam Chomsky summarized privatization—and this is a quote—“Privatization does not mean you take a public institution and give it to some nice person. It means you take a public institution and give it to an unaccountable tyranny.” Close quote. So private business is, in the words of Noam Chomsky, an unaccountable tyranny. Hmm, I wonder if that applies to DMV as well.
The Sandy Springs Model [08:18]
Bob Zadek: Let’s talk about that, and when we come back, let’s talk about a city with no civil servants whatsoever: the shining city on the hill, Sandy Springs, Georgia. When we come back, 800-345-5639. Bob Zadek, I’m talking with Adrian Moore. We are talking about privatization.
The shining city on the hill, Sandy Springs, Georgia. Kind of gives me goosebumps, Adrian. Tell us about Sandy Springs, Georgia.
Adrian Moore: Well, Sandy Springs, it’s a suburb of Atlanta, and it was an unincorporated part of Fulton County. About 80,000 people live in the community. And for many years, a decade and a half at least, they had just been upset with the quality of the services they were getting from the county government. And so over the years, this idea of incorporating themselves and creating a city and doing things themselves caught on. They eventually had an election—well, first they had to get legislation from the state allowing them to form a city.
Bob Zadek: Well, first they had to get a Republican majority in the statehouse.
Adrian Moore: Yeah, and so they got that, they got permission, they voted, and as part of their discussion, they said, “Well, look, what we don’t want—we don’t want to create a big bureaucracy.” They went through the thought experiment you described in the last segment. They said, “No, we want to have a few things.” The law, actually state law, required that they provide police and fire. So they did that. And they said, “We need a few people to do other sort of more kind of law enforcement-like functions, like building inspections and providing permits and licensing.” So they have a small number of employees, and then they have a few employees whose job is just to monitor the private companies that do everything else.
And they had originally hired one company, a big engineering company called CH2M Hill, to provide everything: run the water, wastewater, trash, streets, you name it, everything except for police and fire basically, just manage the whole city. And they did that for a number of years. They’ve recently, when their three-year contracts came up time to re-bid those contracts, they decided to have several companies provide different services instead of having one company do all of it because they thought they would get more competition that way. But it’s sort of the opposite of the traditional city. It’s been so successful that now four other cities in Georgia have incorporated and used the same kind of model, and a couple of cities in Colorado have as well.
Bob Zadek: And so what’s interesting is the city of Sandy Springs, Georgia, they estimate they spend about $25 million a year to outsource almost all functions of city government except for those they are required to do themselves—police and fire and associated services. They outsource everything else. So they have—think—no city employees. They simply have hired somebody to do all city functions. And according to Sandy Springs, both the residents and the mayor, they spend about $25 million a year for this city of 78,000, which they estimate to be half of what they otherwise would spend at no—get this—no compromise in quality.
Union Opposition and the Quality Debate [12:30]
Bob Zadek: Now, what could be more of a no-brainer than that? And the point is, it’s not a question of trashing the workers, because in many cases, it’s the same worker, except the worker is not employed by the municipality but rather employed by a company who is under contract. So this is not an attack on a specific employee; it is an attack on or a readjustment of the system of delivering city services.
And for Democrats who are primarily opposed to this because they are in league with the public service unions, and for the unions to attack privatization as—and you’ll hear this nonsensical phrase—an “attack on the middle class.” This is not an attack on the middle class; it is simply changing the system by which services are delivered. And yet there is so much heat on this issue.
And just—Adrian, I found this wonderful commercial which I’m going to play for the audience just to show you how much heat there is. There was a hospital, a municipal hospital in Rhode Island, that was considering privatizing, that is, turning over its management to a private business to run. And Adrian, seems like a no-brainer if the private business can do the functions cheaper and better. What’s the big deal? If you want to see, and audience, if you want to hear how much heat there is, Tim, play the commercial for the Rhode Island hospital if you would.
Commercial Audio: At the Rhode Island Veterans Home and Eleanor Slater Hospital, our most frail and elderly citizens, including our veterans, are receiving top-notch care from concerned and hardworking public employees. Unfortunately, the jobs of these dedicated public employees are now in jeopardy, and the quality care they provide along with it. Call your legislators today, tell them to prevent a faceless out-of-state for-profit company from coming in and creating another Walter Reed scandal here in Rhode Island.
Bob Zadek: Oh my god, a faceless, out-of-state, heartless corporation. How many of you folks out there work for faceless, heartless, out-of-state corporations? Oh my god, you poor people, how you must suffer. Adrian, that’s the level of discourse on the subject of privatization.
Adrian Moore: You don’t have to tell me. I mean, in this job I’m in, I’ve worked on privatization since I actually did my PhD dissertation on privatization, and so it’s been my whole career. And I’ve been to countless public hearings and public events about privatization. And that is the level of discourse much of the time. It’s just ridiculous.
There’s one part of it is pure special interest. You noticed that they led with that the jobs of those hardworking public servants were under threat, as well as the quality of services. So quality of services is definitely secondary to their jobs. So it’s a special interest play. The unions protect their jobs. The quality question gets brought up all the time. How can you trust the private sector to, you know, provide healthcare to a retired veteran who’s hospitalized? Well, you know, we trust them to build our cars, we trust them to manufacture our pharmaceuticals, we trust them to produce the food we eat, in about a third of the United States to produce the water we drink. They’re not killing us off there; why do we think they can’t take care of veterans? And ironically, all you have to do is go across town where the other community hospital is a private hospital run by Catholic Healthcare West, a nonprofit. So their whole argument just doesn’t have a leg to stand on. But that doesn’t matter in politics. As you know, in politics, logic doesn’t really have much of a role.
Customer Experience: DMV vs. The Market [15:30]
Bob Zadek: And what’s interesting is, you know, I live in Marin County in Northern California, and the local hospital in my area is Marin General Hospital, which is owned by a for-profit group, the Sutter group, I think. I can just imagine that if I were feeling not so well and was picked up by an ambulance, I don’t think I would say, “No, no, don’t take me to Marin General because they are a for-profit run by some heartless out-of-state corporation. Can you find a city-run hospital for me because they’ll give me better care?” I mean, it’s so patently absurd.
And the unions have somehow attempted to equate quality with whether or not it is run by for-profit. Yet Adrian, as you have said, most of what you and I get in our lives, from life-supporting services to services that make life just plain more pleasant, are provided by for-profit corporations. And the price seems pretty good, and the quality seems pretty good, and none of us are clamoring, “Why can’t we have a government-owned laptop manufacturer so I can get a better laptop?”
And what’s happened is the real silliness of all of this is that when you try to privatize something, the unions are up in arms as if to say where we are now is the magic sweet spot, and the relationship between private business and government-offered services is perfect where it is, and if you make any change, we’re doomed. As if we’ve just found it. It’s perfect to have UPS and FedEx, and they’re just the right balance with the postal service—more about them after the break. But this heat about privatization, and what you’re—those people who oppose privatization, they are opposing free markets, they’re opposing competition, they’re opposing “give it to the best-performing service provider.” How in the world could anybody who is an American oppose those standards and those attributes of “give it to the best provider for the lowest price”? What’s wrong with that? Unions, how can you defend yourselves?
Adrian Moore: Well, it’s again, it’s politics. They try not to bring that up. They try to play it—I mean, there really is, when you step back like you’re doing in this show, it seems pretty absurd. I mean, what’s the better experience that we have? Where do we think we get treated better? At the DMV when we go to get our driver’s license, or at the bank when we go to apply for a credit card? I mean, both involve—you don’t have to take a test to get a credit card, but you’ve got to do a lot of paperwork, you’ve got to go through a process, you’ve got to go in the office, you’ve got to sit down with somebody, you’ve got to do all this. And we all know that the bank is a much more pleasant experience than DMV. So why do we think we’re going to be better off with the government picking up the trash, running the water utility, maintaining the streets, or any of that, when all the rest of our experience in our day-to-day life says competition and choices give you better results? If you’re able to fire somebody if they don’t do a good job, you’re going to get a better service.
Bob Zadek: Choice is the perfect concept, Adrian, to go to break. This is all about choice: the best product for the lowest price. Who out there can be opposed to that? Bob Zadek, 800-345-5639, talking with Adrian Moore, talking about privatization, the secret to economic freedom. Back in 90 seconds.
Competitive Contracting and Trash Collection [19:30]
Adrian Moore: You know, it’s—one of the ironies of this debate is it seems like everyone always tries to paint it as one of two extremes: either privatization is just pure evil and it’s all about corruption—you know, whenever the private sector is involved, there’s going to be corruption; whenever the private sector is involved, they’re going to chase, in order to maximize profit, that means necessarily screwing over the customers. All of these things that we kind of know is not really true. But on the other hand, the idea that the private sector never provides bad service is equally false.
When I talk about choice and competition, that’s the crucial thing. In the private sector, you have choices and you have competition. If you don’t like the service at one bank, you quit them and you go to another bank. With government services, you don’t have that choice. And it’s the choice is the crucial thing. When you’re talking about contracting, which has been the main topic we’ve been talking about—that form of privatization—so the city hires a company who’s therefore still a monopoly to say pick up the trash. That potentially has a problem. It’s incumbent upon the government who’s the customer, really, because they’re the one writing the checks, to make sure that the service is good.
Now, what a lot of cities have done, like Phoenix and Charlotte, is they divided the city into sections. So they divided the city into four parts, and they did four separate contracts with four different companies to pick up the trash. And so then you had competition, and you could look in one year later and say, “Well, which company’s doing the best job? Oh, well, this company’s doing the best job. Well, guess what? Now you get two parts of the city, and the company that was doing the worst job, you’re out.” And so that puts a lot of competitive pressure on to keep the quality up. So there’s ways of doing privatization to deal with all of those things AFSCME brings up and try to produce the same kind of situation you have when you’re choosing banks or grocery stores or gas stations.
The Pennsylvania Liquor Store Example [22:30]
Bob Zadek: And it seems to me anybody who attacks privatization as a concept has to, if you are intellectually honest, you have to attack all private business. And you have to say, “I am a Noam Chomsky socialist,” because you cannot believe that privatization works in the manufacture of clothing but doesn’t work in the picking up of the trash. Either the free market works and produces better quality at lower cost, or it doesn’t work. The free market works always. And if it works for clothing, and if it works for computers, and works for motion pictures, it works for picking up the trash, it works for administering DMV. So there is, to my knowledge, no intellectual honest basis to oppose privatization in anything other than those functions that are so purely and inherently governmental, like police and fire, that they simply are—that’s what government is all about. But it’s very, very hard to argue against privatization unless you say government should do everything. There’s no particular function where government does it better. It may be required for political science reasons, but not because government does it better.
Adrian Moore: Right. And you’re right, it really seems like it rarely boils down to that, but that’s fundamentally the truth of the situation is you have—if you’re going to oppose privatization as an idea, you have to be arguing that the private sector does a worse job than the government, that the private sector doesn’t work. And if you’re going to argue that about trash, then clearly it would make sense for the government to run the gas stations, run the groceries. I mean, what could be more crucial to our lives than our food, our water, our shelter, and our mobility? So why aren’t they running not just the roads, but building the cars, running the gas stations, building and owning our homes, and running all the grocery stores, and running all the water utilities? Because those are the most crucial things to life. And yet all of those things are, at least in places, done by the private sector. So that argument just doesn’t hold up. But yet they make that argument over and over and over again everywhere, all over the country. It’s just there’s no place I can go where I can count on people saying, “Well, yeah,” you know, other than Sandy Springs, right? That’s the one place where they really sort of thought this through from sort of from scratch and realized how things work.
Bob Zadek: And your colleague—there’s such a bias in the media against or mainstream media against privatization. Your colleague Jacob Sullum, who has been a guest on my show, made an interesting point. Privatization comes up in weird places. In Pennsylvania, and I think in Maine as well, but Jacob wrote about Pennsylvania—in Pennsylvania, all of the liquor stores are government-owned and government-run, with not much selection, high prices, they’re not open a lot of hours, the usual stuff one would expect from a government-run enterprise. And there was a movement in Pennsylvania to privatize the liquor stores. Now, to me, selling liquor is not a core governmental function, but maybe I’m missing something.
Adrian Moore: No, you’re not.
Bob Zadek: I should also mention that Pennsylvania was of course the seat of the Whiskey Rebellion, the first armed conflict that President Washington had to deal with by sending in 12,000 troops to Western Pennsylvania near Pittsburgh. But that’s besides the point. We have an issue where there was a study in Pennsylvania that Pennsylvania could save or earn $2 billion with a “B” dollars by privatizing the liquor stores. And the New York Times, in discussing this issue—now, what could be more of a no-brainer? What could be less controversial than letting merchants, independent merchants sell liquor and the state earns $2 billion? You would think that’s a no-brainer. The New York Times said in a quote that Jacob pointed out, in discussing the privatization of liquor stores, the New York Times—now this is a reporter, not an op-ed piece, so a reporter unable to hide his or her bias—said this would, quote, “would potentially bring $2 billion for state coffers, but also layoffs of several thousand state workers.” The New York Times looked upon—the reporter considered the layoff of “several thousand state workers” to be a minus. How could that be a minus if you’re going to save the salary of 2,000 workers? But that’s the bias that Jacob brilliantly pointed out in commenting on this issue.
Parking Meters and the Politics of Layoffs [25:00]
Adrian Moore: And that’s the politics of privatization in a nutshell. Liquor stores is a great example because for those of us in California and in the majority of states in the nation, the idea of the government being in the liquor business seems kind of crazy. It’s like, “What are you talking about?” And yet there are a dozen or so states where the state government does run the liquor stores, or at least provides the wholesale, like in Virginia they do the wholesale liquor and the liquor stores themselves are private. But even that doesn’t make any sense. And it’s all about revenue. These states got into that business after Prohibition ended. They justified it, “Well, okay, Prohibition was a failure, but we don’t want to go back to the, you know, the free-drinking times we had before that caused us to pass Prohibition. So the state’s going to run the liquor stores so that we can make sure that it’s not a free-for-all and that the liquor industry isn’t free to, you know, try to convince more people to drink, etc., etc.” But what it really was is, “And by the way, then we get the profit,” so to speak. And so they don’t want to give it up because they’re making money off of it.
And then they keep on doing—I said, you know, the profit margin on liquor is a lot lower than the profit margins on successful restaurants and several other businesses that make, you know, consistently better profit than liquor stores. Why don’t you get into those businesses? If it’s all about the money, you know, be consistent for crying out loud. Instead, they try to argue either that liquor is something special or, like you just said, like the New York Times, “Yeah, but you know, we’ve got state employees, we can’t lay them off.” Never mind that if a private company comes in and takes over, the first thing they’re going to do is need a lot of workers. And what are the best workers around? Well, generally the people who’ve been doing the job. You get rid of the slugs, you keep all the good workers. And since the state generally has, you know, 20% more workers than you really need to do the job, once you get rid of the slugs, you’ve got about the right number of people, and all the good workers still have a job.
Bob Zadek: Governments are coming around, I dare say out of desperation, and we are starting to see some enlightened governments that are bringing privatization into areas where they didn’t used to be there. There is a movement now—Chicago and San Francisco was sort of looking at it, but Chicago has done it—of selling off, that is, privatizing parking: municipal parking garages and parking meters. Now, one can ask, what makes government think they can sell the service of parking better than private business? And the answer is, of course, they cannot because they aren’t driven by the test of a profit motive. So Adrian, how is the selling off of parking meters going in Chicago and elsewhere?
Adrian Moore: Well, the Chicago was the big recent one. Privatizing of parking has been around for a long time. Most cities, the vast majority of parking is provided by the private sector. Most parking lots are owned by the private sector. There may be a few ones that the city built over time and continued to run themselves, and eventually in some places they wake up and realize, “Well, wait a minute, we’re running these parking lots, we only have 20% of the parking in the city, and there’s no reason why the private sector can’t do them. We could sell them, get the money, use it for the budget, and then be out of that business and not have the cost.” Most cities lose money at parking, whereas most businesses are making money at parking. So there’s the difference right there.
In Chicago, they privatized the street parking, which is a little more radical. It’s been done in some other places, but it’s a little more radical. But it’s the same concept. You’ve got spaces, you’ve got meters, you pay, somebody’s got to run the system, do enforcement, collect the money, fix the machines, all of that, right? So they privatized it in Chicago, and it was—now, set the prices is true, though in most cases like this, the government still controls the prices. The private sector has to agree, obviously; they wouldn’t sign the contract if they couldn’t make money at the price the city set. But the city still has some control over the prices so they can’t just raise the prices to ridiculous levels. Though obviously if they raise the prices to ridiculous levels, nobody will buy it. We know that when it comes to milk and computers and cell phones, but somehow we think it’s different when it’s parking or anything else the government does. But at any rate, in Chicago they had some problems at first. The first year actually there was a lot of controversy, mostly because suddenly people had to start to pay for parking in places where it used to be free. Because part of this deal was the city wanted to put metered parking in places where parking had been free, or they wanted to raise the prices in places where it had been low because there wasn’t enough parking, and they didn’t have the guts to do it themselves. So the privatization was sort of their way of doing this. And people, of course, screamed and yelled about it. There was some growing pains, but now it’s, you know, it’s been a couple years and generally it’s considered to be very successful.
Adrian, shame on you. Parking was never free any more than lunches are ever free.
Adrian Moore: Exactly. Well, yeah, but you didn’t have to pay when you parked, right? So people consider that free. Yeah, there wasn’t any user fee for it. Now Los Angeles just went through a drill of considering selling some of the parking lots that they own, and the city council decided not to, entirely on two points: one, they didn’t want to let all those good loyal city workers go, and two, they were losing money on those parking lots because the local businesses gave them campaign contributions and lobbied very heavily to continue to have really cheap parking in their neighborhood, and they objected to the idea of going to commercial rates for parking and therefore they might be—they might lose the competitive advantage they’d gained by lobbying the city to lower those parking rates. And so the city decided not to do it. So that’s democracy in action, unfortunately.
Democracy vs. The Market [27:30]
Bob Zadek: And what’s really astonishing is that there is this involuntary wealth transfer from taxpayers to overpaid—because they get paid above the market—city, county workers. Why in the world are taxpayers so sheep-like and not enraged that they are being forced by taxation to transfer their wealth to somebody just so that union worker can be overpaid? And why do I say they’re overpaid? Because if private business would do it, private business would perform the same function for less by paying their workers less and giving their workers less benefit. Now, that’s not exploitation because the worker doesn’t have to take the job. But if the worker is willing to do the job for less, then to pay somebody more is to pay them above market. Now, why on earth should I be compelled—compelled at the point of a governmental gun—to subsidize somebody else who gets overpaid? And that’s what privatization is all about. Now, the politics are, as Adrian pointed out, that the unions amass a very potent political force, and they give a lot of money to elected officials to get them elected so they can preserve their own jobs. It’s patently dishonest, it’s a terribly abuse of the system, and taxpayers are just sheep by putting up with this.
Adrian Moore: Yeah, it’s—you know, it’s a great lesson in when you think about how much Americans worship democracy. And you know, Winston Churchill famously said, “Democracy is a terrible system except it’s better than everything else,” right? And it is a terrible system. When you look at it, everything we do in the market—there’s no democracy in the market. You know, there’s you vote with your feet. It’s not a you vote by going to another business; it’s not a democratic process. In government, it’s a democratic process, and in a democratic process, the idea of taking a little bit of money from a lot of people who are too busy to care and it’s too little from them to give to a few people who care a lot because for each of them it’s a lot of money—that’s the backbone of our public service system in the United States. And it’s the outcome of democracy. Those few people have tremendous influence with those elected officials because they’re there every day, they attend every city council meeting in mass. And I’m betting you 99% of the listeners of the show right now have never been to a city council meeting. And of the 1% who have been, they’ve only done it once or twice because it’s an infinitesimal fraction of the ordinary citizenry who actually goes to city council meetings or county board of supervisors meetings even occasionally. And so we don’t participate. We do our vote, some of us, 30 or 40% of us actually bother to vote once in a while, and that’s it. While the municipal workers and the other special interests are there every day. And that’s what drives the train in these situations.
So yeah, you get these ridiculous situations where they’re overpaid. And it’s interesting that the private sector doesn’t necessarily do a better job and make a profit by paying less. They pay skilled workers more than the government pays skilled workers, but they pay unskilled workers much less than the government pays unskilled workers. And so depending on whether you’re management or you have a technical skill, you’re much better off in the private sector. And so the government is this process of providing unskilled workers with much too high pay, which is even more bizarre.
Bob Zadek: And government as employer is always paying with OPM: Other People’s Money. It is easy to be generous with other people’s money. So this is about bringing competition and the free market, the economic principles that gave us the strong economic engine we have now, bringing this to the government delivery of services. What could be more sacrosanct and holy than that? This is Bob Zadek, thanking so much Adrian Moore for joining me on the issue of privatization. I’m here every Sunday at noon at 910 AM. Thank you so much for listening. We’ll be back next Sunday.