The Light Begins to Dawn…

America has long had a “bandwagon” approach to policy; our penchant for simple solutions leads us into all manner of fads: the New Public Management, outsourcing and privatization, untested education “reforms,” and others.

For the past couple of decades, the answer to virtually every management challenge has been “privatization.” As I’ve indicated previously, there are times/situations where contracting out (which is what our version of “privatization” really is) makes sense, but thanks to our penchant for jumping on the bandwagon, government agencies have employed this method of delivering public services without the sort of rigorous analysis–or often any analysis–that should accompany decisions to turn tax supported programs over to private vendors.

Lately, however, citizens and public officials are beginning to recognize the downside of inappropriate contracting. A newspaper in North Carolina recently editorialized on the results of that state’s privatization of mental health services:

[A]ccess to services was confusing; services became unavailable to clients, and the number of people with mental illness who ended up in emergency rooms and jails significantly increased.

According to the Orange County Register, privatization’s consequences for Costa Mesa, California, were similar.

When the Costa Mesa City Council attempted to privatize large portions of municipal operations, it did so without conducting any analysis about whether its actions would save money – or whether it would cost more, which it did….

Southern California has provided fertile ground for other failed outsourcing initiatives. In the 1990s, Seal Beach thought it was on the cutting edge of local government privatization. The beach community managed to save about $30,000 in its first year of privatized jail services, and local officials were quick to pat themselves on the back for what they thought was really smart governing.

But what privatization delivered was two decades of lawsuits, two in-custody deaths, improper responses to medical emergencies, inadequately trained staff and a steady stream of violations uncovered by state regulators and health officials. Privatization of Seal Beach’s jail has resulted in so many serious problems that the city is now spending a reported $1.2 million just to start the process of bringing jail services back in-house.

The county of Orange’s most recent information-technology debacle provides yet another cautionary tale. After the county entered into a staggering $132 million contract with Xerox to upgrade phone and computer networks, performance by Xerox was so poor that the Board of Supervisors appears to be poised to sue over the broken promises and cost increases.

The article cites other examples, and notes that enthusiasm for contracting may finally be on the wane:

Across the country, governments of all sizes are rethinking the outsourcing of services as they discover its many unwelcome consequences, including lack of transparency, cost overruns, lack of competition for contracted services, and glaring weaknesses in accountability and oversight.

It’s hard to argue with her conclusion:

Services provided by public entities should be judged by what is best for the health, well-being, civil liberty and security of the public. Inserting a profit motive is an open invitation to graft and corruption and, more often than not, results in services that cost more and serve the public less.

We’ve noticed.


  1. You can bet it will take two decades for Indiana to “recognize” this problem and another two for them to come up with a solution that doesn’t harm the perpetrators or beneficiaries.

  2. This blog struck a nerve with me; that old familiar Goldsmith nerve you have heard me rant about so often regarding privatization – the politically correct term at that time.

    I’m going to jump in here with names; unavoidable because one is a familiar name of a local sports star (I believe an innocent victim in this instance) and part of the company name. The name Warren Tyler I have used before; the vice-president of a Columbus, Ohio, bank who was a major contributor and financial adviser to Goldsmith, illegally named Director of Department of Metropolitan Development. This was in addition to his original 9 month contract (for some reason) to study local public housing; this is important to know to follow the start of his trail.

    Many, many contracts and hiring sans contracts, went to Ohio firms. A one-year, $3 million contract involving all City of Indianapolis Departments and Divisions and Oscar Robertson/Smoot consulting firm, located in Cincinnati, Ohio, was a major one. This was approved by the Metropolitan Development Commission; the business meeting was held and all involved were given copies of the full contract. The consultants were placed in all City Departments and Divisions to watch and listen and, I suppose, offer advice. Come time to begin paying on that $3 million investment; there is no legal contract to be found anywhere, this held up payment only briefly. Being Records Secretary for the Commission, I was frequently asked regarding whereabouts of this most important – and expensive contract. It took almost a year to get to the root of the problem due to the blatant stupidity, the answer was one I hadn’t considered except as a last resort. Everyone involved; all department and division heads (including the Mayor’s Office) and Oscar Robertson/Smoot CEOs had signed their copy of the contract, returned to their respective offices and filed it away. There was NOT one copy of the contract signed by everyone involved and filed with the City Legal Division…or with Commission files. I relayed this message in person to Deputy Mayor Nancy Silvers; returned to my office on the 18th floor to be stopped by DMD’s Chief Financial Officer who asked ME how to get a legal copy of the contract. I explained this to Ali Khan, CFO of DMD, who had a Master’s Degree in Personnel Management from the University of India. He (or someone) managed to accomplish this feat.

    The Metropolitan Development Commission approved a second contract for another year at another $3 million to Oscar Robertson/Smoot and all City departments and divisions. After Commission approval; ALL COPIES OF THE CONTRACT WERE RETURNED TO ME! I do have what some might consider an evil, vindictive side so I put all copies of this second $3 million contract in my Commission files and waited. A few weeks later the OR/S consultant, Tom Sisterhen, placed in the Planning and Zoning Division, came to my desk and introduced me to a Vice President of Oscar Robertson/Smoot who was looking for the contracts, Tom asked if I knew where they were. I said, “After what happened last year, when they were all returned to me I put them in the Commission files.” The VP of OR/S asked what happened last year; when Tom opened his mouth, he was told to shut up and I, in all innocence, explained the previous year’s fiasco. I was never aware of any actual work, recommendations or improvements to come from the consultants with two yearly contracts, totaling $6 million of our tax dollars.

    This is not only a prime, expensive example of incompetence from privatization/outsourcing but also points to incompetence (or outright thievery) from government staff. When privatization/outsourcing fails, as we have seen happen repeatedly here in Indianapolis, begin tracking the problem inside for sources and reasons that government employees are not performing government work which is being paid for with our tax dollars.

  3. I am not sure Indiana will ever get it. This culture of ignorance and prejudice runs deep. The (smart) smart ones leave, and the (dumb) smart ones stay, only to moan about the state’s regressive nature until the days they (we) die. I am inclined to think we should “John Galt” this place and abandon it to the intelligentsia of family values voters and WIBC listeners so thye can make it the John Birch utopia they so desire.

  4. I don’t live in Indy, I reside in a doughnut county north of Indy. I’ve watched our mayor privatize our city services, sell off one of our utilities and lease/buy land for a sports park. All while telling the citizens that he’s fiscally conservative. We now are on the hook for millions of dollars, have watched our streets crumble, our drainage is poor at best and our schools our seeing budgets cut.

  5. It’s almost a given that businesses see a gov’t contract and raise the price 300% just because they can. I hope you’re right Professor. I hope this stops soon. It’s been rampant in the IT business for years.

  6. Aging Girl: It won’t stop soon unless you and a million others quit your habit of voting for the entrenched Oligarchs and religionists.

  7. I’d say, “Tell Ballard,” but I remember, “You can always tell a Marine, but you can’t tell him much.”

  8. I just remembered something I spotted on the 5:00 p.m., WISH TV news yesterday; it was only a brief, one sentence banner at the bottom of the screen. “Mayor’s Office attempted to put $6 million into BlueIndy”; have seen no more about it. Ballard attempted to get our water bills raised to pay for this brainchild, was that $6 million he removed from IMPD budget (?) recovered, found or explained? Just askin’

  9. America has always maintained two parallel economic systems: capitalism and socialism. Capitalism seems to work and potentially offer benefit under two conditions: regulation and competition. Unless those can be maintained it’s unaffordable due to it’s one inherent rule: make more money regardless of the cost to others.

    One market in which we have made the wrong choice is health care which has become unaffordable under capitalism. Obamacare, which was a baby step towards socializing health care by requiring and enabling everyone to be responsible for their own health care costs, is hated by those who have gathered up a disproportionate share of wealth through capitalistic health care, even though it really accomplished nothing in terms of ownership of the means of production so really didn’t change the health care market from capitalism to socialism. Those who pursue wealth redistribution though health care capitalism realize that it was a brilliant move though to solve the problems without socialism because it encourages competition between health care insurers.

    Privatization is the process for moving markets from socialism to capitalism. Of course the basic questions to be considered in those issues are: can adequate competition and regulation be maintained? If you look at some recent trends towards privatization the answer is no. Prisons for instance. Big mistake.

    Those who make and fall for mistakes like that typically are economically illiterate. They are easily fooled by budget machinations and moves of the cost from one pocket to the other.

    So add economics to science and civic illiteracy as main shortcomings in our efforts to maintain democracy.

  10. Gopper, if you’re in this neighborhood today I left a question at the end of yesterday’s blog that I hope that you can provide an answer to.

  11. OMG: I’m voting for #FeelTheBern which I truly believe is nowhere near an established candidate or oligarch or anybody that uses religion as a tool to get votes. I’m an atheist far left hippy freak that didn’t vote for decades until 2008. I still wear the 70s hairstyle, lol.

  12. From a recent Donald Trump speech.

    “The ‘silent majority’ believe me is back, and I think we can use it somewhat differently. I don’t think we have to call it a silent majority anymore, because they’re not silent. People are not silent.”

    “They’re disgusted with our incompetent politicians.”

    “They’re disgusted with the people who are giving our country away.”

    Who would not agree?

    The part that he left out of what followed was that most of the “incompetent politicians” are he and his fellow Republicans who have accomplished nothing good and much bad for the country over the last several decades.

    Look at the ratings for the thoroughly Republican Congress!

    So he is appealing to people who are paying attention to results but are culturally and probably congenitally Republican. Those who are addicted to the Republican Ministry of Truth AKA Fox News broadcasting 24/7/365 that, like Communism, there is only one party.

    He’s got support because he is saying what we all know. Something valuable is being taken away from us. He’s unable however to see what that is and by whom.

  13. “America has long had a “bandwagon” approach to policy; our penchant for simple solutions leads us into all manner of fads: the New Public Management, outsourcing and privatization, untested education “reforms,” and others.”

    Indiana jumped on the ed reform bandwagon early on in the charter school movement and shows no inclination to get off the wagon. Legally and technically charter schools are public schools who receive their funding from the same pot of education funding that your neighborhood public school receives its funding, including any and all Federal, State, and/or Local monies. Before any reader decries the charter school movement as a particular partisan favorite child, please know education reform, especially school choice via charter schools, is bipartisan in its support from the top down, from the White House to the State House to City Hall.

    At present, Indiana ranks #1 in the number of active charter schools with a majority of those charter schools located in Indianapolis where former Mayor Peterson lists among his first-term accomplishments the establishment of charter schools in the City and where current Mayor Ballard continues to establish more charter schools. As Ms. Kennedy noted, untested education reforms abound in Indianapolis.

    Increasingly these charter schools are operated by companies from afar, school management companies who’ve sprouted like dandelions in an untended lawn, fertilized by a national notion of an “education crisis”. Yes, I am cynical, jaded, and jaundiced when I consider that an IPS School Board member is the administrative leader of an Indianapolis charter school located on Meridian Street and that is operated and managed by an out-of-state nonprofit organization that maintains an active Online presence seeking yet more charters.

    From their website, Carpe Diem Learning Systems builds and operates charter schools that run on new standards of student achievement and cost effectiveness. Carpe Diem Learning Systems is committed to creating education-changing innovations in the schools we operate, allowing us to educate, empower and equip students for success in life. At Carpe Diem schools, we teach and coach students using our proprietary blended learning model (digital curriculum plus high quality instruction), personalized learning experiences and high expectations.

    The list of the 41 charter schools operating in Indianapolis is included in this link:

  14. Addendum to my earlier post. A few Indianapolis charter schools are absolutely stellar, provide an education experience equivalent to that of an East Coast private boarding school. Herron High School falls into that category of an absolutely stellar charter high school.

  15. William: Not likely to happen! In the past, I have mentioned a proposal similar to yours and the comments seem to just get longer. Many are without paragraphs, correct punctuation, or any real point. I slide right on past ’em!

  16. @Betty, when “the light begins to dawn” as Ms Kennedy wrote, I’d never recommend anyone’s revelation or ‘aha’ moment be confined to a prescribed number of words.

  17. BSH: Great idea…as long as their expression of their lightbulb moment is not longer than Sheila’s blog-of-the-day. It’s just more than I need, rather like the upcoming “debate”. More than I need.

  18. @Betty, I hear you, and I also remain cognizant that your expressed needs and occasionally my needs for reading a clear concise and succinct post are not necessarily the needs that align with those posters who bring a steamer trunk load of emotional and/or personal experiences to the table, to this forum. Consider Ms Kennedy’s blog an inclusive safe harbor where posters can articulate formerly unspoken experiences before a group of non-judgemental people. And, of course, the readers always have the option of scrolling through comments that we consider long-winded or simply frivolous.

  19. @William and BSH: I am reminded of the adage that more preachers and commenters to any blog (not just this one) might wish to take to heart: “Be brief, be bright, and be gone!”

  20. @Betty, that’s fine advice for pharmaceutical sales reps, those folks who’d “briefly” insert themselves into the likes of my spouse’s busy medical professional practice. As he says, in and out and leave your samples.

  21. @Betty, at this precise moment, I’m laughing out loud in my home office because I like you already without ever meeting you. It only seems appropriate, that we schedule, under Ms Kennedy’s unofficial supervision of course, a location in which we can verbally give no quarter. The bar tab will be on me. LOL

  22. After watching some of the Republican debate tonight: Nobody open to the idea of voting Democrat will vote Republican in this election.

  23. @Pete: The catch will be “open to the idea of voting Democrat”. Can’t budge some folks. It’s in their DNA.

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