When conventional Wisdom...isn't.

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Annals of privatization

Conservative dogma states that private enterprise and contractors accomplish basic services more efficiently and professionally than nasty ol' big government. This happens through crackerjack tactics like holding workers like slaves in windowless warehouses.

Najlaa International Catering Services, a subcontractor to KBR, an engineering, construction and services company, hired the men, who're from India, Nepal, Sri Lanka and Bangladesh. On Tuesday, they staged a march outside their compound to protest their living conditions.

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Now sure, you could say that slavery is just the price we pay for efficiency and the best in service and quality. And you would be right. Because without keeping costs down by enslaving workers, contractors wouldn't be able to provide ice with human remains in it to the troops so quickly and crisply.

The lawsuit also accuses KBR of shipping ice in mortuary trucks that “still had traces of body fluids and putrefied remains in them when they were loaded with ice. This ice was served to U.S. forces.”

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Contracting Out...

You know, something that we don’t even consider as much as we should is the very notion of whether or not contracting out government services has basic assumptions that make sense.
The big drive to contract out much of what the federal government does stems, in large, from a study done decades ago. The Grace Commission was sent out by President Ronald Reagan to try and streamline government and reduce government spending.
Their mission was influenced by Reagan’s conviction that government was the biggest problem in the United States, summed up by his quote that “government is not the solution to the problem, government IS the problem.”
The problem with that quote is that it’s been bastardized beyond all belief. Reagan wanted as much local control as possible, down to the level of empowering citizens to make as many decisions as possible for themselves. Okay, sounds great, but the reality is that you and I cannot possibly confront and solve problems like the national healthcare issue, or a war in Iraq, or the financial meltdown; they require something bigger. That “something bigger” is the federal government.
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As this op-ed piece from the Wall Street Journal points out, the Grace Commission has been leading to some pretty amazing consequences. How?

Back in 1984, the conservative industrialist J. Peter Grace was telling whoever would listen why government was such a wasteful institution.
One reason, which he spelled out in a book chapter on privatization, was that “government-run enterprises lack the driving forces of marketplace competition, which promote tight, efficient operations. This bears repetition,” he wrote, “because it is such a profound and important truth.”

Think about that for a minute. Don’t we often accept it, blindly, as being true? The most basic assumption is that private industry “promotes tight, efficient operations”. But you know what? It doesn’t.
The problem is that since contracting out involves giving massive sums of money to for-profit organizations, they have a massive incentive NOT to innovate or to build “tight, efficient operations”. They have a massive incentive to do two things: One, get the government to keep spending lots of money on whatever it is that they’re doing; two, not let those operations go once they’ve gotten a hold on them.
In the FAA, we’ve seen this perfectly laid out. One of the largest moves ever to contract out government services was when the FAA decided to contract out the operations of Flight Service Stations. The agency promised higher quality for lower costs to better serve more users.
Yet exactly the opposite of those things happened.
The FAA’s Administrator Fact Book shows that in 2003, Flight Service Stations logged over 26 million instances of flight services to pilots. By 2007, after contracting those services out, that number had dropped to under 9 million.
(If you don’t believe me, check out those links- it’s page 9 of the PDF file, page 8 of the publication, of the November 2004 Fact Book; and it’s page 10 of the PDF file, page 8 of the publication, of the July 2008 Fact Book.)
So contracting out has led not to MORE users of the system, but instead led to losing almost two-thirds of the customers choosing to simply quit using the system.
Better services? Phil Boyer, ex-president of AOPA, had this to say about the Lockheed operation:

“In short, the FS21 (twenty-first century) system is in crisis and failing pilots. Based on the hundreds of complaints that AOPA has received in the past month, it is clear that the technical and operational problems plaguing FS21 are now affecting safety,” said AOPA President Phil Boyer in a letter to FAA Administrator Marion Blakey. “The FAA and Lockheed Martin must immediately address the problems and implement a plan to bridge the service gap and provide critical FSS safety of flight services.”

How about the claim of more efficiency? Less costly?