CLEVELAND CAN COME BACK BY PRIVATIZING SERVICES
June 2, 2010
Cleveland has never been a glamorous town, but it used to be lively and successful. Now it is a poster boy for Rust Belt decline. It does not have to be that way. One way to save Cleveland is to privatize services, says Nick Gillespie, editor of reason.com and reason.tv.
The more fiscally sound a city is, the more attractive it is to current and prospective residents. Fiscal stability means citizens have less cause to fear tax increases or cutbacks in services. One tool Cleveland could use to help stabilize ailing city finances is outsourcing, says Gillespie:
- For privatization to be successful, it is essential that local governments identify sound measurements to compare competing bids fairly and to accurately evaluate provider fulfillment.
- With such measurements, a transparent process and open bidding, contracting out swaths of services across several departments -- such as public works, information technology, or facilities management -- would help Cleveland realize economies of scale and cost savings while receiving better value for the money.
Service providers would have an incentive to provide good services while keeping costs to a minimum, lest they lose the contract to a more efficient competitor. As a conservative rule of thumb, cost savings through privatization typically range between 5 percent and 20 percent, says Gillespie.
Source: Nick Gillespie, "Ideas to save Cleveland," Reason Magazine, June 2010.
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