Monday, April 13, 2009

For example, AIG might be willing to insure Atlanta against financial collapse.

Atlanta mayoral candidate Jesse Spikes' love of privatization has withstood both the worst recession since the Great Depression and its cause, the incompetence and greed of the private sector. From his website:

There are many opportunities for the privatization of services now performed by the City.

In my law practice, I have actively supported and participated in the privatization of major services at both the City and County levels. I have witnessed firsthand the cost-savings of privatization . . . and kept a close eye on the quality of service that private companies provided, to guarantee it stayed first-rate. As mayor, I would continue to consider privatization in appropriate circumstances as a way to cut the costs of running our city.

Although he has "witnessed firsthand" the "many opportunities" for "cost savings," he does not name one.

Now, compare Jesse Spikes' gauzy rhetoric to Shirley Franklin's honest response to a recent call for further privatization of city services. From Blog for Democracy:

I understand that there are privatization advocates out there that throw out "projected savings" numbers. That is all very interesting, but at the end of the day the savings opportunity is always quantifiable. A private firm has three potential sources of savings:

  • cheaper capital (due to scale)
  • cheaper labor (usually due to non-union labor)
  • better business processes

When we look at the opportunities in the City, what we generally find is that the City is operating at the peak of the scale curves due to our size (smaller cities usually aren't). Our capital financing capabilities are almost always better than what can be found in the private sector. Our labor is generally cheaper since we do not have collective bargaining in this state so we don't have the type of public sector unions you find in the Northeast and Midwest. That leaves business processes, and our typical approach is to bring someone in to analyze whether there is enough gap between our practices and what a private firm can do to justify privatization. As the examples above demonstrate, the answer has typically been a resounding "no".

Advocates of privatization often make claims that are, as Franklin said, "simply not credible," and Atlanta's next mayor should be no less skeptical of them than Atlanta's current mayor. Certainly, Atlanta's next mayor should not be the one of them.