Contracting Out Public Services

Dave Killion — June 26, 2012

The New York Times has a very interesting and reasonably fair article up about Sandy Springs, Georgia, an Atlanta suburb (pop.94,000) which has contracted out virtually every public service this side of the police and fire departments  –

“To grasp how unusual this is, consider what Sandy Springs does not have. It does not have a fleet of vehicles for road repair, or a yard where the fleet is parked. It does not have long-term debt. It has no pension obligations. It does not have a city hall, for that matter, if your idea of a city hall is a building owned by the city. Sandy Springs rents.”

Residents of Sandy Springs seem very pleased with the way everything has worked out, which suggests that perhaps more local governments should consider a similar path. Naturally, there are those who think ‘we’ should consider whether we’re going to permit that –

“The prospect of more Sandy Springs-style incorporations concerns people like Evan McKenzie, author of “Privatopia: Homeowner Associations and the Rise of Residential Private Government.” He worries that rich enclaves may decide to become gated communities writ large, walling themselves off from areas that are economically distressed.

“You could get into a ‘two Americas’ scenario here,” he says. “If we allow the more affluent to institutionally isolate themselves, then the poor are supposed to do — what? They’re supposed to have all the poverty and all the social problems and deal with them?”

I can’t say I really understand McKenzie’s worry. It seems to me that a poor area would benefit even more so from this kind of contracting out than a rich area. Provided it is executed properly, a community would realize better services at lower costs, thus increasing the desirability of the neighbourhood. Businesses and the better-off would see good value, and their investments would spur further improvements. The next thing you know, you’ve got a virtuous cycle going on. There are legitimate concerns, and I’ll discuss them in the next day or so, but if you share McKenzie’s anxieties, you can rest easy. They won’t be happening.

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