Privatizing Government Services

Can for-profit businesses do a better job?


Many Americans - average citizens and policy experts alike - think government would cost less and run more smoothly if private-sector businesses operated troublesome government programs. In recent years, privatization efforts in many cities, notably Indianapolis and Phoenix, have lent support to the idea. Advocates of “contracting out” argue that government functions more efficiently when it is exposed to the competitive pressures faced daily by the business world. However, public-employee unions generally oppose the idea, claiming that privatizers cut costs by trimming workers' pay. So far, privatization in the U.S. has occurred mainly at the state and local levels. Now, though, policy-makers are considering privatizing two of the largest federal programs of all - Social Security and the Postal Service.

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