1. The competition of private industry can drive efficiencies, innovation, and better ways of doing things, driving down cost for service or improving service for cost. Private industry provides such efficiencies, while public service often does not.
2. Private industry is for profit, so they will always be more responsive toward anything that increases profit, while public services are (usually) responsive to citizen-constituency pressure.
3. The goal of a government-provided service is not to turn a buck but to provide a service to those who need it. Such service should be provided as cost-efficiently as possible, but the service itself is the goal, not cost containment, let alone profit.
I tend to be suspicious of outsourcing government services to private industry largely because of the second and third points above, even as I recognize how the first point is attractive (especially when politicians are offered a huge up-front payment to solve short-term financial needs in lieu of long-term costs that they won't be around to worry about).
I've also seen, in private industry, enough outsource deals that ended up with the outsourcer becoming dependent upon the outsourcee. I've seen companies where "cost savings" were promised, but never delivered — but, in the interim, the company had let go of all of their in-house staff who could have provided fall-back service, and instead left only mid-level-plus managers who saw their own career success as bound up in the (apparent) success of the outsource companies that they were ostensibly managing.
The move to greater transparency and closer analysis of public service outsourcing deals (including the core question of cui bono) seems completely rational to me.
The Privatization Backlash
For decades, city and state governments have seen contracting as a cost-saving panacea. But past experience has left some of today’s policymakers more skeptical.
I asked my husband the other day for a single example of where privatization of public services had objectively made things better and not just led to higher prices. He couldn't think of any.
+Brittany Constable I'm sure there are probably some examples (I would love to hear them, though).
I'm sure that there have to be, somewhere. But yeah, every example we knew of off-hand (which was more than a few) ended up with price hikes and induced shortages.