What is (Not) Privatization?

I don’t think politicians understand what privatization means because it’s tossed around like a silver bullet than can fix any problem.

Congressman Luis Gutierrez said he's tired of hearing about problems with Chicago's hiring practices and it's time for the city to privatize the process.Gutierrez told The Associated Press today that recent headlines about patronage hiring and Chicago's history of such problems show that the system can't be fixed and it's time to try something new.The Chicago Democrat said hiring a private human resources firm would help ensure that employees will have the skills and education needed to do their jobs.

Private enterprise doesn’t succeed because its private, it succeeds because the proper incentives are in place to succeed.  By simply handing a government process over to a private firm you are just moving the problem somewhere else.  The biggest problem with this approach is that when it fails to meet expectations opponents pontificate about how the private sector is just as bad as the public.

Until the entire process is based in free-market incentives (i.e. there are goals that must be met or you will be fired) the hiring process is likely to be poor.  Now I will say that if the human resources firm is giving complete control of hiring patronage should – and I do emphasize should, not will – eliminate patronage in city positions.

If the only purpose of hiring a private firm to do hiring is to eliminate patronage, this may actually work, but if you want human resources to improve (better people, etc) then give the services over to the private sector and let anyone and everyone compete to provide those services directly to the consumers.

Replacing a government process with a monopolistic private provider isn’t privatization, at least not in a way that may actually solve anything.