Privatization efforts are struggling!
by Mary Scott Nabers, CEO of Strategic Partnerships, Inc.
There is a problem that should be acknowledged. Cities and states do not have the funds necessary to build roads, maintain infrastructure, ensure public safety and provide services to diverse populations that are growing at historic rates. In fact, the American Society of Civil Engineers says that the gap between available funding and what is needed over the next five years is a whopping $1.1 trillion.
The funding shortage is one of the reasons privatization became a national trend. Government needed the capital that big business could bring as well as the outside expertise. But, the privatization trend is faltering and if private sector firms lose interest completely, public officials will be left with no option other than to increase taxes.
In the last few years, investment banking firms and large corporations have been eager to invest capital to build roads, lease and maintain airports, purchase government buildings with lease-back agreements and take over highly specialized services. That may be changing.
Privatization is not popular with most segments of the United States population, primarily because few taxpayers have analyzed the reasoning behind the concept. Government employees tend to reject the idea outright. Unions are opposed because of a job-loss fear. And, the media has focused so heavily on failed or less than successful efforts, public opinion is negative. As a result, elected officials consider privatization very carefully or not at all.
Other countries have a better track record. Numerous privatized initiatives in other countries are extremely successful.
As budgets become tighter, elected officials will have to decide whether privatization is a good thing or not. Let’s hope that the option is at least still open to them at that time.
Mary Scott Nabers is president and CEO of Strategic Partnerships, Inc., a 15-year-old procurement consulting and procurement research firm headquartered in Austin, Texas.
