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Issue of Privitization

In the article "Contracting Out: Who Wins?" (1996), the unnamed author critiques the issue of privatization, noting that private contractors urge policymakers to believe that contracting can save money, though often this proves not to be the case. Of course, private contractors have a stake in this issue as they are the ones who are seeking those contracts. The author says that when a fair comparison is made, private vendors often cost the same as the in-house provider. For one thing, private vendors must pay taxes, licensing fees, labor costs, administrative overhead, insurance, and other business expenses and still earn profits, so cost savings are hard to achieve, which in any case may not translate into savings for the district because the district or local state government will continue to pay out the agreed-upon contract. Contractors also have "hidden costs" which are not accounted for in their proposals and should be. The author examines some of these costs and the problems they can cause for administrators who believe they will save money with a private contractor and who find they will not.

The many indirect costs noted by the author do make private contracting seem to be an uncertain move for any administrator. Privatization has been touted by many in recent years as the solution to the problems of government, and yet the way many of these administrators view the issue shows that they believe privatization brings automatic savings. One reason they believe this is because they perceive the current system as too expensive, and the author does not compare current costs with the nature of private contracting. There might be hidden costs in government-provided services as well, and so a comparison is required. The author does rightly point out how to ascertain many of the hidden costs in private contracting so as to know what sort of information to seek to make the comparison in a cogent and effective manner.

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Issue of Privitization. (1969, December 31). In LotsofEssays.com. Retrieved 02:05, March 29, 2024, from https://www.lotsofessays.com/viewpaper/1682909.html