Private vs. Public Enterprise
Socialist approach doesn't work elsewhere; it won't work here

Try to name a government-run enterprise that does not regularly exceed budgets, miss schedules and deliver an inferior product. You might find a rare example, but you’ll have to search far and wide.

In private enterprise, patterns of missed schedules, missed budgets, high costs, poor quality or late deliveries immediately precede firings, demotions, or going out of business. Such corrective pressures are missing from government enterprise.

Examples that readily come to mind, all requiring large taxpayer subsidies, are airports, Amtrak, city bus systems, civic centers and the U.S. Postal Service. Consider the postal service, a government-protected business where Uncle Sam prohibits anyone else from delivering first class mail. In the face of rapidly declining volume, due in part to electronic technology (most notably e-mail), the postal service deems to fix its problems by raising rates for the third time in 18 months. The predictable results will drive more customers to private technology options. Who else but government, when faced with strong competition, would raise rates and cut service?

Graphic inefficiency of government in this area has motivated Germany, Great Britain, the Netherlands, New Zealand and Sweden to move toward privatizing mail delivery.

The airport screener fiasco is a prime and dangerous example of government management and politics. The current screeners were judged to be inept, in many cases illegal immigrants or undereducated. Some were convicted felons. Yet under government management, these are the very same people that are being rehired as federal screeners at significantly higher salaries and increased benefits. Government fiat has instantly converted unsatisfactory private sector employees into federal guardians of the public.

Low productivity and political intrigue endemic to government have spurred some government jurisdictions to privatize services such as garbage collection, school systems, legal services and prisons. The experience is generally a higher level of service at less cost.

Recently the city of Lexington committed to explore a city purchase, by condemnation, of the Kentucky-American Water Company. This corporation has a record of reasonable rates, clean water and satisfactory service. The city has been told it may take nearly all of its meager $300,000 budget reserve just for a preliminary analysis. This is in the face of overwhelming unfounded obligations for sanitary and storm sewers, parks, streets, roads and the completion of the Rupp Arena/Civic Center renovation.

Both municipal and private water systems can work well, but most successful government owned systems were established decades ago. Market values in today’s private systems make it nearly impossible for government to attempt purchases of this magnitude. Condemnation courts have historically determined “fair market value” to be at least twice the preliminary estimates. The Lexington-Fayette Urban County Government should not put taxpayers deeply in debt to take over a private enterprise providing a satisfactory product.

Property rights are a basic human right. After years of neglect, the courts are finally reinvigorating the Fifth Amendment’s restrictions on eminent domain and condemnation of property. The courts have put the brakes on condemnation of private property in at least nine states. This judicial restraint on government’s taking of private property helps limit abusive government takeovers.

Should people in Lexington trust its local government to condemn and run the water system? Absolutely not, with their government’s history of inefficiency, particularly the city’s abominable mismanagement of its sewer system. Rates under city ownership would not be regulated and controlled by the Public Service Commission as they are now. Rate decisions would be made by politicians, usually after elections. Even with private management of a city system, politics would prevail. Control and policy decisions would remain with local politicians at city hall.

The Constitution assigns our government responsibility for the protection and safety of its citizens. Beyond that mission, government should only do what the citizens cannot do for themselves.

Pat Freibert is a former Kentucky state representative from Lexington.
editorial@lanereport.com

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