Competitive Government

7/24/2019 Competitive Government

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Competitive

Government:Injecting Competition

into Service Delivery

The issue is not aboutpublic versus private. It's

competition versus

monopoly.

_____John Motif, Chie

Secretary toMassachusetts


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Competition Competition, in economics, conditions that are present in marets

!here buyers and sellers interact to establish prices and e"chan#e

#oods and services. $conomic competition is the means !hereby the

sel%interest o buyers and sellers acts to serve the needs o society as

!ell as those o individual maret participants. Society is served !henthe ma"imum number o #oods is produced at the lo!est possible

prices.

&ublic sectors are also competitive.

hy (

)o! (

hat (

*ur &ublic Sector should learn to compete.

I. Phoenix

Example: Phoenix

&hoeni" decided to contract #arba#e collection out to the private

sector. +oth public and private company bidden and three times &ublic ors

lost in biddin#.

Example: Phoenix


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Strategies applied by public sector to compete.

Strate#ies !ere made. Jensen and his company converted people to

- person trucs, !ith mechanical arms that piced trash barrels.

Jensen and the mana#ers also had taen else!here or an advanta#e.

The drivers o Jensen !ere told to redesi#n their routes and !or

schedules, because drivers ne! better that anyone else !here

eciencies lay.

Jensen and his company created /uality circles called 0&artnership

teams1 and a labor% mana#ement Committee, to come up !ith other

improvements.

They also developed an or#ani2ed ne! cost accountin# system so they

!ould no! e"actly ho! much their services cost per household, permonth. Jensen also #ave monthly and /uarterly allo!ance to the best

drivers.

Strategies ere success!ul

In -345, a seven year came or the city6s lar#est district.

&ublic ors !as determined to !in it and because o strate#ies

applied by Jensen and his collea#ues,1 the private people morale !entup because no! they could prove that they had it done !ell1.

It !on a second district then third. +y -344, it had !on bac all 7ve

districts.

0*ver a ten year period, you see the cost or all other city pro#rams

#oin# up.1 Says Jensen.

0Solid !aste cost have #one do!n by 5.8 9 a year , in real, in:ation ;ad


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II. "dvantages o! Competition

The most obvious advanta#e o competition is#reater eciency= more ban# or the buc.

#. Competition !orces public $or private% monopolies to

respond to the needs o! their customers.

Example= The &ostal Service is inecient, and it6s also

unresponsive. In -3> it tried, unsuccessully, to suppress

the private courier services?even thou#h it !as not !illin#

to ofer same day service itsel. Competition has orced

drastic has orced drastic improvements in some areas, such

as e"press mail.

hile the @ederal $"press and A&S have produced a

constant stream o innovation, earned millions o loyal

customers, and ept their prices steady, the &ostal Service

stru##led.

B. Competition reards innovation& monopoly sti'es it.

Example:ormal #overnment practice discoura#es naturalselection. Dather than the survival o the helpul, !e 7nd the

survival o the already entrenched or the politically po!erul.


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Service decisions are made based on !hat !as done last

year, !hich provider or#ani2ations have political clout. End

!hen bud#ets are cut, mar#inal pro#rams are the 7rst to #o.

hen service or#ani2ations are put into #enuine

competition, everythin# chan#es.

Those !ho deliver poor services at hi#h prices are #radually

eliminated, !hile those !ho deliver /uality service at

reasonable prices #ro! lar#er.

. Competition boost the pride and morale o! public

employees.

0They 7nd that !hen they #et into competitive situation,they !or a lot harder, but it6s ar more e"citin#. They may

have to be pushed into it, but they discover that it6s much

more re!ardin#. End there6s no /uestion about !hen

they6re doin# a #ood


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+e#innin# -345, the ederal Gepartment o Transportation ased local

transit authorities that !anted ederal unds to include private 7rms as

potential service providers.

BF.Private versus Private Competition

"F. Hoad sheddin#

+F.&rocurement

CF. Contractin#

0oad shedding

Simplest method. overnment turn services over to private sector out

orm public sector.

eor#e Hatimer did this in St. &aul Minnesota.

+ut because public a#encies #ive up direct control over service

producers, load sheddin# reduces #overnment6s ability to hold 7rms

accountable.

Procurement

Is another common avenue #overnments use to orce private

companies to compete. Consider healthcare. Typically, public a#encies

have to secure competitive bids or any procurement contract over a

set amount %%% say,8,KKK. overnment spend hundreds o billions o

dollars this !ay every year%%%on health care, on hi#h!ay construction,

on buildin# maintenance.

$"ample, Medicaid or employees. The Medicaid is the 0&acman o

states bud#ets,1. Medicaid consumed BK percent o Massachusetts

entire bud#et.

&repaid plans such as health maintenance or#ani2ations L)M*sF tend

to be less e"pensive, because they compete 7ercely on price. In

Massachusetts in -343,or instance, traditional health insurance or


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public employees cost almost BKK &$D M*T) per employee , !hile

prepaid plans cost bet!een -K5 and -4.

Contracting

Contractin# is another common method o in


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End relatively non political body is set up to perorm these tass.

*verall, most a#encies appeared lease !ith their contractors6 perormance. E

-343 survey by the ational Commission or $mployment &olicy ound that

>B 9 o local ocials rated the /uality o their contracted services 0very

avorable,1-K9 sli#htly avorable,1. The same study ound that contractin#saved local #overnments -8 to K 9.

2%.Public versus Public competition.

overnments allo! competition bet!een their o!n or#ani2ations to

pursue the same results. Es noted earlier ,public or#ani2ations in

competitive environments oten perorm


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1e assume that each nei#hborhood should have one school, each city

should have one police orce, each re#ion should have one or#ani2ation

drivin# its buses and operatin# its commuter trains. hen costs have to

be cut, !e eliminate anythin# that smacs o duplication.

Oet !e no! that monopoly in the private sector protects ineciency andinhibits chan#e.

I*. Competition is the 3ey

Competition is the 3ey $It could not solve our problems%

it holds the ey that !ill unloc the bureaucratic #ridloc that

hamstrin#s so many public a#encies.

This is not to endorse cutthroat competition, !hich can brin# out the

bad and as !ell as #ood.

I the competition saves money only by simpin# on !a#es or bene7ts, or

instance, #overnments should /uestion its value.

*II.Cases regarding competition

There !as a disastrous sno!all !hich had serious political

overtones. So to cut the lon# story short, they discovered that the

department responsible or cleanin# the sno! !as !orin# 8K 9 o

the time durin# this emer#ency. (he rest o! the time as

consumed by or3 brea3s4 co5er brea3s4 !ueling brea3s4

lunch brea3s and ash6up brea3s. e! Oor City Gepartment o

Sanitation !as compared to private sector around the e! Oor

area. It !as ound out or discovered that it cost private contractors

about -> per ton to collect reuse, !hereas it cost the city a#ency

53 a ton almost three times as much.


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*II. Creating competition !or internal

Government services

Most o the e"amples listed above involve services provided to the public. +ut many

#overnment a#encies do not serve the publicN they serve other #overnment

a#encies. They include printin#, accountin#, and purchasin# oces,

telecommunications and data processin# services, vehicles :eets, repair operations,

and do2ens o others. ormally, the idea o havin# to compete never crosses their

employees6 minds. $ven their customers rarely ima#ine #oin# to outside

competitors= it never occurs to police chie to send his cars do!n to Jify Hube,

rather than the city maintenance shop.

hen public mana#ers do e"ercise such options, remarable thin#s be#an to

happen. $.S. Savas tells a story rom Ou#oslavia, o all places. It seems that the cityathers o H


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Emerica is the only ma


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There !as no stron# leadership that orced schools to compete.

Governor (ommy (hompson o! 9isconsin explains:

0 Competition breeds accountability. Ander the concept o parental

choice, schools !ill be held accountable or their students6

perormance. Schools providin# a hi#h /uality education !ould :ourish,

the same !ay as a business that improves its /uality or its consumers.

Schools ailin# to meet the needs o their students !ould not be able to

compete, and in efect !ould #o out o business.1

ey !actors that can contribute !or the improvement o! schools

Schools should have autonomy.

Schools that ofer less /uality education should be eliminated.

Headers and le#islature can ur#e schools to improve. Lstron#

leadershipF

Competition

&arents should be inormed about the /uality o education that eachschool ofers.

9hat competition can do;

*nly competition could motivate schools to improve because only

competition or customers creates real conse/uences and real pressure

i school ail. *nly competition orces principals and teachers constantly to mae the

dicult chan#es necessary to meet the needs o their students.

I


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EKs !hen the Citi2ens Hea#ue, a

combination o citi2ens6 or#ani2ations and thin tan, created tas

orce to e"amine the results o court ordered dese#re#ation.

Minnesota had lon# prided itsel on its e"cellent public schools, +ut to

its surprise, the tas orce suraced #ro!in# complaints.

Complaints

hat people !ere most disturbed about !as the declinin# /uality o

their schools.

Curtis Johnson said that, 0!e !ere


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&erpich unveiled a proposal to let Minnesota children attend school in

any district they choose.

The bill !as deeated. +ut it overlooed a separate clause in theeducation bill, drated by a le#islator, !hich allo!ed


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&erpich pushed to a Bndbill allo!in# students a#ed -B to B- !ho !ere

not succeedin# in one school to attend another.

The state advertised the pro#ram !ith the slo#an= 0Students on the

ver#e o droppin# out don6t need a lecture, they need an alternative.1

School o! choice are !ar

$Parents do not ant their children

to travel great distances just attend to school%

In -33-, Rolderie, Johnson and their allies pushed a bill throu#h

le#islature that allo!s #roups o teachers to create ne! public schools.

&arents had limited choices unless ne! schools sprin# up in their area.

0School choice alone !on6t chan#e a closed system.1, hat6s neededis to open the system enterprisin# people !ho !ant to start innovative

ne! schools.1

innesota7s choice system has other limits.

It mandates competition bet!een districts, but not competition !ithineach district.

It mandates choice, but not choices=

It creates pressure or schools to diversiy their pro#rams and teachin#styles, but does not mandate decentrali2ation o authority that !ould

acilitate such chan#es.

It does not orce school districts to open and close schools, as Gistrict 5

in $ast )arlem, schools that e"cel and attract more students rarely

#ro! or close themselves.


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&oorly educated parents and students should be inormed by

choice advocates about the /uality o each school.

Students need ree transportation.

Public Schools Choice !ail i! :LCompetition is uselessF

The parents are not !ell inormed about the /uality that the

choices can ofer to the students. Students !ill not be #uided properly as to !here he should

enroll to e"cel in hisUher interests. I students lac 7nancial resources.

(he ,ld Educational System

Students !ith 7nancial resources :ee to private schools or to the

suburbs, !hile those !ithout remained trapped.

Choice advocates in innesota and East )arlem argued that their

approach has exactly the opposite e5ect.

Competition orces ailin# school to improve or orces the district tochan#e their mana#ement.

Qerne Johnson said , 0 !e are not really !orin# or B 9 or 89 but !e

are !orin# or 389 !ho are still there, to ener#i2e and revitali2e the

system.1 $ast )arlem ofers a livin# proo.

Competition has revitali2ed the system. @ailin# schools improved, and

ailin# mana#ement are replaced. Students in inerior schools are not

let behind, they are rescued.


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>9 o patients transer rom other hospital because they

had no insurance.

&rivate hospitals routinely turned a!ay patients !ithout insurance to

public hospitals.

Sadly, eleven o them died.

Example @ A

E diferent orm o ine/uity can threaten those !ho !or or

competitive service providers.

Studies indicate that !a#es paid by the #overnment and private

contractors are, on avera#e, airly comparable.

Studies su##est also that contactors ofer e!er bene7ts, such as

health insurance.

Structured competition can produce more e>uitable

results than service delivery by public monopoly4


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Contractors can be re/uired to provide comparable !a#es and bene7ts

and to promote armative action.

This is important, i the values !e embraced to our #overnments are

not to be lost !hen those #overnments use competitive contracts.

Contractors can also be re>uired to serve all segments o!

the mar3et to 3eep !rom creaming o5 the most proBtable

customers.

Gurin# the ational Science @oundation study on #arba#e collection,

$.S. Savas ound that competition hei#htened the e/uity o service

delivery because the public a#encies !ere, in efect, creamin#.

hen the city orces encountered delays and did not !ant to payovertime, they !ould simply sip some areas that day oten the

poorest areas, because they had the least political clout. ith a contractor that didn6t happen, because the contractor had no

choice but to ul7ll his contract. 0 it6s a


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prison mana#ement 0!ill be competitive lie the nuclear%submarine industry%

!hich is to say, not at all.1

$ven !hen private 7rms do not have monopolies, they at timesdevelop enou#h political po!er to sti:e competition. In mass transit, private

bus companies spend considerable sums to in:uence le#islatures, to #et and

eep their contracts. In #arba#e collection, lar#e private 7rms use their

po!er to lobby a#ainst policies that !ould reduce the volume o #arba#e,

such as recyclin# and source reduction.

$ven day care, private 7rms restrict competition.

Competition is here to stay, re#ardless o our #overnments must do. Intoday6s ast movin# maret place, the private sector is rapidly tain# maret

share a!ay rom public or#ani2ations. &ublic schools are losin# #round to

private schools. The &ostal service is losin# #round to @ederal e"press and

A&S. &ublic police @orces are losin# #round to private security 7rms, !hich

no! employ t!o%thirds o all security personnel in the nation.

e can i#nore this trend !atchin# e!er people use public institutions. e

can sit idly by as vicious un!inds in !hich the less people depend on

#overnment the less they are !illin# to 7nance it , the less they 7nance it the

!orse it #ets, and the !orse it #ets the less depend on it.

ey Ideas

*r !e can !ae up as entrepreneurial leaders

rom &hoeni" to $ast )arlem to Minnesota have and

embrace competition as a tool to revitali2e our public

institutions.

The choice is not /uite as star as it !ould be in a

competitive maretplace= compete or die. +ut it is star

enou#h. *ur public sector can learn to compete, or it can

sta#nate and shrin, until the only customers !ho use public

services are those !ho cannot aford an alternative.


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Competitive Government

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