New Record: Most Outlandish Critique of Privatization

This episode in outlandish critique’s comes from someone who has an impressive-sounding title — Moshe Adler, who apparently teaches economics at Columbia University and at the Harry Van Arsdale Center for Labor Studies at Empire State College.

Apparently, the city of New York uses private companies to trim trees.  Which leads us to this critique:

Possible Cause of Death: Privatization

When a branch fell from a tree at the Central Park Zoo in New York City last month, killing a 6-month-old baby and severely injuring her mother, who had been holding the infant, Mayor Michael Bloomberg declared it “an act of God.” But in all likelihood it was the act of a mayor….

City officials told The New York Times that the tree in question had been pruned twice since December. But pruning requires expertise and is time-consuming. … But it is precisely because tree maintenance requires expertise and great diligence that the responsibility for it should lie within the city, and that the person responding to reporters’ questions should be a city arborist.  Initially, city officials did not even know exactly who was in charge of maintaining the tree.

As turnkey operator for over 150 parks with many trees, part of our duty is to identify “hazard trees” that present a danger to the public and prune or remove them.  We do so in close cooperation with the USFS.  I don’t know what arborists Mr. Adler talked to, but certainly they are correct that this process takes some expertise.  However, they were either incompetent, or Mr. Adler is not reporting his full discussion with them, if they said that even the best expert can reliably identify every tree or branch that is likely to fall.

We have an aggressive hazard tree program that is conducted with US Forest Service experts looking over our shoulder, and we still miss lots of trees and branches that fall.   That is because nature is complex and unpredictable and sometime inscrutable.  Whenever we have had an accident of a tree falling and damaging something, we have an expert come out and do a post-mortem, and almost every time the diagnosis is that there was no reason to believe that branch or tree was in danger.

The contractor for tree trimming therefore could be bad or could be good – this single event does not shed much light on the problem.  Since Mr. Adler is an academic at a prestigious university like Columbia, I am sure that to be so certain, he must have done a real analysis which would logically compare incident rates with falling trees either between periods in New York with both public and private operation of the tree trimming, or else compare between cities that use different methodologies.   Given this obvious analysis, it is odd that he would not share the results with us in this article – surely a professor at Columbia isn’t just trying to draw an ideological conclusion from a single data point concerning a function with which he is not very familiar.

One wonders, further, if public servants are so flawless, why someone in New York City hasn’t thought of the idea of supervising private contractors with a public expert.  This is the kind of 90/10 solution we use with the USFS, with the Forest Service getting 90% of the cost benefit of private operations while still supervising the tree trimming and removal with a tree expert from within their organization.  This strikes me as falling into the same category of many other critiques of privatization, where the failure (if there is one in this example) is one of public management of the process rather than privatization per se.

Mr. Adler is is correct, I think, to put a heavy weight on incentives.  He feels that the incentives problem makes the diligence of public employees inherently superior.  What incentive, after all, do public employees have other than to do the right thing for the public, while profit making companies will tend to cut corners to improve profits.

First, there are certainly companies that cut corners, and the great thing about a free market is that these guys tend to get weeded out through competition.  The only exception to this is in government contracting, where mindless low-bid contracting  (my private company almost never takes the low bid when we are looking for a contractor) and poor supervision give corner-cutting private companies room to thrive.  I would argue that the continued existence and use of these type companies is a government failure rather than a private one.  Incredibly, Mr. Adler seems to agree

The body that awards the contract is not a private party acting on its own behalf but officials acting on behalf of the public, and the level of vigilance is not the same as that which occurs between private parties

As to employee incentives, while in theory public employees are supposed to serve the public, in practice their incentives tend to be an awful mess.  A big part of this problem is that  they are almost impossible to fire.  Combine this with a seniority-based pay package, and there is absolutely no incentive to perform.  I laughed when Mr. Adler wrote this:

The rationale for contracting out is always the same: cost cutting. The taxpayer will save money, it is argued, because the workers of private contractors get lower wages and fewer benefits than city employees get, and because the workers of these contractors have no protections against arbitrary dismissals.

In fact, public “protections against arbitrary dismissals” in practice become public protections against any dismissals.  The difficulty, for example, in firing a NY teacher is well documented.

Further, if a tree falls and kills someone, and there is a liability claim, the taxpayer pays for it.  What do the public managers care?  In fact, you can see this in Mr. Adler’s article, the public agency’s relative indifference to this incident.  Do you really think the agency’s indifference would not translate to workers?  What super-men is Adler positing for these public tree removal jobs — their bosses are indifferent, their pay does not change if they do a good or bad job, and they can’t be fired — but they somehow have a ruthless dedication to excellence?   Has Mr. Adler never been to the DMV  (actually, if he lives in Manhattan all his life, he may not have).

If the same event were to happen in an area we manage, the claim costs me personally money.  You can bet that if we hire indifferent employees who do a bad job, they are gone, usually in weeks.  If I was stuck for years, as the public is, with every employee we made a hiring mistake on, I would have to shut down the company.