Privatization: Metropolitan Boston Transit Authority (MBTA) and the California State Compensation Insurance Fund

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Privatization: Metropolitan Boston Transit Authority (MBTA) and the California State Compensation Insurance Fund

According to Robert B. Denhardt, Public Administration an Action Orientation, privatization "is the use of non governmental agencies to provide goods or services previously provided by government." (P.95). Privatization comes in various degrees, from the outright selling or transfer of government ownership of assets (for example public utilities), to, as is more common in the United States - the contracting of goods or services to private firms.

Contracting is not something new in government. For example the Defense Department procures new weapons systems from the private sector all the time and the Pentagon oversees
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There are two common areas of privatization, transportation and garbage collection. In Boston for example, the Metropolitan Boston Transit Authority undertook a huge effort to privatize public transportation. The result was a "private company and a coalition of unions each tentatively chosen to run their own network of MBTA buses, at costs considerably below what the authority now pays according to a Boston Globe article (Metro, Monday Feb. 3, 1997). How they arrived at this strange equation is unknown but the stated goal was to cut costs though competition. "Such arrangements reflect the belief that competition brings out the best among contenders-and that by inserting government units into a competitive environment, service recipients stand to gain much while risking little." (Ammons, D. and Hill D. pg. 12).

Opponents of privatization argue that "any cost savings are attributable to reductions in service quality or to worker exploitation, especially through lower wages and fewer benefits." (Ibid. 14). They argue further that "the free market has little sensitivity to the issue of equity...and if unfettered may be expected to exclude nonpaying customers-even if the "public good" would be served by universal access." (Ibid. 14). In a study on trash collection, while the contractual refuse collections was found to
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