Twenty-five years later and the evidence is in: Massachusetts’s Taxpayer Protection Act, known as the “Pacheco Law,” has saved the state’s residents hundreds of millions of dollars.
That’s the conclusion of a new study by Columbia University’s Elliott Sclar and Michael Snidal, along with David Kassel. Their findings confirm what many of us already know in our bones: privatization is more about ideology than it is about saving tax dollars.
In case you missed it, the Pacheco Law is the country’s one and only state policy that puts up a guardrail against corrupt and irrational outsourcing. Before, say, public bus service can be handed over to a corporation, it must be proven that the move will actually save money. The corporation’s bus drivers must also be paid the average private sector or state wage (whichever is lower). And service quality must stay the same or even get better.
These protections were crucial when the Massachusetts Bay Transportation Authority tried to outsource multiple bus lines in 1997. The math showed that privatization would actually cost the state $73 million. Without the Pacheco Law, the deal likely would’ve gone through based on an outside consultant’s inaccurate recommendation.
This flies in the face of the libertarian — and dare I say it, neoliberal — claim that the “free market” is always more efficient and innovative than government. You can almost hear a little Trump in that claim. My way or the highway! I’m the best. The free market is the best. Drain the swamp!
Sure, the government probably shouldn’t manufacture the laptops that its employees use. But basic human needs — water, education, transportation — shouldn’t be left to the violent whims of private markets.
Like any policy, the Pacheco Law isn’t perfect. Sclar, Snidal, and Kassel argue that it’s failed to protect people with developmental disabilities from suffering through the privatization of state-run mental hospitals. In a recent high-profile incident, a man with Down syndrome almost died of pneumonia after staff at his corporate-run group home ignored his symptoms. Tragically, abuse and neglect in privatized group homes is becoming all too common.
And it doesn’t take into the account the hidden — and most damaging — cost of privatization: loss of public, democratic control. Charter schools are run by private boards unaccountable to parents. Public-private partnerships often take decision-making power away from the public. Contractors try to hide what they pay workers as “trade secrets.”
But the intention matters. Privatizers say that handing over control of public goods to corporations saves taxpayer money. They say that government should be run like a business. Massachusetts’s Pacheco Law calls them on their bluff.
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Jeremy Mohleris a writer and communications strategist for In the Public Interest, a nonprofit that studies public goods and services. He’d love to hear from you: jmohler@inthepublicinterest.org