The Value of Competition

I am researching privatization in public schools for the Mackinac Center this summer, and so am making a good number of somewhat monotonous phone calls collecting data on competitive contracting within Michigan school districts.  Recently, a few districts have given me some interesting stats regarding their competitive contracting efforts that are enlightening.

I have spoken with several school districts which bid out their food, transportation or custodial services that are taking offers from various private firms to provide these functions rather than hiring school district employees.  In multiple districts, the school board did not decide to actually privatize, but the mere process of competitive contracting resulted in substantially decreased costs for the district.  Frequently, school employee unions gave concessions in order to keep the service in-house, demonstrating the impact of competition.  The introduction of competition among service providers works in the favor of our schools, enabling them to save precious dollars amidst tight economic times.  Schools must be allowed to explore multiple options, both public and private, in order to find the best possible options.  Any restrictions upon this competition handicap school boards in their attempt to make the best possible use of the resources available.

By the way, this competition does not demand that districts should privatize services haphazardly.  Sometimes, in-house services make the most financial and practical sense.  However, failing to explore all possible options is poor stewardship of taxpayers’ dollars.  A wise and frugal individual would explore as many options as possible before deciding on a major purchase, such as a new home or car.  Simply taking the first available option would be foolish and could likely lead to a waste of money.   We must hold Michigan school boards accountable as stewards of our tax dollars, entrusted to them with the faith that they will make good use of the money.  Competition is the best way to encourage high-quality services at fair prices, as the desire for healthy business will push private companies to provide better services for our schools at a lower cost.  The reminder that other companies are willing and able to provide comparable services is one of the best possible safeguards against workplace complacency and settling for second-rate work.  Competition promotes innovation and excellence.  It is a great strength of the free market.


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