The Detroit News Overstates the Value of Privatization

(In addition to watchdog commentary on public policy and politics, Democracy Tree will also be on the lookout for bias and improprieties in the media, with a particular focus on an increased blurring of the lines between opinion pieces and articles in traditional media.)

Analytics and Editorials

The Detroit News ran an analysis piece in support of increased privatization of government services in Michigan. Here’s the online headline:

DN Favor Privatization

Most readers can easily distinguish between editorial writing and reporting, but this piece falls into a third category of journalism– an analysis, which is a hybrid of opinion and article, best described by Voxygen:

There is a specific type of article called an “analysis” that interprets information. This kind of writing goes a step beyond simple reporting because it presents an opinion about conclusions drawn from the information the reporter gathered. News analysis articles aren’t just reporting; they are analyzing and offering conclusions. Usually, though, they include substantial support from experts and they give more than one opinion in the article. So, it’s a step in between the biased tone of an editorial and the neutral tone of a news article.

In this case, the Detroit News analyzes a Michigan Public Policy Survey (MPPS) of local units of government conducted by the Center for Local, State, and Urban Policy through the University of Michigan. Their report, Most Michigan Local Officials are Satisfied with Their Privatized Services, But Few Seek to Expand Further, is just as thorough as its lengthy title implies.

MPPS conducts regular surveys of Michigan municipalities on topical issues. They are strictly non-partisan and unbiased, leaving readers to interpret the compiled data — or to cherry pick it to fit their views.

A Matter of Semantics

Drawing from the survey report, The Detroit News reached the conclusion that increased privatization is good for local governmental bodies seeking to trim their budgets, and is favored by “Michiganians.” 

First, let’s point out the obvious: The survey was not targeted at the 9.896 million citizens of the Great Lakes State. From the survey:

These findings are based on statewide surveys of local
government leaders in the Spring 2014 wave of the
Michigan Public Policy Survey (MPPS).

The survey was not conducted on “Michiganians” at large, as the News implies, instead the results were based on responses from a select few leaders in jurisdictions across the state, including mayors, city managers, township supervisors, and others in positions of authority. In all, 1856 surveys were distributed, with a response rate of 1344.

Of the municipalities reporting, it was found that few of them even bother to conduct evaluations of privatized services, with only 39 percent of larger cities monitoring their success — and of those, only 6 in 10 seek citizen input. Based on the report, it cannot be said that Michiganians favor, or not favor, privatization.

The Survey Says

MPPS makes it clear at the outset that the evidence is still out on the efficacy of privatization:

Previous research is mixed on the outcomes of privatization, finding that private sector delivery of public services may or may not boost efficiency, cost savings, and service quality. These outcomes often depend on a variety of factors, such as the types of services being privatized, the level of competition among potential service providers, and the amount of monitoring and evaluation conducted by the governments that are contracting out services. In addition, research has found that “in-sourcing”—that is, bringing privatized services back into the government for public service delivery—is also a common practice among local governments.

Now let’s take a look at the conclusions the News deduced from the 15 page report.

They start with the statewide results, touting that “Among communities that outsource any service, local leaders in 73 percent [of the units of government] say they are satisfied with the results.” However, MPPS provides a pie chart which paints a slightly different picture, with 33 percent reporting they are fully satisfied, and 40 percent showing to be only somewhat so.

munis satisfied

The newspaper analysis focused primarily on the geographic area of its core readership — Wayne, Oakland and Macomb Counties in Southeast Michigan, whose combined 3.86 million residents comprise slightly over a third of the state’s population. At several data points, the report breaks-out the responses based on population density, which helps provide additional insight into the privatization picture for the greater Detroit area, and the newspaper’s bending of the survey’s findings to their way of thinking.

Buyer’s Remorse

MPPS found that Michigan has an overall rate of 15 percent of units of government reporting the “in-sourcing” of public services — that means the reversal of previously privatized services. With 27 percent of larger municipalities canceling failed contracts.

jurisdictions that reverse privatization

This by no means implies that all privatization initiatives are flawed — clearly more of them work than not, or are at least functional at some level, but they certainly require very careful evaluation and regular monitoring. They are not the panacea the News portrays them to be.

So, why do municipalities back-pedal on their privatization policies? The reasons given for reversal reveal that, by and large, about half the time it’s due to a lack of savings and/or low quality of service.

reasons for reversal

Mistaken Thinking

The News article laments that only 10 percent of local units of government anticipate increased privatization of their services in 2014, calling that attitude “mistaken thinking.” 

In the five years MPPS has been tracking public sector out-sourcing in Michigan, there clearly is a new lull in the momentum. A trend that even the conservative think tank, Mackinac Center for Public Policy, understands may indicate a point of saturation. As a strong proponent of public-private partnerships, the Mackinac Center admits in their report on the public education sector, the Michigan School Privatization Survey -2014, that the rate of privatization is slowing for good reason:

It could be that school support service privatization has topped out. In other words, there may come a time when all the districts that could contract out for quality services while simultaneously saving money have.

It appears the Detroit News is the one suffering from “mistaken thinking”, especially when they further extrapolated the following fanciful notions from the data:

[T]he message is clear: These practices will help municipalities trim budget costs and operate at a more efficient level while still providing services to residents.

It would bode well for state, county and local municipalities to explore more fervently and frequently inter-government cooperation and privatization.

These are proven fiscal options that will continue to be valuable factors in balancing governmental budgets.

One can’t help but wonder if they were reviewing the same report at all.

DSCN0444Amy Kerr Hardin

 

 

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One Response to The Detroit News Overstates the Value of Privatization

  1. Ramona says:

    Wow, more craziness from “The Michiganians”. I’m glad I’m a Michigander; I don’t want to be connected to that bunch.

    The News has a long history of slanting their stories to benefit Republicans and their long quest to privatize everything, but this is quite a stretch.

    Thanks so much for this detailed explanation. (And I’m glad you’re on our side.)

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