The Street Cleaning Committee of the City of New York concluded already in 1826 that "the present system of cleaning streets by contract will always prove ineffectual in as much as that private interest is too frequently at variance with public convenience and therefore ought to be abandoned." Yet the contractors could not so easily be shaken off. In spite of their persistent failures, contracting out continued in New York City until 1880. It took the Civil War and the political re-alliances that it prompted to break the hold that contractors had on the city. Contracting out of sanitation services came to an end when New York City's Committee on the Affairs of Cities declared: "The contract system has been repeatedly tried in all forms, and invariably repudiated by the city, either on account of dissatisfaction with the work done or of the failure of the contractors to live up to their agreement."
Privatizers are no doubt willing to pledge that the quality of service the private firm will provide will be guaranteed by a signed contract. Nothing can change the fact, however, that to the private firm reducing the quality and extent of service will be a way to improve profits. As a result, whether the private sanitation company will provide good service everywhere depends entirely on the vigilance of a new army of government inspectors that will have to be created in order to monitor compliance. Of course, in neighbourhoods of single family homes such monitors would not be necessary at all. Homeowners are bound to make the contractor live up to the contract. But in high rise-high density neighbourhoods, where responsibility resides with no one person or family, the frequency of garbage collection will have to be verified, frequently. Ditto for making sure that garbage does not get strewn as it is being collected, or for making sure that the garbage trucks do not leak their unsavoury content along the city streets. If it lives up to its task, the army of inspectors will have its hands full.
Now assume that such a large army of inspectors is indeed created — even though wealthy low density neighbourhoods will be served well without it — and that the government continues to fully fund it even during economic downturns and budget deficits. Assume also that only few inspectors succumb to the regular temptation of bribes that will no doubt be offered. Both assumptions, particularly the first, are dubious, but not half as dubious as the next: The private contractor will surely become a political player in Toronto's politics. With such high stakes there is little doubt that it could become a formidable political contributor and influential participant. Are you willing to assume that if the corporation does not live up to its contract it will receive more than its wrist slapped?
The people of Toronto may want to reduce their tax burden. New Yorkers are no different. We have learned the hard way, however, that using government employees to do the job is actually the cheapest and most cost effective way to achieve a clean city.
Moshe Adler is an economist in the urban planning department at Columbia University and a senior economist at the Fiscal Policy Institute in New York.