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Will the debate about contracting out ever be resolved? Each side presents cases that support its point of view, but making policy decisions on the basis of case studies is difficult. And at any rate, aren't the failures of contracting out just points on the learning curve? Can't the system be perfected over time?
In fact, contracting out passed its developmental stage more than 100 years ago, since that was the method by which American cities carried out their governmental business once they grew beyond their small village beginnings. In nineteenth-century New York, for example, the city charter itself mandated contracting out for all work done for the city. By the end of the nineteenth century contracting out was a mature system that was already as good as it could possibly be. And it was precisely then that governmental production came to America. The realization that every possible improvement to contracting out had been tried led city after city to declare its failure.
The head of the Chicago Board of Health declared in 1892: "There are few if any redeeming qualities attached [to the contract system]. No matter what guards are placed around it, the system remains vicious." 1 Mayor Pingree of Detroit expressed the same view in 1895: "Most of our troubles can be traced to the temptations which are offered to city officials when franchises are sought by wealthy corporations, or contracts are to be let for public works." 2 Practically all American cities discarded contracting out at that time and switched to governmental production.
Since all of this happened more than a hundred years ago, it is not surprising that our experience with contracting out has faded from public memory. Curiously, it is often the current advocates of contracting out who refer to its history. They assert that--unlike their predecessors--they know how to make contracting out competitive. But was the contracting out of the past indeed not competitive? Are there any devices that we can try today that were not tried in the nineteenth century? We can answer these questions by examining the contracting out of one service, street cleaning, in one city, New York, during the course of its final fifty-nine years before it was discarded in 1881.
N.Y.C. STREET CLEANING