Statement on the President's Commission on Privatization

 

September 3, 1987

 

Today I am announcing my intention to appoint the 13 members of my Commission on Privatization. The Commission will help fulfill the commitment I made in my Economic Bill of Rights to end unfair government competition and return government programs and assets to the American people. Privatization follows in the great tradition of free enterprise and private ownership of property that has long been a part of American history, from the initial sale of government lands under the Northwest Ordinance to the homestead program that brought the pioneers to the American West over 100 years ago.

 

There are many activities that are not the proper function of the Federal Government and that should simply be left to the private sector. The American people know that in many cases the Government is less efficient than private enterprise in providing certain services. Government agencies do not have the same incentives and interests that allow the private market to provide goods and services more efficiently and effectively.

 

Privatization programs have the potential for bringing enormous benefits to all members of society. Workers can be given part ownership in the newly created private company and often receive a pay raise. The public receives better services. Managers are free to respond to the proper incentives to build a successful business, and competition in the free market allows others to share in the prosperity. As recent experience in Great Britain shows, privatization also increases the public participation in the market system: By selling government-owned enterprises, the number of families owning stock increased dramatically.

 

In the United States, privatization has been pursued more aggressively at the State and local level than at the Federal level. One of the many success stories comes from right here in southern California. The University of Southern California's Medical Center, which is operated by Los Angeles County, contracted out its food service and found that it could save over $6 million in 4 years. Most of the county workers affected by the change went to work for the private contractor, and 90 percent of them received a pay hike when the service went private.

 

The Commission will be chaired by Professor David Linowes of the University of Illinois. The other members will bring a wide range of expertise to the Commission. The bipartisan Commission will study all activities of the Federal Government and report back to me on which government programs, enterprises, and activities are more appropriately part of the private sector. In addition, the Commission is expected to review scholarly work on privatization and examine the accomplishments of other countries and State and local governments. Based on its findings, the Commission will propose how we can return appropriate Federal activities to the private sector through the sale of government operations and assets, the use of private enterprise to provide services for government agencies, or the use of vouchers to provide services to the public through the private sector. It will recommend legislative and administrative action that can be taken to accomplish the privatization initiatives. In the meantime, my administration will continue to vigorously pursue our current privatization initiatives.

 

It is my hope that my Commission on Privatization can take politics out of the privatization effort and propose a national policy, one that draws upon the lessons of our past successes -- such as the homestead program in the West -- that transformed the American economy into the biggest and best this world has ever seen, and a policy that calls upon the ingenuity of our free enterprise system to benefit all Americans.