Last week, the California Supreme Court rejected a suit by a government employee union, the Professional Engineers in California Government, that sought to bar state and local transportation officials from hiring private contractors to work on the rebuilding of the northbound approach to the Golden Gate Bridge.
This decision is a welcome victory against the phenomenon known as “in-sourcing,” which involves government taking over functions that could performed by private contractors and handing them over to government employees.
Thus, in-sourcing fuels government growth directly by increasing the number of government employees. It also fuels government growth indirectly, by providing new potential members for government employee unions, which in turn can use the increased dues revenue to lobby for bigger government.
The decision is also sound because it promotes the sort of private-public partnership that makes economic sense. As CEI’s Marc Scribner notes in an Issue Analysis on the topic, not all private-public partnerships are created equal. In the real estate sector, they have led to undue government encroachment upon the market. In the transportation sector, on the other hand, they have brought market forces into government projects.
In the case of surface transportation infrastructure, innovative new private-sector ? nancing, management, and ownership regimes have much to offer in terms of minimizing taxpayer exposure, capturing user revenues, and creating an ef?cient transport network. In contrast, government’s recent expanded role in real estate development has increased taxpayer exposure to risk, socialized costs, and concentrated the bene? ts into the hands of select private developers and special interests.