The Continuing Value of Privatization

A Primer on How to Do It Right, and What to Avoid Doing Wrong

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As mayor of Indianapolis, Stephen Goldsmith applied what he called the “Yellow Pages Test” to the government of America’s 12th largest city: If at least two firms advertised in the local Yellow Pages to provide a service, he would work to see if the city could turn that service over to the private sector. This way, Goldsmith turned many of Indianapolis’s government services over to the private sector: From running the airport to collecting trash, Goldsmith brought in private firms and, on balance, improved services throughout the city.

Throughout the world, it has become clear that private enterprise generally outperforms government in providing a large number of services. Not everything currently public can or should be made private, but a growing body of research indicates that government works best when it draws on the private sector to deliver services.