Can Detroit run as a multinational corporation city?

[Danny]

Since Detroit is bankrupt and its city government is no longer doing monetary spending in its services, can Detroit do better if multinational corporations take over city services? So far Sandy Springs, GA. [[a suburb of Atlanta) became the first city in the U.S. to be run as a multinational corporation government. Can this proposal work for Detroit putting our neighborhoods back to middle income levels or could it do more harm then good.

Any thoughts?

[JBMcB]

Outsourcing can save a lot of money and increase efficiency dramatically, but it needs to be done as transparently as possible. Unfortunately, transparency is anathema to the current crony-capitalists running things. How can Bobby Ferguson funnel money to his friends if bid processes are open?

[Cliffy]

Outsourcing doesn't save money. It just transfers money from the worker to the business owner. Instead of making $15 an hour, the worker gets $9 hour and no benefits while the owner of the company is making a killing. The city realizes no savings because the owner charges just as much or even more but the public thinks since we privatized services, that we are saving money.

[Hermod]

Outsourcing doesn't save money. It just transfers money from the worker to the business owner. Instead of making $15 an hour, the worker gets $9 hour and no benefits while the owner of the company is making a killing. The city realizes no savings because the owner charges just as much or even more but the public thinks since we privatized services, that we are saving money.

No, there are real savings for most cities that contract out their garbage and trash services. Janitorial services in city offices are another area where cities can save money. If you have an open bidding process, the contractor will pare his overhead and you only pay the low wage he pays to his worker plus about 15% in overhead costs. Contracting out only costs more if you have a "friends and family" contracting process or where the city contracting office is getting kickbacks.

[Hypestyles]

Privatization isn't the cure-all that the most strident of proponents tend to feel it is.

If Detroit goes to the "whoops, you're behind on your fire-services tax/fee, we gotta let your place burn" zone, look for problems.

[JBMcB]

Instead of making $15 an hour, the worker gets $9 hour and no benefits while the owner of the company is making a killing.

Another way of looking at it is the worker makes $15 an hour, and the worker actually does a full hour of work, and you only hire as many workers as you need, and you don't have fifty supervisors and 30 HR staff for a workforce of 100 people.

That tends to save money, too.

[313WX]

Privatization isn't the cure-all that the most strident of proponents tend to feel it is.

If Detroit goes to the "whoops, you're behind on your fire-services tax/fee, we gotta let your place burn" zone, look for problems.

There's that, and what Cliffy mentioned earlier about the potential hidden costs [[I.E., we may start only paying $6 Million for one contract, but then when it's time for the next contract, the contractor will gradually ask for more money). Accountability is an absolute must when it comes to these contracts, and we must realize that we can't just walk out on these contracts when they're implemented.

[davewindsor]

Since Detroit is bankrupt and its city government is no longer doing monetary spending in its services, can Detroit do better if multinational corporations take over city services? So far Sandy Springs, GA. [[a suburb of Atlanta) became the first city in the U.S. to be run as a multinational corporation government. Can this proposal work for Detroit putting our neighborhoods back to middle income levels or could it do more harm then good.

Any thoughts?

It sounds like a good idea. The Sandy Springs model works. Here's a video on what Sandy Springs did. http://www.dailypaul.com/277968/sand...rtarian-living

The only thing they didn't outsource was police and fire. They are to provide $50m worth of public services that a publicly run city would charge taxpayers for half that--$25m. No city debt plus they are building a reserve. No tax increases while neighbouring public cities continue to have increases. The roads are finally paved, plus 7 new parks. A nice and clean city.

[Jimaz]

Privatization is the brainchild of the same sociopathic cult that brought us rabid deregulation and the resulting global economic meltdown.

Gotta hand it to George H. W. Bush though. "Voodoo economics" was a remarkably prescient name for a scam that keeps getting up and walking around after it's been so thoroughly proven dead.

[JBMcB]

Accountability is an absolute must when it comes to these contracts, and we must realize that we can't just walk out on these contracts when they're implemented.

I've heard some cities contract out to two or three companies. Then, if one isn't working out, another company can fill in. Works well for garbage collection, maintenance, etc... And keeps them on their toes.

[Dexlin]

No, because cities and corporations have totally different aims and obligations, but even if the answer was yes, the next question would be, would you even want it to? This really is a silly questions.

Even under the most corrupt mayor, the mayor makes pennies compared to what a crook makes in financing. There is no way I'd put a corporation in charge of a city. What the banks do makes what the Kwames of the world did look like child's play.

[Cliffy]

Another way of looking at it is the worker makes $15 an hour, and the worker actually does a full hour of work, and you only hire as many workers as you need, and you don't have fifty supervisors and 30 HR staff for a workforce of 100 people.

That tends to save money, too.

A private company has ZERO accountability. They turn in the billable hours and nobody knows if person X was working 10 hours that day. Whatever they turn in, we pay. I know from experience. This one consultant was billing twice for the same person on two different contracts. So this person was putting in 8 hours on two different jobs on the same day. He was caught eventually but we don't know what the hell is going on.

Lets just the say the consultant charges $125 hour plus overhead plus a guaranteed fixed percentage. The same govt employee would cost $34 hour plus benefits so lets say $60 hour. Don't forget that the consultant will send a bill for drive time, computer use, suppplies, etc... People don't know how much of a scam it is. Everyone thinks its privatized and it has to be good. It is good, for the company owner!

[JBMcB]

A private company has ZERO accountability.

Only if you don't hold them accountable.

They turn in the billable hours and nobody knows if person X was working 10 hours that day.

Then you need to audit your vendors better. I do this stuff for a living - it ain't rocket science. Do a random audit once in a while - if that's not in your vendors contract then it's YOUR fault you're getting ripped off.

The problem isn't privitization, the problem is people using under the table deals, obfuscated procurement procedures, and a complete lack of auditing to cover up funneling money to their friends.

Want a counter-example? How many phantom teachers were receiving a paycheck before Bobb took over DPS? The public sector has all the same incentives the private sector has to run a scam. The only difference is, with a private company, you can drop them if they are in violation of their contract. You're pretty much stuck with the government.

[sumas]

Privatization is the brainchild of the same sociopathic cult that brought us rabid deregulation and the resulting global economic meltdown.

Gotta hand it to George H. W. Bush though. "Voodoo economics" was a remarkably prescient name for a scam that keeps getting up and walking around after it's been so thoroughly proven dead.

I do hear that zombies are quite popular these days.

[wolverine]

Chicago sold all of its parking spaces to Abu Dhabi. It was nothing more than a quick fix. In the end the city will probably lose on all the potential revenues gains or rate hikes and repayment for event days that will make the labor costs look minuscule. Doubt privatization would benefit Detroit much either.

[Hermod]

1. Privatize things where you have competition [[janitorial work, trash collection).

2. Have specific performance requirements in the contract with financial penalties for not meeting them.

3. Performance measures are "tasks completed" and not "billable hours".


Most places I have lived, we had privatized trash collection and it was very much superior to places I have lived with public trash collection. If the contractor doesn't do something right or leaves a mess, I call the DPW and shortly they contractor has someone come out in a pickup truck and rectify the problem. I get two garbage pickups a week, two yard waste/bulk item pickups a week, and one recycling pickup a week.

[Detroitnerd]

Chicago sold all of its parking spaces to Abu Dhabi. It was nothing more than a quick fix. In the end the city will probably lose on all the potential revenues gains or rate hikes and repayment for event days that will make the labor costs look minuscule. Doubt privatization would benefit Detroit much either.

I think it's unfair to offer all these undue criticisms of privatization. After all, we have a long and glorious history of private contractors and companies performing public functions.

http://www.youtube.com/watch?v=y-vBJ8cS08U

[professorscott]

Whether you're a fan of privatization or not - I have mixed feelings about it - we're certainly going to find out if it works in Detroit.

[Wesley Mouch]

Privatization can be bad. In-House operation can be bad. Either one can be the problem or the solution.

Garbage collection seems to be the one the everyone accepts. Why is this? It actually seems like one of the easier things that government historically did in-house. A much more obvious thing to outsource is payroll processing. Why? Not just that its easy to measure results -- but more because its a very complex and every-changing world.

Its harder today for a city to stay current on all the trends, requirements, laws, regulations, procedures, deadlines, and such. Outside processing firms spread the cost across many clients. ADP [[and their kind) are widely used by private industry because they can usually do the job cheaper than in-house. Spread the costs across many clients. In-house means buying and maintaining complex computer software for example. Is this something the city does as well as IBM?

[mwilbert]

Privatization can be bad. In-House operation can be bad. Either one can be the problem or the solution.

Garbage collection seems to be the one the everyone accepts. Why is this? It actually seems like one of the easier things that government historically did in-house. A much more obvious thing to outsource is payroll processing. Why? Not just that its easy to measure results -- but more because its a very complex and every-changing world.

Its harder today for a city to stay current on all the trends, requirements, laws, regulations, procedures, deadlines, and such. Outside processing firms spread the cost across many clients. ADP [[and their kind) are widely used by private industry because they can usually do the job cheaper than in-house. Spread the costs across many clients. In-house means buying and maintaining complex computer software for example. Is this something the city does as well as IBM?

Garbage collection is a good target for outsourcing because it is a very standard product and it is easy to assess how well it is being done, and reasonably easy to assess how much it costs to do in-house, because most of the equipment and people only do trash pickup. In cities where they also use the vehicles for snow removal it is harder to assess. Since Detroit doesn't really do snow removal it isn't an issue.

Payroll is good because there are a lot of competitive suppliers and you can also tell if it is being done well, but payroll companies get their economies by providing a fairly standard product, and don't generally deal well with public safety payrolls which are full of weird non-standard contractual things. It might be possible to renegotiate some of those provisions if that were a priority, but generally it isn't.

Once you are running a payroll system for the public safety employees, it isn't much harder to add on the rest of them, and you end up with an in-house payroll system. I also think you would find that a pretty high proportion of companies with 10,000 employees run payroll in-house anyway, because by the time you have that many employees you have adequate scale internally.

[Wesley Mouch]

Garbage collection is a good target for outsourcing because it is a very standard product and it is easy to assess how well it is being done, and reasonably easy to assess how much it costs to do in-house, because most of the equipment and people only do trash pickup. In cities where they also use the vehicles for snow removal it is harder to assess. Since Detroit doesn't really do snow removal it isn't an issue.

Payroll is good because there are a lot of competitive suppliers and you can also tell if it is being done well, but payroll companies get their economies by providing a fairly standard product, and don't generally deal well with public safety payrolls which are full of weird non-standard contractual things. It might be possible to renegotiate some of those provisions if that were a priority, but generally it isn't.

Once you are running a payroll system for the public safety employees, it isn't much harder to add on the rest of them, and you end up with an in-house payroll system. I also think you would find that a pretty high proportion of companies with 10,000 employees run payroll in-house anyway, because by the time you have that many employees you have adequate scale internally.

Yes, once you have that many employees you can probably do it yourself efficiently. Although I think a lot of people fool themselves on their real in-house costs.

The question that I think needs to be asked is whether managing payroll services in-house is something worth spending time on. Detroit probably runs a archaic software highly customized for their use. In addition, I'll be the staff does a lot of the odd calculations by hand to deal with whatever software they are running. Sure, it could be cleaned up. But should the administration work on this, or maybe on cleaning up police dispatch operations? There's only so much administrative skill and time to be used, so use it well.

As to the standard software, that's not as true as you probably think. ADP does a lot of municipal work, and they do major hospitals. Cities have nothing on hospitals when it comes to complex labor agreements. If Detroit were to outsource, they will still need a large payroll department to collect, audit, and process information. They should just stop focusing on maintaining their own infrastructure to do the commodity part, IMHO.