Study Sees Harm in Reagan’s Plan to Shift Services to Private Sector

A liberal research organization said Friday that Reagan Administration proposals to put more government services into private hands seem unlikely to save taxpayers money, would hurt the poor and reduce government responsiveness.

“Given the American experience with defense production, construction projects and health care--all mostly produced privately with public dollars--it is remarkable that anyone could see a path toward budgetary salvation simply by shifting the locus of service production from the public sector to the private sector,” Pulitzer Prize-winning sociologist Paul Starr wrote.

Sees Cost Increasing

In a study published by the Economic Policy Institute, a nonprofit, nonpartisan group, Starr said that what the Reagan Administration terms “privatization” would--through contracting, vouchers and other methods--turn more government services over to private corporations or organizations. But, he said, the public would continue to pay what could be an increasing tab.

This could be clearly seen, he said, in “privatization” advocates’ calls for a system that would enable parents of children in inadequate public schools to use government-provided vouchers to pay some of the cost of sending their children to private schools.

Greater private sector involvement in government services at the federal, state and local levels has been promoted by President Reagan, who has appointed a Commission on Privatization, which plans to issue a report March 1. It also has been advocated by some academics and state and local government officials.

David Linowes, a University of Illinois political economy professor who heads the presidential commission, said Friday that he had not seen the institute’s study. However, he said, it is not the commission’s primary focus to save money, but rather to use competitive market forces to spend tax money wisely for better public services.

Stresses Value of Vouchers

Linowes said that school and housing vouchers could significantly improve the quality of poor people’s lives. In the public housing area, Linowes said that it makes more sense to give poor people adequate rent vouchers to live in private housing, rather than spend billions of dollars to build or repair public housing units that, he said, are afflicted with rats, drug pushers and crime.

Starr, who favors a private sector role in certain government activities, such as public housing and postal service, said it is especially dangerous--as proposed or even partially implemented in some states--to put law enforcement, prisons, courts or other “coercive powers” of the state in private hands.

Also, removing decisions on essential services, such as education and fire protection, “from the public arena diminishes the individual incentive for community participation,” he wrote.