‘Privatization’ Pioneer Wins Prestigious Professorship

Published January 1, 2008

E.S. “Steve” Savas chuckles when asked what he thinks about being named, with two other professors, the first “Presidential Professor” in the history of Baruch College in New York City.

“Here I am, preaching privatization in a public university. There is some academic freedom in some places,” Savas said. “I guess it shows conservatives can be honored even in the People’s Republic of New York.”

Savas is a Heartland Institute policy advisor, professor of public affairs, and renowned expert on privatization, a word he says he dislikes. The Presidential Professorships were bestowed in 2007 for the first time by Baruch College President Kathleen Waldron.

The college created the professorships to honor faculty members who demonstrate outstanding teaching skills and whose research or creative work has received national and international recognition. Their professional contributions also must have added “distinction and luster” to the college, according to Waldron. In addition to prestige, the professorships give recipients research support.

Idea Snowballs

Savas has been receiving national and international recognition since the 1960s, when he served as first deputy city administrator under Mayor John Lindsay in New York City. A blizzard in 1969 paralyzed the city, and Lindsay asked Savas to find out why.

“I learned that during this snow emergency, department of sanitation workers were plowing streets only half of the time,” Savas says. “The rest of their time was spent on breaks. I wondered, ‘Gee, if they’re working only 50 percent of the time in an emergency, what are they like during the rest of the time they’re on garbage collection?'”

He learned they probably worked even less.

“Private guys were charging $17 a ton [to haul waste]. City guys were costing us $47 a ton,” Savas said.

Savas suggested hiring private contractors through competitive bidding in a couple of collection districts, leaving city sanitation workers to continue collecting garbage in other districts. The city could then compare who was doing a better and more cost-effective job.

Unions on Attack

“The unions hated me,” Savas said. “They put up wanted posters in the sanitation garages with my picture on them. A professor of public administration sent a letter to Mayor Lindsay blasting me. Lindsay dropped the idea, to keep the unions happy.”

Savas stuck with the idea, though, launching his own studies of public service labor costs. He began writing about the topic, demonstrating that private companies could often provide municipal services and do so at higher quality and lower costs.

In 1982, after having published several studies on garbage collection, he came out with his first book, Privatizing the Public Sector: How to Shrink Government.

“This book, because of its title, attracted a lot of enmity from the usual suspects on the Left,” Savas said. “Critics were government unions and people so addicted to the notion of large government they believe it makes us all one big happy family.”

He followed that with Privatization: The Key to Better Government (Chatham House, 1987), still considered one of the most influential books on the topic.

Catches Reagan’s Attention

Those books and previous articles by Savas attracted many supporters, among them President Ronald Reagan. Savas served as Reagan’s assistant secretary for policy development and research in the U.S. Department of Housing and Urban Development from 1981 to 1983.

Another supporter, who has since become a nationally known expert in the outsourcing of government services, credits Savas with sparking his interest: Robert Poole, founder of the Reason Foundation.

“I encountered his writings in the early to mid-1970s, I think in Harper’s magazine, or maybe Forbes, calling for competition in municipal government,” Poole said. “I was intrigued by that idea.”

Poole pursued his own research and in 1980 published Cutting Back City Hall, the first book-length treatment of the subject.

Before long Poole and Savas started meeting each other at conferences and got to know each other.

“We get along very well,” Poole said. “We decided we were fellow warriors in the same battle and have stayed in touch ever since. He’s genial, has a great smile, and is well traveled. He’s been all over the world and has a cosmopolitan nature.”

Works Around the World

Savas has consulted in 54 countries, including recently in China, where his books have been translated from English and where government leaders have been encouraging public officials to read them.

“That’s something that’s never happened in the People’s Republic of New York,” Savas jokes.

Savas also has been instrumental in spreading private transportation services across Ukraine in the former Soviet Union. He worked with locals to create a private bus service in Odessa in the early 1990s and continued consulting there. Within three years, more than 60 Ukrainian cities were being served by more than 30 private bus companies.

Monopolies on the Run

Though he is widely acknowledged as the father of privatization, Savas dislikes the word. He prefers the term “outsourcing,” because there have been instances in which government workers have been able to win bids when going up against private firms for certain work.

The idea, Savas says, is to break government’s monopoly hold by injecting competition into what government does.

“In the U.S., and this applies to outsourcing, we go to great lengths to protect against [private-sector] monopolies,” Savas said. “But what do we do to protect against public monopolies? The non-thinking approach has been if it’s a public activity, it’s being carried out in the public interest. That’s nonsense. People in public monopolies behave like people in private monopolies. They become fat, dumb, and happy.

“Outsourcing is a way to protect people from monopolies,” Savas continued. “Through outsourcing of services we can have or can create a competitive market to provide better services at lower costs.”

Steve Stanek ([email protected]) is managing editor of Budget & Tax News and a research fellow at The Heartland Institute.