Privatization: paving the way

THE delay in Budget Director James Miller's submission of the next federal budget may be a blessing in disguise, giving the Reagan administration more time to draw upon the interim reports of the President's Commission on Privatization, scheduled to provide a final report by March 1. The goal of the commission is clear: ``to end unfair government competition and return government programs and assets to the American people'' - a mandate that, if carried out, could lessen Washington's red ink. The commission's creation should not be surprising to political observers, for one of the most unheralded developments in United States history was the extent to which government turned to private enterprise to establish and operate what later became public responsibilities. For example, the best roads in early America were private, as illustrated by the Philadelphia-Lancaster Turnpike, a 62-mile experiment so successful that other states in the early 1800s followed suit.

The best canals in early America were privately run, with modest and achievable goals, unlike the typical public model, often financed with surplus federal funds turned over to the states. For example, the state of Pennsylvania's Main Line, built to ensure competition with New York State's Erie Canal, was an expensive series of water routes, inclined planes, and railroads that never really connected Philadelphia and Pittsburgh. Other states, especially New York and Ohio, lost much public money in grandiose projects. Private canals, on the other hand, were short-line, providing an important industry (coal, for instance) with a cheaper transportation alternative.

Privatizing was the hallmark of early communications. The Post Office eagerly contracted private firms to carry the mail. None was more impressive than John Butterfield's Overland Mail Company, which moved mail from Fort Smith, Ark., through Missouri, Texas, and up to Los Angeles and San Francisco. Post Office regulations stipulated that Mr. Butterfield run the route in 25 days, but his company did it in 22.

Privatizing is not without the threat of poor quality. But the history of modern America would suggest that government, not business, has had the monopoly in that area.

Current experiments in privatization such as private overnight package delivery and for-profit hospitals appear positive, suggesting that this age-old American tradition merits serious consideration in Washington.

Thomas V. DiBacco, a historian at the American University, is author of ``Made in the U.S.A.: The History of American Business'' (Harper & Row).

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