MAKING GOVERNMENT CHEAPER AND BETTER.

• Author: Goldsmith, Stephen
• Position: Indianapolis mayor Stephen Goldsmith's economic policy

"... The opportunities for improving service through [private-sector] competition are as vast as the free market itself."

EVERY DAY, the private sector introduces new products, improves old ones, expands services, and, in general, reduces costs. The desktop computer on which this article was written, for example, was nonexistent 25 years ago and essentially unaffordable until recently.

Government, on the other hand, becomes less responsive and more expensive over time. Spending by the Federal government has exploded over the past four decades, yet almost no one would argue that government services are better today than they were 40 years ago. To most government managers, the private-sector practice of cutting budgets while increasing services seems a bizarre and paradoxical dream.

The notion that, by definition, more spending improves services is the single most destructive idea that hampers government policy today. It explains why so many attempts to get Federal, state, and local budgets under control start in deceit and end in gridlock. We all agree the budget must be cut, but the underlying assumption is that services must therefore be reduced, which means the debate boils down to an argument over whose ox gets gored.

Not surprisingly, many elected leaders now talk about "running government like a business," looking to the private sector for a way out of the spiral of higher taxes and declining services. Indianapolis has been a part of this trend toward efficiency in government. Some might even suggest that it has been at the forefront. Since 1992, my administration has allowed private companies to compete for contracts to provide more than 75 city services. In the process, we have reduced our operating budget, lowered taxes three times, and cut our non-public-safety workforce by nearly 50%. Even as we have decreased the total budget, we have raised the public-safety budget by almost 30%; put 100 more police officers on the street; invested over $1,000,000,000 to rebuild roads, sewers, and other parts of the city's infrastructure; and increased our budget reserves by more than 400%.

Equally important, competition has dramatically improved the quality of city services, increasing productivity and boosting customer satisfaction. Rather than lowering service quality or slashing wages, our private partners have produced savings through innovation and a strong focus on customer service.

Looking beyond arbitrary public/private distinctions has enabled us to tap the skill...