In the era of a billionaire president (namely Donald Trump), any discussion of privatization turns nasty, and it’s Ronald Reagan’s legacy that is getting beat up in the process.

Reagan was big on running the federal government more like a business, and proposed broad ideas to get the private sector to take over some of the jobs government was doing. These public-private partnerships helped pump the economy, and it seemed to make more sense for these jobs to be done by companies whose business it was to do this kind of work. In a 1986 message to Congress, Reagan wrote:

In most cases, it would be better for the government to get out of the business and stop competing with the private sector, and in this budget I propose that we begin that process. Examples of such ‘privatization’ initiatives in this budget include sale of the power marketing administrations and the naval petroleum reserves; and implementation of housing and education voucher programs.

During the Reagan era, privatization began on a broad level, and private-public partnerships were instituted in a variety of areas. Today, these arrangements vary from prison administration to school vouchers. As Gerard Robinson, the former commissioner of education for Florida and secretary of education for Virginia, explains:

Public-private partnerships remain an important aspect of doing business in America; private prisons are still part of our state and federal corrections landscape; 26 school voucher programs are operating in 15 states and the District of Columbia; and 21 tax credit programs are operating in 17 states.

But in the age of Trump, Robinson says, much of the talk about private companies, which earn billions providing services to the government, has turned toward an anti-capitalistic tendency: namely arguments like, if a company has a contract with the government, it shouldn’t be allowed to profit.

But is that even remotely realistic? For one, these types of relationships have in fact been functioning for more than 100 years, not without flaws but certainly more efficiently than government could do alone. Two, what would be the incentive for companies to do business if they can’t benefit from the service? They already are doing it more more cheaply than could be done by a parallel company created by government to perform the same function without benefit.

Three, as Robinson points out, it’s just more feasible for some government agencies to contract out some educational services while doing others in-house. He uses examples from public school arrangements, for instance, in the area of technology support. Let Apple and Microsoft handle student computer services, not the schools. Or how about student transportation?

According to a recent report from Bellwether, district-managed public school buses account for approximately two-thirds of the 480,000 buses that transport 25 million students in urban and rural school districts each year. Private companies such as First Student, Inc., which has a contract with 1,200 school districts and employs 57,000 people to drive 6 million students to school each day, are among for-profit service providers that compose the remaining one-third. Why do districts outsource transportation? According to the National School Transportation Association, ‘School bus contracting benefits schools and school districts nationwide. Outsourcing transportation redirects attention and financial resources back into the schools that were overburdened by the expense and administrative commitment of providing their own student transportation.’

Robinson lastly makes the case that some anti-privatization groups may not want to admit: public employees benefit from investing in the private sector. If you remove that profit margin, public employees lose out, both in terms of an upper salary limit and by not having profitable companies into which they invest their retirement savings.

According to an American Investment Council report regarding the investments of over 155 public pension funds in various equity markets, funds invested in private equity produce a median 10-year annualized return rate nearly 4 percent higher than those invested in public equity. For example, the Teacher Retirement System of Texas invested $16.41 billion in private equity, and came away with a 15.4 percent increase in their annualized 10-year return. The New York State Teachers’ Retirement System invested $8.26 billion in private equity, and garnered a 13.2 percent increase in their return. The point is that these teachers, and countless more, will be able to retire with some comfort based on the investment of their public pensions in the private equity market.

So having profitable companies that provide valuable services seems like a smart choice that works on both sides of the coin, complementing government services while also providing a revenue stream for government investments. Seems like a viable course of action, one currently threatened by anti-capitalistic forces.

What do you think?