It's not a "truism" at all. For a start, companies are going bust taking these contracts[1] -- going bust generally being a good sign that they aren't making a profit. More importantly, the alternative is a state-owned security service (police, army, etc) who are likely to be inefficient, highly unionized with tons of overhanging pension payments. Is that cheaper? I don't know which is why I was saying in my original comment that these things can be studied.
The article said that "the cash not going to the work force is redirected into shareholders' pockets". I don't read anything in that phrase about the service being cheaper or not. I just read that if the contractor gets X cash, and then gives Y cash to its workforce, the difference goes to the shareholders. If labor is what makes the biggest part of the expenses (and I guess the author is referring to such cases) that is almost a truism.
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It's not a "truism" at all. For a start, companies are going bust taking these contracts[1] -- going bust generally being a good sign that they aren't making a profit. More importantly, the alternative is a state-owned security service (police, army, etc) who are likely to be inefficient, highly unionized with tons of overhanging pension payments. Is that cheaper? I don't know which is why I was saying in my original comment that these things can be studied.
[1] http://www.out-law.com/en/articles/2012/july/special-adminis...
The article said that "the cash not going to the work force is redirected into shareholders' pockets". I don't read anything in that phrase about the service being cheaper or not. I just read that if the contractor gets X cash, and then gives Y cash to its workforce, the difference goes to the shareholders. If labor is what makes the biggest part of the expenses (and I guess the author is referring to such cases) that is almost a truism.