a jungle out there!
By Keith Wade
A chorus of voices joins in pleading with the government to get out of businesses that can be better run by private industry. Yet there continues to be reluctance and skepticism.
This reluctance is not just from those whose cushy jobs are at stake. Many people are legitimately concerned about private industry's willingness and ability to take over government functions. Those who concede that private industry can do an adequate job argue that it will not want the "unprofitable sectors," leaving municipalities with an array of costly services to provide without the offsetting benefits of the more profitable services. By looking at the privatization of zoos, however, we see that these concerns are just not valid.
Says one prominent zoo professional: "Politicians may adamantly oppose the privatization purely on the grounds of losing 'control' over the facility. This may occur even though your governmental entity recognizes that they can no longer afford to adequately fund the facility."1
Many cities actually try hard to do a good job running zoos. They invest lots of money in their facilities and may even try to hire the right people. The problem, however, is that a zoo is different from other city departments. With a diverse, living inventory, a need for staff with unique characteristics, and continuous contact with the general public, a zoo creates challenges that most city bureaucracies are not equipped to handle. Unless one has the proper academic credentials, for example, one does not get to bid on the post of veterinarian regardless of seniority; delays in purchasing make multi-ton beasts hungry; and one does not simply requisition a Komodo dragon from the downtown warehouse should the old one disappear. Contrary to popular belief, many of the best zoos in the nation are run by private, not-for-profit institutions. Over the years, more and more municipalities have found their zoos too costly and too cumbersome to run.2 Simply stated, zoos have special needs that private management is better able to handle, as we'll see by examining two of the recently privatized institutions, the National Aviary in Pittsburgh and the Pittsburgh Zoo. In both cases, private industry took over what was widely regarded as failing government projects and turned them around with private money.
The National Aviary in Pittsburgh
When the city of Pittsburgh faced a budget crunch, it made the decision to close its aviary. As Dayton Baker, executive director of the National Aviary wrote me, "Under city operation the Pittsburgh Aviary became a 'burden' when the 1970s and 1980s steel depression hit the city of steel. The city thought it could save $1 million annually by just closing the facility." A group of concerned citizens, Save the Aviary, Inc., organized to stop the closure. They did not ask the city to continue running it. They did not demand that taxes be raised or budgets cut elsewhere. Rather, they asked to be allowed to run the aviary. After a great deal of negotiation, the city agreed. Shortly after it became a private entity, the federal government designated the institution "The National Aviary in Pittsburgh" in recognition of its work in the area of conservation, but, unlike the National Zoo and other "national" entities, the designation carries no federal money with it.
As in the case of other recent privatizations, the new organization did not hire a city employee to run it. Rather, it hired someone with a vision. The director is forced to run the institution like a business: budgets must balance. Thanks to a dedicated staff (they have to be; they took drastic pay cuts to keep the aviary open and are only now back to industry-standard salaries), the National Aviary is making great strides.
New construction is underway the first new capital improvements in 25 years. Exhibits that cannot be replaced right away have been spruced up. Local industry is being courted to help rebuild the facility. Local advertisers are generous enough to provide free billboards, newspaper space, and the like (not surprisingly, few felt the need to provide this sort of assistance when it was a city institution).
While the aviary is still in its formative years, the prognosis is good. Each year is a record year (the 1997 operational budget is the largest in the institution's 45-year history), special events are becoming more popular, the local media has been kind, a new regional base of support has been established, and local business has been receptive. Once so burdensome to the city that it was to be closed, the aviary provides yet another example of private enterprise successfully doing what a municipality could not. Before privatization, the institution received 83 percent of its support from tax dollars; today the share is 57 percent and shrinking, Baker said. He attributes the success thus far to "creative, workable, logical capitalism and business sense."
The Pittsburgh Zoo
Shortly after the National Aviary was privatized, the Pittsburgh Zoo was turned over to private ownership as well. Several years earlier, the city had hired a young veterinarian from South Carolina, Barbara Baker, to serve as zoo director, a drastic change from previous administrators. Her diagnosis was simple (albeit not universally well received): the city must relinquish control if the zoo was to prosper. Among other things, she observed to the astonishment of many that 38 people were involved in purchasing a banana (and, as a result, an employee sometimes drove to the local grocery store to purchase bananas while they were waiting for the "official" lot to be approved and delivered).
The city council meetings were heated, with members of the zookeeper's union expressing their opposition to Dr. Baker's plan. But the citizens group Save the Pittsburgh Zoo ultimately prevailed, and the Zoological Society of Pittsburgh ultimately won control, with Dr. Baker staying on as president and chief executive officer.
What has happened since? Massive expansion voluntarily paid for by the local community, and increased attendance, membership, spending, and private corporate contributions. And it now takes just one person to buy a banana.
Without having to directly compete with classrooms and jail cells for funding, the Pittsburgh Zoo has been able to revamp its infrastructure, expand its educational offerings, build a new children's zoo, and attract any number of local corporate partners.
Lessons to Be Learned
After privatization, both institutions started big expansion programs resulting in a better time for the visitors and a better life for the animals. Even though enlarged, each institution costs the local community far less than before in direct government support. (Each institution initially got a stipend to help out until it could become entirely self-sufficient.) The employees once city workers have had to adjust to life in private industry but most have done so without incident. No massive firings took place. The public is generally unconcerned about the legal technicalities; they notice only improved facilities, friendly customer service, and a better animal collection. Educational programs continue and, in fact, have been increased at each institution.
What about admission prices? When forced to break even, the aviary had to evaluate its prices and eventually raised them slightly. (Its 1992 price was 50 cents, less than a cup of coffee and certainly less than the break-even price.) The zoo has not dramatically changed its prices since privatization. Prices cannot as we are sometimes told they will go "through the roof." Because the budget has to balance, they cannot rise above the market level. Given a choice (something that people did not have when these institutions were tax-funded), people will not pay more for a product or service than it is worth to them.
Most important for animal lovers, both institutions have secured their futures against city budget cuts. By its very nature, any municipality will have a number of entities competing for scarce resources. While new schoolbooks and a new rhinoceros might be equally important, the former is often an easier political sell. By being able to focus on doing only one thing well, private enterprise is able to ensure that funds are not diverted to some other program. Says aviary director Dayton Baker, "Privatization allows us to generate many more dollars for what we believe in as an organization your mission conservation, etc., and then allows us to tackle the enormous job of meeting the challenge. The city system has too many limits and controls and non-visionary thinking to allow such progress."
In addition, private enterprise is not burdened by political pressure on staffing. When the city is removed, there need not be any more concern about parity between a veterinarian's salary and a deputy sheriff's salary. Further, personnel at least at the executive level can be hired on the basis of merit rather than seniority.
Finally, private enterprise can tap the local community for support. Few of us are willing to support any municipal enterprise. First, most of us feel we provide enough support to municipalities by way of taxes. Second, there is always doubt about whether the money will really be used for its designated purpose; general funds tend to get large and unwieldy. Third, recognition for major donors is not available under a municipal system. Private enterprise avoids these problems and can thus raise money.
It's Not Just About Zoos
The moral here is simple: it can be done. Private enterprise can and will take over services that the government vacates. Unlike garbage collection or parcel delivery, the zoo industry isn't very profitable. Most facilities have massive structures that must be heated, cooled, and maintained; large payrolls of professionals and specialists; and increasing competition in an ever-tightening recreational market. Nevertheless, there are those who are willing to step in and take over from the government. As Dayton Baker put it, "It is more of a motivational thing motivation to meet the bottom line always and to exceed expectations whenever possible motivation to be the best at what we do motivation to be able to command our own destiny and be able to take an organization as far as it will go in ways no city bureaucrat could possibly imagine." As we can see from the Pittsburgh Zoo and the National Aviary in Pittsburgh (and any number of other privately run zoological parks and aquaria), the government can successfully transfer its role to private enterprise.
1. Barbara Baker (president and CEO, Pittsburgh Zoological Foundation and director of the Pittsburgh Zoo), 1994 Zoological Association Annual Conference Proceedings, p. 383. [back]
2. Ibid. [back]
This piece originally appeared in The Freeman (August 1998) and is reprinted with the kind permission of the Foundation for Economic Education.
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