Editors’ Note: This article is from NPQ‘s new, spring 2015 edition, “Inequality’s Tipping Point and the Pivotal Role of Nonprofits.”

Over the course of sixty years, the United States has moved human services from public to private provision. The poor, who used to go to county health departments for their medical care, now go to nonprofit health clinics or even for-profit hospital emergency rooms. Mental healthcare famously moved from state hospitals to nonprofit outpatient services. Vocational training is now offered by nonprofit contractors. Even legal services in many jurisdictions are handled by nonprofit legal clinics or private attorneys funded by counties as piecemeal public defenders. As Steven Rathgeb Smith and Michael Lipsky have articulated, the public-private “contract regime” is here to stay.1

Privatizing human services has had many positive aspects. First, it has allowed for greater flexibility. Clients potentially have choices. Nobel laureate Elinor Ostrom and her husband, Vincent, held that this would create a polycentric system, where choice leads to what they called “public economies”;2 public economies allow for competition, which in turn can lead to better services for all. Second, privatization can result in services t