It would work. Maywood, CA fired every city employee and outsourced the work. The New York Times reports that residents feared for the worst, but are so far surprised with the good results:
The apocalypse never arrived. In fact, it seems this city was so bad at being a city that outsourcing -- so far, at least -- is being viewed as an act of municipal genius.
"We don't want to be the model for other cities to lay off their employees," said Magdalena Prado, a spokeswoman for the city who works on contract. "But our residents have been somewhat pleased."
Read the full story at the New York Times.