Opponents present case studies that show public sector employees can provide more efficient alternatives to privatization (Sclar 1997). "Cities , Unions, and the Privatization of Sanitation Services." Journal of Labor Research 15 (1): 53-71. "Municipal Unions and Privatization." Public Administration Review 51 (1): 15-22. "Contracting Out in New York State: The Story the Lauder Report Chose Not to Tell." Labor Studies Journal (Spring): 3-29.The expertise and experience of many government employees may make them better at providing government services, and management techniques like total quality management are making the public sector more efficient. This article analyzes the relationship between unionization and government decisions to contract out sanitation services using a conceptual framework that emphasizes political considerations. The authors examine the impacts of unionization on local governments' decision to contract out sanitation services, based on a survey of 1,541 municipalities between 19. The author sees privatization as a disruptive, harmful way of cost saving. "What Impact Has Privatization Had on Pay and Employment: A Review of the UK Experience." Industrial Relations 52 (3): 554-579. "Subcontracting in the Public Sector: The New York State Experience." : Cornell University.
They note that in some places creating the competition necessary for effective contracting is impossible, and suggest that in practice privatization is more complicated than it seems. She concludes the article by examining the implications of privatization’s actual results for local governance. In this classic article based on public choice theory, Charles Tiebout puts forth a model for determining the optimum expenditure level for public goods. "Decentralization, Intergovernmental Relations and Markets: Towards a Post-Welfare Agenda? 1-26 in Decentralization, Local Government and Markets: Towards a Post-Welfare Agenda, ed. Both decentralization and privatization reflect decentralizing trends from state to market and state to local levels of government. "Competition, Cooperation and Local Governance," chapter 19 pp 252-262 in Challenges for Rural America in the Twenty First Century, edited by David Brown and Louis Swanson, : Penn State University Press. The intention of quasi-markets is to promote consumer sovereignty and efficient provision of goods and services. Coasian bargaining creates the potential for market solutions to the provision of public goods. This article provides an example of Coasian bargaining with respect to land use planning. This article argues that this interpretation of the Coase theorem is essentially incorrect; in fact it misses some of the aspects that Ronald Coase considered key in formulating his idea. The authors discuss the different political lenses through which privatization is viewed. Standard economic measures used to make privatization decisions fail to accurately assess the real costs and benefits of care. Chapter 2 pp16 – 48 in The Power to Chose; Bangladeshi Women and Labor Market Decisions in London & Dhaka, : Verso, 2000. "Bureaucracy, Organizational Redundancy and the Privatization of Public Services." Public Administration Review 55(2): 193-200. "The Emperor's New Clothes: Transit Privatization and Public Policy." Washington, D. This article uses the example of the Urban Mass Transportation Administration, which has mandated state and local transit authorities to privatize their operations, to illustrate that private sector delivery of public goods and services is not nearly as advantageous as its proponents claim. This article summarizes the results of a survey conducted by the International City/County Management Association (ICMA) in 1992 on local area alternative service delivery, focusing on the involvement of workers and citizens in decisions to contract for government services. Pack evaluates the success and sustainability of service cost reduction from the perspective of the economic model of cost minimization through competitive bidding. The Political ‐ Economics of Infrastructure Finance: The New Sub Prime, New York: Center for Sustainable Urban Development, The Earth Institute Columbia University. Sclar combines academic literature and case studies to argue that the current Public-Private Partnership model risks undermining the public good aspect of infrastructure provision. While generally supportive of the use of public-private partnerships in the US transportation sector, Geddes outlines important best practices and policy issues for public-sector officials to consider before entering into a PPP contract. "The Financial Engineering of Infrastructure Privatization." Journal of American Planning Assocation, 78(3):300-312. "Rural-Urban Differences in Privatization: Limits to the Competitive State," Environment and Planning C: Government and Policy 21(5): 703-718.
He treats residents as consumers, who “shop around” for the communities that best fit their preferences. "Competition and Local Government: A Public Choice Perspective." Urban Studies 33 (4-5): 703-721. Competition Critiques: Competition is rarely found in markets for public goods because of the fundamental structure of such markets. Lowery contends that quasi-markets often fail to meet these objectives due to 1) failure of market formation (lack of competition), 2) failure by preference error on the part of consumers and 3) failure by preference substitution (the difference between individual and collective wants). Market Structures and Public Contracting," Chapter 4 of You Don’t Always Get What You Pay For: The Economics of Privatization. In this chapter, Sclar challenges the argument that privatization creates competition, and therefore efficiency, in the public sector. "Restructuring the State: Devolution, Privatization, and the Geographic Redistribution of Power and Capacity in Governance." pp. However it raises the issue of transactions costs which may be hard to manage. Staley and Scarlet propose changes to current planning processes, to streamline the development process and reduce transaction costs. "The Failure of Market Failure," Journal of Policy Analysis and Management 18(4):558-578. Several of his assumptions are ignored in the discourse. "The Political Underpinnings of Privatization: A Typology". They emphasize pragmatic privatization as a means of cost-cutting, tactical privatization as a way of rewarding allies, and systemic privatization to change institutional structures and societal ideologies. This article provides a theoretical critique of privatization and its potential effects on justice, security, and citizenship. Kabeer discusses two contradictory positions in social science theory that attempt to explain social and economic change. Lehman takes the special case of public lands and shows the limits of market allocation mechanisms. Privatization alone may not lead to better quality or cost reduction in public service delivery. The Reason Foundation, established in 1978, provides excellent materials on privatization (see According to Geddes, it is important to develop the appropriate “infrastructure of an institutional nature” in order to successfully benefit from these types of partnerships, as their initiation, negotiation, and management can be particularly complicated. There has been great debate as to why public sector entities so often undervalue what a project will be worth long-term to a private buyer. Despite two decades of experience with privatization, US local government use of contracting in public service delivery remains relatively flat.
In New York State, labor concerns are also a major issue.
Although empirical studies do not provide clear evidence on the costs and benefits of privatization, public perception and pressure for improved government efficiency will keep privatization on the government agenda.
A review of recent literature on the theoretical and practical debates on privatization follows.
A set of links to Professor Warner's research on national and New York State trends is also available on this site. Savas and Elliot Sclar lay out key theoretical and empirical arguments for and against privatization.
The privatization of the pubic sector has been one of the defining policies of the world economy since the 1970s. The Spanish scholar Germà Bel addresses where the idea of privatization comes from.
State-owned utilities and monopolies have been sold off or transferred to the private sector on the neoliberal theory that “the market” is more rational and better able to manage such enterprises. Neoliberalism, predicated on a primacy of the market, is the overarching ideology of privatization.
The Contracting Process: Issues surrounding contracting out include the cost of information and monitoring and the need to create a level playing field for competitive bidding between public workers and the private sector. "Privatization and Its Reverse: Explaining the Dynamics of the Government Contracting Process" Journal of Public Administration, Research and Theory, 14(2):171-190. This article shows that the level of contracting back in previously privatized services is significant among local governments in the US. : International City County Management Association. Between 19, the most common forms of alternative service delivery (privatization to for-profits and non-profits and inter-municipal cooperation) increased only slightly. They find both alternatives promote efficiency, but equity and voice are more associated with inter-municipal cooperation than privatization. These structural constraints limit the applicability of competitive approaches to local government service delivery. Using ICMA data we can track the dynamics of local government contracting.
The contracting process is dynamic (contracting out and back in) and requires governments to play a market structuring role. A statistical model assessing the reasons for such behavior is presented. The stability in these trends belies a more dynamic process of contracting out and back in which reflects the key market structuring role played by local governments. Our results suggest that cooperation, as an alternative to privatization at the local level and as a source of redistributive aid at the state level, may provide a more equitable alternative for disadvantaged rural communities. We find contracting back in (or reverse privatization) is growing in importance.