The Two Faces of Privatization

Abstract

Much has been written in the past few years about the effort to surrender more and more government programs and services to the sector. The merits of this phenomenon called have been extolled, its shortcomings criticized, and its advantages and disadvantages discussed. Some of the debate reflects ideological overtones, as certain proponents clearly see privatizing as a means to shrink government. Others with a pragmatic view are more concerned with the question of whether can deliver on its promise of providing public goods and services more economically than can be done under traditional government auspices. Still others believe that the movement reached its zenith under the Reagan Administration and will surely wane in the 1990s.[2] Then there are those who argue just the opposite, that will continue to grow not only in the United States but throughout the world.3 Regardless of what happens in Washington, most assuredly local governments, which face seemingly unremitting fiscal pressures, will likely remain interested in certain versions of for some time to come.4 In fact, proponents of contracting out can already point to more and more successful examples of how cities have saved money by the use of this particular alternative to municipal monopolies.5 Much of the argument for service delivery has an economic rationale at its core. Although the concept of can take on several meanings, Bailey insists that a clear unifying thread can be identified--maximizing efficiency.6 Such devotees are committed to the presumed advantages of the market. They contend that the private sector is inherently more efficient than the public sector, primarily because it brings increased competition and reduces governmental bureaucracy and red tape.7 Others are less sure, although their arguments are more wide ranging and more diffuse at times. Most of those who are skeptical if not hostile do agree that the movement has implications that go beyond economic considerations. Among these, some will not concede even on the efficiency issue. Starr, for example, asserts that conservatives who favor privatization ignore impressive examples of inefficiency, waste, and corruption in the American experience with defense, construction projects, and health care--all mostly produced privately with public dollars.8 Others worry that contributes to a further unfortunate blurring of the distinction between public and private. Moe maintains that economic considerations should not be paramount, that decisions on the delivery of public services must be made primarily on the basis of whether or not the

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