PRIVATIZATION/Book examines outsourcing pros and cons
From solid waste pickup to charter schools, privatization has invaded every service that falls under the local government umbrella. Now one of the phenomenon’s leading authorities, E. S. Savas, has published “Privatization and Public-Private Partnerships,” a book that takes a look at the changing face of privatization, the pros and cons of outsourcing and the elements that have influenced privatization from the beginning.
Savas, a professor of public affairs at New York’s Baruch College, has served as an assistant secretary in the U.S. Department of Housing and Urban Development, and he was first deputy city administrator of New York. Frustration with New York’s city services prompted him to look at privatization, although his initial suggestions were met with anything but enthusiasm. “Early attacks on privatization were based on the mistaken assumption that it was antigovernment; it was not,” he notes.
In fact, Savas’ overriding theme is that competition can only help governments deliver the services they are required to provide to residents. He notes that, in large and fast-growing cities, it is difficult for governments to keep up with the demand for services, which has increased because of demographic changes in population, income growth and a desire to preserve existing programs, the latter a larger problem than one might expect. Maintaining current services depends on the individuals who are charged with providing the services, and many of those individuals have fallen down on the job.
Savas cites several examples in which city employees were running up costs and not completing jobs quickly enough because they were taking too many breaks or otherwise wasting time. For example, in one city, bus drivers were being paid for 14 hours of work when they drove for four hours each morning, took a four-hour midday break and drove four more hours each afternoon at overtime pay of time-and-a-half.
The book, however, does not point to privatization as a panacea. In a chapter titled “Alternative arrangements for providing goods and services,” Savas lists the good and bad points about contracting. Pros include offering a yardstick for comparing costs; limiting the size of government in terms of the number of employees; and creating opportunities for entrepreneurs. Arguments against subcontracting include corrupt practices in awarding contracts; layoffs of government workers; and the cost of managing the contract.
He also lists methods of privatization — contracts, franchises and deregulation — and the advantages and disadvantages of each. Savas also includes several guidelines for government officials who are looking to privatize; and steps to establishing open competition through requests for proposals.
Before-and-after case studies compare different services in cities and counties, the number of contracts, the estimated savings and productivity gains. (The case studies are basically success stories involving privatization and public-private partnerships.)
“Privatization is more a political than an economic act,” Savas notes. Like any political move, privatization has its sources of opposition, and it is important for governments to consider the big picture before proceeding with an action that likely will change their entire operations.
Published by Seven Bridges Press/ Chatham House Publishers, New York, the book is $32.95.
