Privatization

Privatization

Acknowledgments

Work on this Article was supported by a grant from the Pew Charitable Trust for the study of "Public Sector Reform and Privatization." An earlier version was completed at the Institute for Advanced Study at Princeton, New Jersey and delivered at a conference there on " The Public Sector and Its Problems." The Article will also appear in a slightly different version in a volume on privatization and the welfare state edited by Alfred Kahn and Sheila Kamerman. I wish also to express my general debt to Stephen Holmes, Jeffrey Weintraub, the members of the Yale Legal Theory Workshop, and others from whom I received ideas and suggestions .

Growth of Privatization

"Privatization may be a popular buzzword today, but the concept has been around since the first municipality hired Joe and his wagon to pick up the trash instead of getting city employee Frank to do it," remarked Public Works. "The difference today is that privatization is encroaching into all areas of public administration. And governments are expecting public agencies to compete—dollar for dollar—with private operators or surrender management of services. For years, our country has supported the idea that a public workforce was the best provider of essential services. Public employees would reliably and efficiently protect the public safety and deliver water and power; maintain roads and bridges; collect refuse and treat sewage…. In return, public employees enjoyed a certain job stability and a wide range of desirable benefits." But proliferating responsibilities, fiscal belt-tightening, sometimes lackluster performance by workers, and—in the cases of larger cities, especially—festering problems with infrastructure led increasing numbers of city planners and public policy makers to look to privatization.

Today, several of the nation's largest cities, including New York, Indianapolis, Philadelphia, and Phoenix have contracted out a broad spectrum of services that were...