Public Management of Privatization

Americans are inclined to adopt a distinctive set of expectations about private firms and public bureaucracies, private markets and public policies. The private sector is assumed to be inherently dynamic, productive, and dependable, and private institutions are thought to be intrinsically superior to public institutions for the delivery of goods and services. These expectations are so broadly held that assertions and ideas in accord with them are often defined as natural and inevitable, whereas alternative views are dismissed as unrealistic and unworkable. The current debate about privatization illustrates these tendencies. Although private delivery of public services has always played an important role in the United States, in the 1980s a number of commentators and public officials have offered proposals to expand the role of the private sector by shifting from public sector provision of goods and services to private sector alternatives. The justifications include improving the performance of public assets or service functions, cutting back public expenditures and taxes, depoliticizing policy decisions, generating budget revenues through the sale of public assets, and reducing the power of public sector unions (Hanke, 1987). Unfortunately, all too often the evidence to support privatization initiatives has been anecdotal rather than based on careful empirical analysis. Nonetheless, these initiatives have been given a great deal of credibility as the best way to improve the productivity of government. Enough words have been written about privatization over the past decade to fill many library shelves-too many for the busy public manager to sort through to distinguish those initiatives that offer real promise for the improvement of services from those that are based largely on unexamined assumptions about the responsiveness and efficiency of private institutions. Our goal is to do the sorting. We will try to get past the rhetoric for and against privatization to determine where and under what circumstances