LWVUS Study

LWVDenver Presentation
2012

www.lwv.org/member-resources/privatization
Concepts
We have government of the
people, by the bureaucracy,
for the bureaucracy.
one of the most influential
economists of the 20
th
century.
"His radical idea that governments
should spend money they don't have
may have saved capitalism. Times
Magazine, 1999
Milton Friedman, Nobel Prize
in Economics, 1971

John Maynard Keynes,
The purpose of this study is to identify policies and
parameters that should be considered when any
governmental entity is planning to undertake
some type of privatization process.

Purpose of Study
Scope of Privatization Study
The purpose of this study is to identify those
parameters and policy issues to be considered in
connection with proposals to transfer federal,
state, or local government services, assets, and/or
function to the private sector. It will review the
stated goals and the community impact of such
transfers and identify strategies to ensure
transparency, accountability, and preservation of
the common good.
Dont Panic
Concepts
Privatization: The Public Policy Debate

Privatization is a movement to deregulate private
industry and/or transfer many government
services, assets and functions to the private sector.
Definition of Privatization
Classic
Total transfer of assets and authority from the
government sector to the for profit or nonprofit sector
Purposes: Shrink government; Reduce risk and cost
Reason: Often a response to economic downturn; Ideology
Definition of Privatization
Modified
Private sector provision of a service once/also provided
by government along with private sector funding
(Proprietary colleges)
Private sector provision of a service with public sector
funding (Direct funding for a private college; Private
trash collection paid for by tax revenue)
Public sector provision of a service with private sector
funding (Student tuition at public colleges)
Definition
Deregulation

the lessening of regulatory provisions
that govern individuals, entities, and
systems.
Definitions
Decentralization

Moving the authority for a function from
a central agency to an agency closest to
where the activity is actually
performed.
Privatizing Actions
deregulating reducing regulations (often used as a defining
characteristic of privatization),
contracting with the private sector to purchase a service (road
construction),
establishing incentives to encourage the private sector to
provide a service,
abandoning or shedding of services,
reducing demand for a service,
establishing quasi-public organizations (government
enterprise, charters),
establishing separate corporations - profit and nonprofit
(authority),
supplying temporary help on the part of the private sector,


issuing vouchers (K-12 education),
issuing waivers,
selling or giving away government owned assets,
establishing franchises,
leasing,
subsidizing or making available grants to the private sector,
relying on user fees rather than tax dollars to fund a service
(hunting licenses),
discontinuing subsidies to public entities (almost doing this
with public higher education in Colorado),
providing joint funding,
establishing public/private partnerships, and
setting up consumer self-help processes, or using volunteers

Summary
For the purposes of this study, privatization can
be considered as occurring any time the
government gives up some amount of control in
any of several different ways. Examples include:
Authorities (Regional Transportation District)
Charters (K-12 schools)
Deregulation (Higher education procurement in
Colorado)
Transfer of assets to a private entity (Workers
Compensation/Pinnacol)
Contracting with for profit or nonprofit entities (e.g.,
building contractors, social services)
Turning over a service (provision of, funding of ) to
an other than government entity


History
Shift from central control to less central control late
1960s/early 1970s
End of regulatory capitalism (Yergin 1998, 8)
regulatory backlash
Reducing the size of government
Revitalizing entrepreneurial spirit
Restoring influence of market forces
Reducing taxes
Recent Examples of
Privatization or Suggestions to
Privatize
Social Security
Medicare
Student loans
Military service
Highways, roads, and
bridges
Corrections
Education
Libraries


Parks
Court services
Free Trade
Eliminate food safety
Eliminate environmental
safety
Establish a flat tax
Eliminate Workers
Compensation
Sale of Conrail, government owned/operated rail
system
Use of private entities for military support services
Deregulation of airline, natural gas, electrical and
telecommunications industries

Attributes Attached to
Public Entities
Part of state
Geographic boundaries
Public action
Public welfare
Public as beneficiaries
Public accountability
Base on certain principles: e.g., Equality, Security,
Fairness, Safety
Attributes Attached to Private
(nonprofit and for profit)
Entities
Part of the economy
No boundaries except those self imposed
Private action/Operated by individuals
Individual freedom
Privately held assets
Benefits individuals

What should the government do?

Public Safety
Defense
Justice
Protect public health/environment
Education
Ensure democracy
Other?
Does government have to do these things
itself?
What is the balance between government,
business, and civil society?
How can the balance best be fostered?

The public agenda of privatization requires a
close examination of the proper relationship
between government, business and civil society.

Major Issues in Privatization:
Transparency and Accountability

Sunshine Laws

Freedom of Information Act

Community Engagement

Can these requirements be applied to privatization?
Some thoughts on Choosing
Privatization
How can a community vision be developed?
What are the goals and which form
(government/privatization) would best achieve
the goals?
Which concept would best achieve quality?
Which is the least costly while still maintaining
other goals?
How will personnel be affected?
What is the political resistance?
What are the legal constraints?
Which provides more choice?
What are the risks and hazards?
Reading List - LWVUS
Consensus Questions Introduction
Strategies for Best Practice
State Level Privatization 2011
Privatization: The Public Policy Debate
The Legal Framework of Transparency and
Accountability within the Context of Privatization
Reading List - LWVUS
Deregulation of Railroads
Privatization of a Publicly Owned Waste Water
Treatment Plant
Subcontracting Public Education
Privatization of Prisons

Reading List Other
Decentralization in U.S. Public Higher Education
Sections on Governance, Privatization and
Deregulation and Choosing Privatization (Larson
2003)
Government Privatization: History, Examples, and
Issues (Commission on Government Forecasting
and Accountability 2006)
Privatization: Lessons Learned by State and Local
Governments (U.S. General Accounting Office
1997)
The Meaning of Privatization (Starr 1988)

Comments & Questions