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Organized labor, however, is very concerned about layoffs, erosion of wages and benefits, and decreased levels of union membership with privatization.Empirical studies show that privatization has not had a major impact on wages and working conditions (Pendleton 1997), but it can have significant effects on labor relations (Hebdon 1995).
Search the database of case studies on local government restructuring in : Community and Rural Development Institute, Cornell University Hebdon and Gunn provide a brief overview of the privatization debate, at the level of local service delivery. It also introduces the experiences of other states and cities, and the special experiences gained in Britain.
Another major issue is the impact of privatization on job security and employment.
Most privatization research is based on case studies. Proponents argue that private firms are more efficient than government because of economies of scale, higher labor productivity, and fewer legal constraints. Savas, an advocate of privatization, describes the theory and practice of privatization and alternative service delivery arrangements, illustrating the appropriate use of various privatization techniques. You Don’t Always Get What You Pay For: The Economics of Privatization. Elliot Sclar lays out and critiques the standard market-based arguments for privatization, using local government case studies.
He faults government service provision for its monopoly status and inability to be responsive to citizens' needs, resulting in inefficient, one-size-fits-all services. He concludes that advocates of privatization should proceed with caution. This book outlines a theory for the potential of Coasian-style bargaining to work in complex urban contexts.
For more discussion of this phenomenon see, Hefetz and Warner 2004 Privatization and its Reverse. Hebdon "Local Government Restructuring in New York State: Summary of Survey Results" Restructuring in New York State primarily involves public sector innovation rather than privatization.
Robert Smithson Central Park Essay - Privatization Research Paper
For a more descriptive account with case studies, see Warner and Hefetz 2001 Privatization and the Market Structuring Role of Local Government. 2001 "Local Government Restructuring: Privatization and Its Alternatives," Journal of Policy Analysis and Management 20(2):315-336. "Structuring the Market for Service Delivery: A New Role for Local Government." pp 85-104 in Local Government Innovation: Issues and Trends in Privatization and Managed Competition, Robin Johnson and Norman Walzer eds. Case study analysis of reverse privatization among New York State towns and counties shows how governments engage the market to ensure competition, control and attention to community values. Intermunicipal cooperation was the predominant form of restructuring, while privatization was the second most common form of restructuring.As Bel notes, “German privatization of the 1930s was intended to benefit the wealthiest sectors and enhance the economic position and political support of the elite.” The Nazis sold off public ownership in “steel, mining, banking, shipyard, ship-lines, and railways.” These had originally been nationalized in the early 1930s because of the economic disaster of the Great Depression.However, Bel argues that Nazi privatization was set “within a framework of increasing state control of the whole economy through regulation and political interference.” Uncooperative industrialists, like the head of the Junkers aircraft company, were removed from their positions; the market was very much controlled by the party. Then, state monopolies on match production, life insurance, telephone networks, and tolled highways were ended after Mussolini came to power.The Ansaldo company, which produced boats, trains, airplanes, and naval equipment, had initially been nationalized by the Fascists in 1921 when it went into bankruptcy. The earliest Fascist manifestos “rejected private ownership and industrial interests.” Considering many of the first party members were ex-socialists like Mussolini himself, this should not be surprising.But once in power, the Fascists reversed themselves and called for an end to the “Collectivist State.” Bel notes that Mussolini was a tactician above all, and quotes historian James Gregor: “there was little that was conservative, liberal, or politically democratic about his most fundamental convictions.Critics argue that the nature of government services makes many of them inappropriate for privatization. Privatization, first propagated by Margaret Thatcher in 1970, predicted market competition would allow for greater cost-efficiency, increased consumer voice, and enable service integration in the delivery of urban services. “Privatization and Urban Governance: The Continuing Challenges of Efficiency, Voice and Integration,” Cities, 29 (Supplement 2) s38-s43. "Analyzing Collective Action." Agricultural Economics 41(S1) (November 2010): 155–66. Agglomeration creates catallaxis (knowledge exchange) and new possibilities for spontaneous coordination that do not require government planning. "Public Choice, Pigouvian and Coasian Planning Theory," Urban Studies 35(1):53-75 This article contrasts Pigouvian (welfare) and Coasian economics in the context of planning theory, and gives examples from land-use planning. "Market Oriented Planning: Principles and Tools." : Reason Public Policy Institute. The common interpretation of Coase theorem is that markets fail when property rights are poorly defined, and the way to combat this problem is to allow individuals to negotiate among themselves until they reach an ideal solution.They also point out that contracting may entail hidden costs, because of lack of information, the need for monitoring, and "low-ball" bidding. In her article, Warner examines these promises of privatization and whether or not they are supported by empirical evidence. Competition: The theory of privatization is fundamentally based on the notion of competition and the efficiency and choice that it engenders. "A Pure Theory of Local Expenditures," Journal of Political Economy 6-424. This article puts privatization in a theoretical context. "Consumer Sovereignty and Quasi-Market Failure" Journal of Public Administration Research and Theory, pp.137-172. Kodras outlines some of the major arguments for and against three methods of changing how government services are provided: privatization, devolution to lower levels of government, and simply abandoning service provision to the nonprofit sector. Ostrom puts forth a theoretical framework that attempts to reconcile rational choice theory with norm-based behavior regarding collective action problems. Webster suggests that Coasian bargaining may provide solutions to the problem of public goods provision. Reason Public Policy Institute promotes market solutions over government regulation. This interpretation lends support to a conservative, pro-market view of polluter-victim situations. Folbre discusses the adverse effects privatization and competitive pressures on the quality of services in care sectors. Stories of structure and agency in the social sciences.". "Privatization: involving citizens and local government employees." Baseline Data Report 26 (1): 1-7. "Privatization and Cost Reduction." Policy Sciences 22: 1-25.The privatization of the pubic sector has been one of the defining policies of the world economy since the 1970s. The Spanish scholar Germà Bel addresses where the idea of privatization comes from.State-owned utilities and monopolies have been sold off or transferred to the private sector on the neoliberal theory that “the market” is more rational and better able to manage such enterprises. Neoliberalism, predicated on a primacy of the market, is the overarching ideology of privatization.The spread of the privatization movement is grounded in the fundamental belief that market competition in the private sector is a more efficient way to provide these services and allows for greater citizen choice.In practice, however, concerns about service quality, social equity, and employment conditions raise skepticism of privatization.