US state government privatization: Implications for social equity and inequality?

Privatization of state government services is commonplace, but our understanding of its effects is limited by data availability. We study the relationship between American state government contracting and public sector wages. Governments have used public sector employment to support a variety of goals, including social equity and economic development, but privatization, as a new public management (NPM) reform, may shift the focus. Our empirical analysis shows that state privatization of service delivery is associated with decreases in the public sector wage premium, but that these effects are not driven by gender, race, or low-levels of educational attainment. The fidelity of the implementation to NPM values conditions these effects. We also find that contracting service delivery is associated with a lower public sector wage premium for middle-class workers.     

Is Activity-Based Costing Up to the Challenge When It Comes to Privatization of Local Government Services?

After its initial success in the private sector, activity-based costing (ABC) has been embraced by the public sector as an analytical tool that can be used to improve the efficiency of government operations, especially in the area of the privatization of operations. Despite claims that ABC can greatly enhance the evaluation of how to most efficiently deliver services, there are significant obstacles that must be overcome before ABC can be effectively implemented. In order to underscore the challenges facing successful ABC execution in the public sector, the use of activity-based cost accounting by the City of Indianapolis for its privatization initiatives is discussed. Generally ABC is not up to challenge of providing local governments with the tool necessary to comprehensively evaluate direct services and determine which are candidates for contracting out or privatization.     

The Public/Private Cleavage in a Welfare State: Attitudes Toward Public Management Reform

This study contributes to the growing literature on differences in attitudes between public and private sector employees, particularly with respect to their receptivity or resistance to public management reforms. We begin by asking the question: to what degree does perceived self-interest play a role in accounting for attitudes toward public management reforms such as downsizing, privatization, and public spending? Using attitudinal data from Sweden, a social welfare state with a large public bureaucracy, a tension is observed both among public employees in different levels of government and between public and private sector employees. In the context of public management reforms, national government employees emerge as more right-leaning politically and more supportive of public management reforms than those working in local government. The analysis finds, particularly among national government employees, that while interest as measured here is strongly related to attitudes toward reform, status as a public employee and status as a public bureaucrat are not as significant as other components of interest in accounting for attitudes toward public management reform.     

Employee buy-outs and privatization: Issues and implications for LDCs and post-communist countries of UK experience

Privatization has become an international phenomenon. Most attention has been devoted to privatization by stock market flotation or by sales to third parties. Management and employee buy-outs present a third main possibility for transferring assets from the public to the private sector. This paper discusses the scope for privatization buy-outs in LDCs and ‘post-communist’ economies in the light of conceptual issues and UK experience. The positive aspects of privatization by management and employee buy-outs concern: ownership incentives; the introduction of control mechanisms by institutional investors and various types of financing instruments; indigenous ownership, decentralized privatization; greater incentives in firms where specific skills are involved; the ability to improve trading relationships between a privatized supplier (the buy-out) and its former parent, which remains in the public sector where the supplier is heavily dependent on its former parent; and the general contribution of buy-outs to a redrawing of a state firm's spread of activities to create a more viable entity. The potential problems with buy-outs concern such issues as: absence of entrepreneurial skills; the scope of their applicability; the potentially restrictive effects of debt and debt-like finance; the need to deal with investment requirements of firms; the lack of personal wealth; the use of inside information by managers to purchase a firm at a price which is to the detriment of the public interest; and the possibility of social and political problems if individuals are perceived to enhance their personal wealth significantly as an accident of where they work. There are means by which many of these potential problems can be dealt with and the paper addresses these.     

Traditions and Public Sector Reform: Comparing Britain and Denmark

A governmental tradition is a set of beliefs about the institutions and history of government. In this article I argue the Anglo-Saxon governmental tradition interprets public sector reform differently to the Rechtsstaat , participation tradition of Denmark, leading to different aims, measures and outcomes. In the Introduction, I define NPM arguing that is has become everything and is, therefore a meaningless term. I identify six dimensions to public sector reform: privatization, marketization, corporate management, regulation, decentralization and political control. In section 2, I describe the six dimensions of public sector reform in Britain and Denmark. In section 3, I explain the idea of a governmental tradition and argue the idea is essential to understanding the differences between Britain and Denmark. In section 4, I compare British and Danish governmental traditions, arguing the key differences lie in beliefs about the constitution, bureaucracy and state-civil society relations. Finally, I provide a summary explanation of the differences and argue that traditions not only shape the aims, measures and outcomes of public sector reform but also lead to different interpretations of reform and its dilemmas. In Britain, the key dilemma concerns central steering capacity. In Denmark, the main dilemma is democratic accountability.     

THE IMPLICATIONS OF HIGH LEVELS OF PUBLIC SECTOR DEBT FOR ECONOMIC POLICY-MAKING: THE CASE OF SOUTH AUSTRALIA

Abstract: The relatively small and open South Australian economy has been facing the difficulties associated with the structural adjustment of its industry for over 15 years. In addition, the South Australian public sector has been contending with financial difficulties largely as a result of a reduction in grants from the commonwealth before the failure of the State Bank of South Australia. This paper reviews the growth and current level of government indebtedness in South Australia and discusses which group(s) is likely to bear the main burden of such debt. The main consequences of high levels of state public sector debt, including budgetary inflexibility, are also examined. The paper suggests that it will be necessary for relative wages and prices to adjust more freely if the negative impacts of an inevitable state government budgetary consolidation are to be minimised. If wages and prices are not free to adjust then unemployment will continue to take the brunt of the adjustment process. In addition, out-migration of businesses and people from South Australia will accelerate, leading to a further erosion of the taxation base. The State Bank indemnity arrangements and consequent levels of public sector debt incurred will require the state government to reduce the level and quality of services provided by the state public sector, sell state public sector assets and further improve efficiency and effectiveness. However, there are a number of important arguments why taxation should be an important means by which the South Australian government moves to retire public sector debt as soon as practicable. Not the least important of these arguments is the need to ensure accountability by elected representatives of government for their expenditure decisions.     

Accountability in the Privatized State

As well as better efficiency and improved services, privatization has also often promised improved accountability. But how does the empirical evidence on this look and what are the lessons here? This article looks at the notion of accountability and the degree to which privatizing public sector activities might improve or worsen such mechanisms. It then looks specifically at the different systems of accountability existing following three privatization activities in Victoria and compares these against that existing previously under public operation. The sale of electricity sector enterprises, the operation of urban rail service franchises, and the implementation of a public–private partnership project to supply transport infrastructure are adopted as case studies. For each case study, accountability systems are articulated and the operation of these systems is discussed. Overall, the article analyses the effectiveness of accountability systems now operating in the privatized state from the perspective of stakeholders. Importantly, the degree to which trade‐offs may have been made under new accountability arrangements is also discussed. Finally, the article draws together some general lessons on accountability for future privatization activities and proposes a conceptual model for a pyramid of accountability.     

Public Enterprises and the Budget in Developing Countries

Public enterprises have a substantial fiscal impact in developing countries. This has led to the enterprises impinging on the budgetary process of the government while public enterprises are burdened by budget policies and macroeconomic policies. Such difficulties may necessitate the restructuring of public enterprises, either through privatization or reform to make them more competitive with the private sector.     

An Evaluation of Private Sector Provision of Public Infrastructure in Australian Local Government

Private sector provision of public infrastructure in Australia at all levels of government, including local government, has steadily increased over the past twenty years. Nevertheless, this method of providing public infrastructure remains controversial. This article seeks to provide a critical review of the arguments surrounding private sector provision of infrastructure in Australian local government. It examines both the case for private sector provision of municipal infrastructure in Australia and the major arguments advanced against this approach to infrastructure development. Given the conceptual argumentation and empirical evidence on private municipal infrastructure provision, it is argued that policy makers should employ a nuanced performance evaluation framework to assess the benefits and weaknesses of private provision on the basis of the specific type of infrastructure in question and the kind of services it provides rather than simply endorse carte blanche privatization.     

A Political Perspective on Contracting Out: The Politics of Good Times. Experiences from Danish Local Governments

Privatization has been on the political agenda for the last two decades. The literature points to two major explanations of privatization. One explanation is political-ideological, considering privatization to be a Liberal-Conservative strategy. Economic crisis or fiscal stress is the other main explanation of privatization. The two theses are investigated by evaluating the determinants of contracting out in Danish local governments. The analysis shows that fiscal stress is strongly, but inversely related to contracting out, while Liberal-Conservative political leadership is not associated with higher levels of contracting out than Social Democratic governance. Thus, the richer a local government becomes, the more it contracts out. Although party politics is not decisive for contracting out, the motivation seems to be political rather than economical. Specifically, it is argued that in a strongly decentralized public sector with influential public employees, contracting out is possible in good times when revenue and public expenditure are easier to increase, which reduces public employee resistance to contracting out.     

Mapping Patterns of Support for Privatization in the Mass Public: The Case of Michigan

This article examines public attitudes about using for-profit firms or nonprofit organizations to deliver public services in Michigan. Using survey data, it shows how the public reacts to the privatization of various state and local government services. It then considers some dimensions of attitudes toward privatization. Finally, it estimates models that predict support for privatization based upon a range of characteristics of respondents to our survey.     

Lessons from Privatization of Argentina's National Telephone Company

Privatization, defined as the transfer of state-owned enterprises to the private sector, plays a vital role in the economic growth of developing countries and in the transformation of nationalized countries to market economies. Despite its importance, current literature focuses little attention on the effective management of privatization. Most research discusses the benefits and problems of privatization. This article provides additional insight into effective management of the privatization process using a case study of the sale of the national telephone company of Argentina. The study identifies certain conditions necessary for transferring government assets to the private sector. The analysis also identifies strategies for effective privatization and tasks after the process is complete.     

Continuity and Change: The New South Wales Public Sector Under Labor

This paper analyses recent developments in wage bargaining in the New South Wales public sector under the Labor government. It contrasts the approach taken by the former Coalition government with that of its successor. The discussion is focused on the Memorandum of Understanding between the Labor government and the public sector unions. With the agreement of the unions, the government has reasserted both substantive and procedural control over public sector industrial relations. This has not, however, prevented widespread industrial action in schools, hospitals and public transport and continuing tensions between the principal public service union and the government.     

Beliefs About Corporate America and the Structure of Opinions Toward Privatization

This research analyzes the individual-level factors associated with public support for the private provision of public goods and services. Given that privatization requires the transfer of authority from public to private entities, we argue that beliefs about private companies are an important and overlooked source of heterogeneity in explaining public policy preferences toward privatization. We test this expectation using survey data from the 2014 Cooperative Congressional Election Study. We find that support for privatization is associated with positive beliefs about the motivation of private companies and with favorable views about corporate accountability relative to the accountability of government. Opposition to privatization is associated with beliefs about corporate influence in politics. Preferences for limited government are also associated with support for privatization. These results highlight the potential for beliefs about private companies to serve as a group heuristic in political reasoning and the ability of citizens to make reasoned choices on complex public policy issues.     

Against Privatization in China: A Historical and Empirical Argument

Reform in China’s urban public sector has been so contentious that the nature, function, validity and viability of state firms require clarifications. First of a two-part critique, this essay assesses the outcomes and wider consequences of China’s largely free wheeling process of privatization as compared to the rationale claimed for its instigation. By identifying the ideological and political forces behind that process, the essay further seeks to explain the erosion of public policy capacities pivotal for social defence in market globalization, thereby demonstrating the need to reorient the reform. Losing the opportunity to reinvigorate a sizable and strong state sector capable of healthy interactions with other sectors is shown to be especially damaging in developing and transitional societies, which in turn negatively impacts both global economy and ecology.     

Top‐Down Self‐Organization: State Logics,Substitutional Delegation,and Private Governance in Russia

This study investigates the counterintuitive emergence of self‐regulation in the Russian construction sector. Despite its proclivity for centralizing political authority, the government acted as the catalyst for the delegation of regulatory powers to private industry groups. The article argues that a factor little considered in extant literature—namely, a weak and corrupt bureaucracy—is key to explaining why the normally control‐oriented executive branch began to promote private governance despite industry's preference for continued state regulation. The article's signal contribution is to theoretically explain and empirically demonstrate how a government's prior inability to establish intrastate control over an ineffective and bribable public bureaucracy creates incentives for political authorities to search for alternative means for policy implementation outside of existing state agencies. These findings are important for understanding the impetus and logic behind particular regulatory shifts in countries where the state apparatus is both deficient and corrupt.     

Trends and Opportunities in the Public Sector: A Critical Assessment

The public sector should be designed to work on behalf of government. Government, in turn, should be designed to work on behalf of a citizen community both to pursue its collective interests and to defend the citizen community against harmful effects of private market activities. At this time, the integrity of the public sector/government has been eroded because the established forms of regulation of the market are outmoded. This has permitted transnational corporations to argue that government should respond more to their agendas often at the expense of citizen needs and claims. At the same time, citizen movements have become more diverse and sophisticated. They represent an opportunity for revisioning the work of government and the public sector.     

Privatization Within the Chinese State

This article suggests that China's public and collective enterprises have contributed to its economic growth and socio-political stability. The efficiency of these enterprises has been improved not through the privatization of the state (transferring public ownership to private hands) but privatization within the state (decentralization, appropriation, and marketization). This article first provides statistics to juxtapose the growth of the Chinese economy to the continued expansion of public and collective enter-prises. I t then explains the causes and benefits of privatization within the Chinese state. A case study of privatization within the state in Shanghai City follows. The article concludes that China's economic reform has been a transformation of socialism, not a transition to capitalism, and that it is a less costly but more effective alternative to the privatization of the state approach. The former communist countries in Europe have painfully followed this latter approach and have suffered from its political, social, and economic consequences.     

Different Roads to Unfamiliar Places: UK Experience in Comparative Perspective

This article views the new public management (NPM) as a prime example of the sour laws of unintended consequences in action. Section 1 places the UK in international context by arguing there is no such thing as NPM and suggesting recent public sector reforms vary along six dimensions: privatisation, marketisation, corporate management, regulation, decentralisation and political control. Section 2 updates the UK story by describing developments under New Labour. Section 3 identifies the unintended consequences of reform: fragmentation, steering, accountability, co-ordination, and public service ethics. Section 4 argues the conventional story of public sector reform as marketization and corporate management omits significant changes. British government differentiated its service delivery systems and now employs at least three governing structures: bureaucracy, markets and networks. The final section discusses whether British experience is different. I argue a satisfactory explanation of the differences must include an analysis of governmental traditions that make public sector reform distinctive everywhere.     

Explaining Privatization: Notes Towards a Predictive Theory

This article starts from the assumption that some of the theoretical work used to explain welfare-state expansion can be used 'in reverse' to explain privatization, here seen as welfare state contraction, i.e., the transfer from the public to the private sector of the responsibility for certain activities involved in welfare provision. To this end, valiants of the 'power resources' approach are examined. Finding that the 'labour movement' thesis does not have a strong predictive value, I then discuss the 'game theoretical' variant of the 'power resources' approach. Its usefulness for predicting privatization patterns seems limited because of the reductionism built into it. Following the neo-Institutionalists' argument that actor preferences and strategies both reflect and form institutional arrangements of the welfare state, some institutional typologies are developed which are relevant to the course and patterns of privatization. An ideal-type dichotomy between 'pluralist' and 'corporatist' institutions is discussed, in connection with a further delineation of decision-making, financing, and implementing structures. In conclusion, an effort is made to combine actor-oriented and institutional approaches to formulate some preliminary predictions about when and where certain patterns of privatization will occur.