Privatization and the Courts: How Judicial Structures Shaped German Privatization

This article examines how legal institutional structures shaped the process of East German privatization by the Treuhandanstalt. It argues that the courts, as an important venue for oversight and accountability, were central to achieving the rapid and narrowly defined privatization carried out by the agency. Moreover, the experience of privatization after 1989 suggests the courts played a far more important role in shaping economic policy than one would have expected from traditional scholarship on public agencies, the courts, or the German legal system.     

Privatization and cost reduction

In this paper several examples of government contracts with private firms are examined to see how experience conforms to a principal-agent model of cost minimization via competitive bidding and how important are the many qualifications to the model. Fifteen cases of local government contracting are examined.The course of private contracting is not always smooth — as judged by the many contract disruptions observed and by the number of cities that believe they are no longer saving money by contracting and those which have resumed public production. It also seems to be the case, however, that competition generally reduces initial costs, that in many cases cost savings persist, that it is possible to stimulte competition, and that providing for continual interaction, as contrasted with simply monitoring performance, can prevent disruption.     

Privatization as institutional choice

A model based upon the common concept of rent-seeking behavior avoids an exclusive focus on the pecuniary motive in private institutions and the power motive in public institutions. Using this model, the case for privatization ranges from very strong to unpersuasive, with some fascinating intermediate cases. Where purchases are frequent, information is abundant, costs of a bad decision are small, externalities are minimal, and competition is the norm, privatization ought to be pursued. At the other extreme, in situations where externalities and collective interests abound, natural monopolies are dominant, distributional goals are important, or debate and experience will alter preferences, governmental determination of service levels and public provision should continue. Intermediate situations such as those involving education, health, and some aspects of enterprise development provide the most interesting and hotly debated areas. These intermediate situations have both private and collective characteristics, choices are made infrequently with little information, have monumental consequences, distributional considerations are critical, and public debate about the level and type of service substantially affects individual behavior.     

Privatization,information and incentives

In this paper the choice between public and private provision of goods and services is considered. In practice, both modes of operation involve significant delegation of authority, and thus appear quite similar in some respects. The argument here is that the main difference between the two modes concerns the transactions costs faced by the government when attempting to intervene in the delegated production activities. Such intervention is generally less costly under public ownership than under private ownership. The greater ease of intervention under public ownership can have its advantages; but the fact that a promise not to intervene is more credible under private production can also have beneficial incentive effects. The fundamental privatization theorem (analogous to the fundamental theorem of welfare economics) is presented, providing conditions under which government production cannot improve upon private production. The restrictiveness of these conditions is evaluated.     

Privatization of Municipal Wastewater Treatment

Privatization of wastewater treatment facilities was encouraged by changes in the law and in the attitude of government officials during the early 1980s The idea was for localities to benefit from the efficiency gains expected when operations were transferred from municipal administration to a profit-making organization. However, significant differences between the ideal and reality often existed, particularly when contracts all but eliminated the profit motive.     

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.     

Mediterranean Security Revisited

At the dawn of the last century, the European and Mediterranean countries failed to reach a consensus on building a cooperative security system. This article is an attempt at revisiting the concept of the Mediterranean security system and assessing the conditions for restarting security dialogue in the region. Upon recognition of the need for taking into account the new dimension of risks along with the traditional dimension of threats, the article reviews the insecurity factors of the Mediterranean region and the lesson learned in the security dialogue of the Barcelona Process. Some proposals about rehearsing that dialogue are advanced in the concluding section.     

Citizen Competence Revisited

Political Behavior -     

Historical Contextualism Revisited

To deal with the methodological problems of historical contextualism, it is useful to distinguish between (1) Text, (2) Context, (3) History, (4) Contextualism and (5) Historicism.¹A text is by turn the outcome, and object, of all writing or research. A context is any perspective on a text, including the background data that one may append to it. History is a narrative, a story, which is focused upon a text or context - in as far as the two are the same, viewed as propositions 'Contextualism' is a methodological claim that valid history is only secured or demonstrated via the reconstruction of 'the context' - especially where the latter is to do with a perspective on the background to a text. Historicism is disinclined either to extract present moral judgements from, or apply them to, the past; it resists more broadly any form of social generalisation over extended units of chronological time²; it thereby displays a liability to overrate the importance of the sometimes 'spectacular differences' (Popper 1960: p.101) between various historical periods. Historical contextualism may be construed as a new variety of historicism. The emphasis of the present account is more broadly upon the logical futility of historical contextualism in general, and less upon its specifically historicist character.     

Canadian Federalism Revisited

The crisis in Canadian federalism is examined in its historicalcontext, with particular emphasis on regionalism, provincialand national assertions of power, the institutional framework,and intergovernmental consultation. Current problems are consideredin relation to the new Constitution.     

The Culture Cult Revisited

Society - What is the gravest threat to “open” democratic societies today? In Karl Popper’s view it was tribalism. By contrasting closed autarkic Sparta and free-trading Athens,...     

Social Security Privatization and Market Risk

Under Social Security privatization, workers would be allowed to divert some of the money that currently goes to Social Security into private accounts. This would expose them to market risk, that is, the risk of a substantial drop in equity prices or of a prolonged bear market. This could result in generations of workers with less money than they thought they would have for retirement. Depending on a worker's birth date, if the privatization approach proposed by President Bush's Commission to Strengthen Social Security had been enacted at the start of the Social Security program, the retirement benefits generated from putting 10% of earnings in a private account for 35 years would have ranged from 100% to less than 20% relative to pre‐retirement earnings. The extraordinarily high retirement income generated from the booming 1990s stock market was the equivalent of winning the generational lottery—unlikely to be repeated regularly. Even under these beneficial circumstances, a privatized system could have cost the government more than $1 trillion in today's dollars over the past 3 decades if the government decided to help out those who accumulated too little for retirement. The primary alternative to a government bailout of the Social Security system, older workers working longer, would likely not generate the desired results. Workers wanting to work longer would create labor market pressures typically at times when unemployment is already high.     

The Progressive Dilemma Revisited

In his book of the same title, David Marquand identified the progressive dilemma faced by many intellectuals since the beginning of the twentieth century as a question of whether it was better to work through a political party or through civil society to achieve reform. This dilemma was sharpened by the emergence of the Labour party as the main challenger to the Conservatives, because the party was so closely identified with the defence of a particular interest. This hindered the creation of the kind of broad electoral coalition that could win general elections. Throughout most of its history, Labour has failed to realise its promise and sustain reforming governments. In this article, the history of the Labour party over the past hundred years is outlined, in particular the three cycles 1931–51, 1951–79 and 1979–2010 and the divisions and recriminations that have followed each period in government. The current predicament of the party is then briefly assessed.