Regulation in an Episodic Policy-Making Environment: The Water Industry in England and Wales

This article describes and analyses the evolving regulatory game in the post-privatized water industry. It highlights a regulatory environment that is more complex than that which existed under public ownership, and an industry which is subject to heavier regulation in the private sector than it was in the public sector. There has been erosion of the strict public/private divide following privatization. The article highlights an episodic and seemingly incongruous policy-making environment that defies consistent characterization: sometimes private consensus is the main feature and sometimes it is public conflict. It also illustrates that while there are two broad-based constituencies of interest active in the water sector — cost and environmental — the composition of these coalitions mutates depending on the issue being considered. Indeed, there are occasions when core constituency participants 'defect' and join the 'opposing side'.     

PUBLIC SECTOR PAY BARGAINING: COMPARABILITY, DECENTRALIZATION AND CONTROL

Public sector pay, as a key component of public expenditure, has been a major issue for government since the mid-1970s. This article analyses public services pay bargaining since 1979 and examines the continuing tension between the control of public sector pay levels on the one hand and the wish to make pay levels more responsive to external market forces on the other.
The article concentrates on the changes in pay bargaining in the public services. It does not purport to provide a detailed economic analysis of the outcomes of the various phases in public sector pay policy, but does attempt to explain the process implications of the political contingencies and rationale driving government policy on pay determination. In particular it notes the resilience of national pay-setting arrangements and pay comparability throughout most of the period under review, despite the political rhetoric, emphasizing the pragmatism of government policy. The latter section of the article reviews the current policy, with its emphasis on decentralized pay determination, and considers these new developments within the context of private sector collective bargaining theory.
The evidence from the private sector suggests that pay determination in the private sector is complex and that levels of bargaining relate to various factors. Decentralization is neither a panacea for poor performance nor necessarily problem free. Devolved pay determination can lead to problems of control over costs and, in the context of high levels of trade union organization, to pay'leapfrogging'. The article concludes that there is a continuing contradiction between the role of the government as an employer, keen to devolve pay decisions to local level, and that of economic regulator with responsibility for the wider economy. This continuing tension indicates that decentralized pay bargaining in the public sector will be limited in its scope by some form of central government control.     

Coalitions and corporate choices in Argentina, 1976–1994: The recent private sector support of privatization

After sabotaging almost every privatization since the 1970s, the Argentine private sector suddenly began to support privatizations in 1991. While public choice approaches that stress the cost impact of policy can explain the anti-privatization behavior of the private sector prior to 1991, they are less successful at explaining this recent shift in behavior. This article explains this shift by focusing on political coalitions. By expanding (or reducing) the set of attainable outcomes, political coalitions shape the political choices of firms. Prior to 1991, the rent-seeking private sector led a huge multi-sectoral anti-privatization coalition that repeatedly preempted the Executive from privatizing. In 1991, this coalition disintegrated as a result of a reordering of economic institutions. Devoid of its traditional allies, the private sector chose to acquiesce to privatizations. Thus, political coalitions can be more important in shaping firm behavior than economic considerations such as the cost-impact of public policy or the size of rent markets. This article also explains why, in many countries confronting comparable anti-privatization coalitions, privatizations are likely to emerge with an unexpected mixture of competition-enhancing and competition-restricting policies. Javier Corrales is assistant professor of political science at Amherst College, specializing in comparative and international politics of Latin America. He is currently writing a book on the effects of executive-ruling party relations on the implementation of market-oriented reforms in Latin America. Newspapers and magazines (from Buenos Aires)ámbito Financiero Clarín El Cronista Comercial La Nación Noticias The Review of the River Plate     

THE PUBLIC/PRIVATE SECTOR CLEAVAGE REVISITED: THE IMPACT OF GOVERNMENT EMPLOYMENT ON POLITICAL ATTITUDES AND BEHAVIOUR IN 11 WEST EUROPEAN COUNTRIES

This study explores a refined model of public/private sector cleavage voting. Assuming that market and work experiences are crucial for people to develop common political views, it investigates three contexts that shape government employees' willingness to vote as a single constituency: the branch of public sector production, the occupational status, and the type of service economy. Estimation results obtained from regressions on European Social Survey (ESS) data indicate that government employees in public health, education and service production rather than public administration utilize sector cleavage voting. Regardless of their actual occupational status, public health and education employees show persistently stronger attitudes in favour of expanding state responsibility. With respect to party choice, stronger signs of alignment along the sector cleavage are observed in Social Democratic service economies. In sum, the public/private sector cleavage continues to matter in a more complex way than a simple sector dichotomy would suggest.     

The Dynamics of Decentralization and Recentralization

Decentralization of authority from central government to sub-national governments is an important part of modern public sector reforms and has been the primary contribution to public sector reform in Denmark and the other Nordic countries. On the assumption that political and administrative actors are authority maximizers, the paper analyses how national and sub-national actors react to these decentralization goals, and the extent to which they are implemented. The analysis points to the importance of both institutional and power variables. It concludes that dynamic change can take place in a public sector which is characterized by strong corporatist and multi-level institutions, such as in Denmark.     

PRIVATE POLICING: A VIEW FROM THE MALL

In many Western democratic societies the primacy of the police has begun to diminish with a proliferation of alternative service providers, particularly within the private security sector. This raises questions about how such bodies can best be mobilized and integrated within policing. This paper reports findings from three ethnographic case studies of private security teams operating within areas of semi‐public space, to advance understanding of their nature and operations. It shows how the character of security work is determined by vastly differing structural arrangements to those of the police, but by a similar heterogeneity of function. While private security is seen to have a valid place within the ‘extended police family’, it is depicted as a low status sector whose authority in undertaking policing derives from the autonomy of other more powerful players. Future ethnographies, it is therefore argued, need to focus on the corporate users that govern its activities.     

Managing the Public Sector in Hong Kong: Trends and Adjustments

Public sector management in Hong Kong was initially designed to rule the territory as a British colony. A number of changes took place in the last quarter century before Hong Kong's reintegration with China and the nature of public sector management has transformed over this period. An overview of administrative principles and practices and an analysis of changes reveal trends that were influenced by both local and international factors. The framework of traditional public administration in the territory adapted effectively to embrace the principles of new public management without much difficulty. The global economic crisis compelled the government to revise its strategies to expand public spending and adopt a further reduced role in the provision of public services. New social, economic and political challenges are driving Hong Kong to adjust to the changing circumstances and trends, and four noticeable shifts can be identified. They include shifts from an administrative to a political executive, from job cuts to job creation, from financial restraint to increased spending, and from public to private sector provision of public services. The trends are driven by local and international forces as well as the progress of democratization and political awareness in Hong Kong.     

Admitting a Bad Influence: Contracting the Public Service

Abstract

Emulation of the private sector is a longstanding controversy in public administration, but could it constitute a bad influence, of the kind that parents seek to guard against by scrutinizing their children's peers? Effectiveness provides a perspective on how helpful or harmful private sector influence has been for the public service. The practice of contracting-out under the A-76 process receives particular scrutiny relative to maintaining the effectiveness of public agencies. A second perspective on private sector influence examines, through the theoretical perspective of transaction-cost economics, the promise of cost savings that justified recent acceleration of contracting-out. The author, himself a government contractor, also bases his analysis on personal experience.     

The Nature of Contracting Hazards in Public–Private Partnerships—Evidence from Ireland

The use of public–private partnerships (PPP) for the procurement of infrastructure and related services can be a complex and challenging process. This article adopts a transaction cost regulation perspective to examine two PPP cases from Ireland that encountered significant obstacles to successful procurement. It finds that both procurements met hazards including uncertainty about the viability of the bids and opportunistic behavior by preferred bidders that held quasi-monopoly positions. The public nature of both cases provided a fertile ground for opportunistic behavior by political opponents and other “interested” parties. The analysis shows how the governance of PPPs is shaped by the attributes of the transactions and the interaction of economic and political hazards that create transaction costs.     

The Virtual Value Chain and E-Government Partnership: Non-Monetary Agreements in the IRS E-File Program

Abstract

Electronic government (e-government) models generally espouse the principle of partnership with the private sector. What is not always clear is what is meant by partnership, though, and how public organizations should organize and manage such relationships to support e-government initiatives. The paper relies on a conceptual framework of the virtual value chain to understand how a new form of collaboration emerged in the Internal Revenue Service (IRS) e-file program in 1999 and what dimensions helped to make it a success. As part of a larger, multi-nation study of public–private partnerships in e-government, this paper examines IRS e-file program, one of the largest, longest-standing (dating back to 1986), and most successful US e-government programs with tens of millions of users each year.

The IRS e-file program experienced dramatic changes in its long-standing partnership with the tax preparation and related software development industries in 1999 and 2000. It is possible, using the concept of the virtual value chain, to understand how the IRS rethought its relationship with its private-sector partners. A combination of conditions in the market place, in US society, within the IRS, and among the private-sector partners helped to make this new model of collaboration quite successful. The paper concludes by examining how the dimensions of partnership in the IRS e-file case and the concept of the virtual value chain might enable other public organizations to reconceptualize their e-government partnership arrangements with the private sector using a new model of collaboration.     

Party System Competition and Private Sector Development in Africa

Democratic transitions by many African countries have generated much analysis of the organisational features of political parties or their role in voter mobilisation during elections. Yet, scholars have largely overlooked how parties negotiate economic policymaking or interact with the private sector in countries that are incipient democracies and emerging markets. This article argues that the stability or fragmentation of the party system affects patterns of private sector development and shapes linkages between the state, business and labour. It compares Mozambique and Zambia to demonstrate how variations in party system characteristics influence the relationship between economic and political interests.     

Business and the Politics of Urban Violence in Colombia

What explains variation in local government policy responses to urban violence? Existing research on the politics of urban violence overlooks the pivotal role that private sector interests play in shaping the public provision of security in major developing world cities faced with conditions of intense violence. I argue that business is a pivotal political actor that mobilizes through powerful private sector institutions to shape policy responses to urban violence in ways that advance its economic interests and preserve its privileged status in local political arenas. The security policy preferences of business vary across economic sectors due to variation in relations to urban space and violence. This cross-sectoral variation in security policy preferences generates both opportunities and challenges for political and societal actors that seek to stem and prevent urban violence. Analysis of puzzling variation in policy responses across Colombia's three principal cities—Medellin, Cali, and Bogota—and over time within each shows that a focus on business can strengthen our understanding of the politics of urban violence and, more broadly, its implications for development.     

Deregulation and the decline of public administration teaching in the UK

In 1991 eight polytechnics offered a BA in public administration while five universities provided the degree with either public or social policy. Currently, no higher education institution in Britain offers a BA degree solely entitled 'public administration'. The subject area is, however, offered in 16 higher education institutions under a variety of names that include, in any order, the words 'public', 'management', 'policy' and 'administration'. This paper analyses the reasons for the transformation during the 1990s in undergraduate courses for the public sector. It is argued that these changes do not so much derive from academics, employers or students taking on board an enthusiasm for new public management but are as much the consequences of deregulation of student choice and an expansion in student numbers that has not been matched in financial terms. The consequence has been to increasingly move this sector towards business and management teaching geared to private sector interests and away from its more political and social science roots.     

Regulating Markets: The Real Costs of Poly-Centric Administration under the National Health Insurance Scheme (1912–46)

Using a transaction cost perspective, this article explores the administrative costs involved in quasi-market systems of public service delivery. Employing the historical example of the interwar National Health Insurance scheme, it revives Beveridge's early criticisms of the duplication and expense incurred by the utilization of approved societies for benefit administration purposes. To this we should add the costs incurred by central audit and actuarial evaluation, the main mechanisms through which the societies were centrally regulated. The article concludes that, thanks to regulatory requirements, this poly-centric system of public administration was more expensive than a state-run equivalent – and that this message has significance for recent reforms. In the course of the analysis, the narrowness of a 'pure' transaction cost perspective is demonstrated and common assumptions concerning distinctions between 'the state and the market' in administrative structures are drawn into question. The division of public administration into these two typologies is arguably based on a false dichotomy.     

Strategic management and public organizations: Lessons from the past and prescriptions for the future

The 1990s have become a decade of reflection and rethinking of foundational concepts in the field of public administration. Public adminstrationists are attempting to bring the best of management approaches to bear on the problems facing public organizations. Strategic management has been widely used in the private sector since the 1960s, and has gained increased acceptance in the public sector since the 1980s. It is a management approach that synthesizes much of what management theorists have long recognized as essential to effective management practice. This article traces the development of strategic management and examines what has been learned from the past that will improve future implementation efforts in public organizations.     

Entrepreneurs,investors and the state: the public and the private in sub-Saharan African irrigation development

This article draws on ethnographic research in Tanzania to interrogate the discourse of ‘public’ and ‘private’ in sub-Saharan irrigation development. It contrasts the complexity of social and political relations with narratives suggesting that ‘private’ is necessarily opposed and superior to ‘public’. We argue that support for models of private-sector development obscures access to and control over resources and can result in the dispossession of those least able to resist this. Different interests of ‘entrepreneurial’ individuals and corporate investors and the ways in which these relate to the state are also glossed over. Conversely, the failure of the ‘public’ cannot simply be read from the chequered histories of irrigation schemes within which public and private interests intersect in complex ways.     

VALUE FOR MONEY IN PFI PROPOSALS: A COMMENTARY ON THE UK TREASURY GUIDELINES FOR PUBLIC SECTOR COMPARATORS

The Private Finance Initiative (PFI), introduced to Britain in 1992, has become a major means of procuring public sector infrastructure. It involves long‐term contracts whereby private sector suppliers construct and own capital assets and provide services for which they are paid on the basis of availability or use. This paper focuses on the early stages of a PFI procurement, the decision to use the PFI rather than any other form of procurement. In 2004 and 2006, the UK Treasury issued new Guidance as to how this should be done. There are two stages to this Guidance: qualitative and quantitative assessments. This paper comments on some of the key issues in the quantitative assessments: the treatment of risk, of residual and life‐time costs, of tax, of rates of return and of the appropriate use of discounted flow techniques when finance is a constraint for an investing agency.     

Going privately: partnership and outsourcing in UK public services

Public private partnerships provide an important illustration of the way the traditional role of government as employer and service provider is being transformed. While policy–makers argue that the growing role of the private sector is not driven by ideological thinking – that, in fact, both public and private sector organizations can benefit from working together in partnership relations – in practice it is the norms and rules of private sector management that underpin reforms. This paper assesses evidence from two detailed case studies of partnerships and demonstrates, first, that there is little evidence of mutual gains from partnership arrangements and, second, that because of an imbalance of power between public and private sector partners, any gains achieved are not distributed equitably. These results suggest that current reforms need to be refocused around building on the distinctive qualities of services provision in the public sector, rather than expanding the private sector world of markets and contracts.     

Municipal Service Delivery: The Role of Transaction Costs in the Choice between Alternative Governance Mechanisms

Service provision by local governments can be delivered using in-house bureaucracies, private firms, and partnerships with other governments or the not-for-profit sector. This production decision has been a major focus of discussion among scholars, practitioners and political agents for the last quarter of a century. The transaction costs framework is an important tool to analyse decisions regarding the production of local services. In this paper, the authors employ this framework to analyse service delivery in Portugal and find that service characteristics and the local political environment play a key role in local officials' choice among the three governance mechanisms to deliver public services.     

Privatization in developing countries: ideal and reality

In both developed and developing countries, governments finance, produce, and distribute various goods and services. In recent years, the range of goods provided by government has extended widely, covering many goods which do not meet the purist's definition of “public” goods. As the size of the public sector has increased steadily there has been a growing concern about the effectiveness of the public sector's performance as producer. Critics of this rapid growth argue that the public provision of certain goods is inefficient and have proposed that the private sector replace many current public sector activities, that is, that services be privatized. Since Ronald Reagan took office greater privatization efforts have been pursued in the United States. Paralleling this trend has been a strong endorsement by international and bilateral donor agencies for heavier reliance on the private sector in developing countries.

However, the political, institutional, and economic environments of developing nations are markedly different from those of developed countries. It is not clear that the theories and empirical evidence purported to justify privatization in developed countries are applicable to developing countries.

In this paper we present a study of privatization using the case of Honduras. We examine the policy shift from “direct administration” to “contracting out” for three construction activities: urban upgrading for housing projects, rural primary schools, and rural roads. The purpose of our study is threefold. First, we test key hypotheses pertaining to the effectiveness of privatization, focusing on three aspects: cost, time, and quality. Second, we identify major factors which affect the performance of this privatization approach. Third, we document the impact of privatization as it influences the political and institutional settings of Honduras. Our main finding is that contracting out in Honduras has not led to the common expectations of its proponents because of institutional barriers and limited competitiveness in the market. These findings suggest that privatization can not produce goods and services efficiently without substantial reform in the market and regulatory procedures. Policy makers also need to consider carefully multiple objectives at the national level in making decisions about privatization.