Privatization and Contracting Out

Contracting Out Federal Employment

Contracting out in the federal government promises to be one of the most controversial and hotly-debated issues when the Reagan Administration, heavily in favor of contracting out services as a savings device, tries to get its budget cuts passed in Congress. Paul Staudohar's article on the subject offers a comprehensive overview of contracting out, its pros and cons, its logical aspects and political overtones. Contracting out is not a new phenomenon, but as federal sector unions have grown larger, more influential and militant, the practice has come under increasingly heavy criticism and attack. The American Federation of Government Employees of the AFL-CIO, the largest federal employees union, has even established its own department exclusively engaged with contracting out which lobbies against such legislation and is active on the legal front, battling specific subcontracting practices within various federal agencies and departments.

Report of Seminar Held at St. Geroge's House, Windsor Castle, England, "Public Services and the Private Alternative"
PSRF - Special Edition

Summary coming soon! 

Privatizing the Planet: An Alternative Vision of Environmental Protection Wallop, Malcolm,

While the Clinton administration continues to seek solutions to the nation's problems through greater government involvement in the economy, others feel that the direction that federal, state and local governments should follow is towards privatization. One area that is rarely considered for privatization is the environment. Senator Malcolm Wallop (R-WY) presents a very interesting argument for why that should change in "Privatizing the Planet: An Alternative Vision of Environmental Protection."

School Choice and Public/Private Partnership: Revitalizing D.C. Public Schools Smith, Franklin,

Union opposition to change is a reality that Dr. Franklin Smith has had to face since taking charge of public schools in the nation's capital. Yet he maintains that the only lasting solution to the crisis facing the city's schools today is to examine alternative forms of school management. He outlines that variety of options in "School Choice and Public/Private Partnership: Revitalizing D.C. Public Schools."

Privatization in Massachusetts: Getting Results Robinson and Wilson, Mark and Steve

When Massachusetts Governor William Weld (R) took office in January 1991, he set about attacking his state's fiscal problems by implementing an ambitious privatization program. At the core of his governing philosophy is the belief that privatization is an essential strategy for reinventing state government, reducing its costs and improving the quality of its services.

In two years, the Weld administration's efforts have saved state taxpayers over $273 million by contracting out or privatizing services ranging from health care to highway maintenance. Yet, late in its 1993 legislative session, the Democrat-controlled General Court, at the behest of the state's public sector unions, rallied behind a bill, SB 1664, introduced by Senator Marc Pacheco (D) that would impose further regulations inhibiting the governor's privatization efforts.

To combat SB 1664, the Commonwealth's Executive Office for Administration and Finance released "Privatization in Massachusetts: Getting Results," authored by John Robinson and Steve Wilson. The white paper provides an in-depth look at general privatization issues, the results of specific administration contracting out efforts and a rebuttal to the arguments of privatization opponents which merit the attention of public administrators across the country.

Despite administration efforts, the Pacheco bill was passed over the governor's veto, becoming law in January 1994. Nevertheless, as indicated in the report's appendix, the government will continue to aggressively pursue its privatization policy. While instructing government agencies to comply with the law, the administration has filed with the legislature for several changes in the statute, and Weld is considering challenging the validity of the law on constitutional grounds.

It's Time to Privatize Savas, E. S.

From the esoterica of legal arguments, we turn to the topic of privatization. Dr. E.S. Savas, a leading proponent of returning government-run services to the private sector through outright sales or contracting out, presents a compelling argument in "It's Time To Privatize" for the divestiture of such concerns by New York City. To make his case, he draws examples of successful privatizations from across the country and sees the lack of it in New York City as a primary reason behind the fundamental failure of its municipal government to provide efficient, cost effective services.

Controlling the Demand for Higher Taxes Through Competitive Incentives Cox, Wendell and Love, Jean

In Controlling The Demand For Taxes Through Competitive Incentives, public policy consultants Wendell Cox and Jean Love argue that the federal, state and local governments already extract more than enough money in taxes to provide all the public services demanded by citizens. What is needed to curb government waste and inefficiency is simply the contracting out of more services.

Privatizing Justice Agencies: The Due Process Dilemma of At-Will Employees Calder and Mattson, James and Gary

Privatizing Justice Agencies: The Due Process Dilemma of At-Will Emp1oyees, by Dr. James D. Calder and Dr. Gary A. Mattson, discusses the significant gap between substantive and procedural justice in the private and public sectors. It calls attention to the potential for increasing litigation over employee rights under privatization linked to current issues in labor-management relations: employment conditions, allegations of wrongdoing or poor performance, truth verification, medical testing and background investigations. The authors urge public management to consider the employee rights issue as part of any dialogue leading to privatization of public justice services.

Nationalization and Privatization in Contemporary France Jacquillat, Bertrand

France presents an interesting case study since, as the government is currently constituted, the conservative Chirac must contend with the reality of dealing with incumbent Socialist President Francois Mitterrand.

When Mitterrand ascended to the presidency in 1981, with a victory that also gave the Socialists control of the prime minister's office, he inaugurated a massive, and economically destructive, nationalization policy. Its effects and the politics that have now brought about the beginning of its reversal are the subject of Nationalization and Privatization in Contemporary France by Dr. Bertrand Jacquillat.

Privatization in Great Britain Young, Peter

To stir Great Britain from its economic malaise, in 1979 Conservative Prime Minister Margaret Thatcher initiated the selling off of state-owned enterprises to the private sector. It was the purpose of her "privatization" program to reverse England's devolution into socialism and it has worked with remarkable success. So successfully, in fact, that there has been a phenomenal growth in the number of European and third world nations that have followed her lead and initiated privatization programs of their own.

Precisely how broad in scope Thatcher's program is and how it is progressing is the subject of Privatization in Great Britain by Peter Young of the Adam Smith Institute. With the Reagan Administration expressing its desire to privatize and contract out more government services as one means of reducing the cost and size of the federal bureaucracy, American readers should find this an informative article.

Privatizing the United States Postal Service By Crutcher, John,

he United States Postal Service is the largest single employer of federal workers outside of the armed forces. Its management has enjoyed a monopolistic advantage which has generally inhibited any incentive to concern itself with the cost effectiveness of its operations. That oversight is one which has been fully exploited by the postal unions. Today a postal employee earns an average wage and benefit package of about $25,000, or 33.1 percent more than his comparably skilled private industry counterpart. Since the 1970 Postal Reorganization Act, postal costs have risen from $8 billion in 1970 to $23 billion in 1982. A staggering 84 percent of those operating costs go towards wages, which grew 123 percent over that period.

In "Privatizing the United States Postal Service," Postal Rate Commissioner John Crutcher exposes the reasons behind such a rapid rise in postal costs and looks at how private businesses have begun to compete with the Postal Service. Commissioner Crutcher offers some compelling arguments for scaling postal costs by contracting out certain mail services, and he argues that postal costs could be brought under control if the Postal Board of Governors discards its rubber stamp approach to governance.

Public Employee Unions, Privatization and the New Frederalism. Bennett, James and DiLorenzo, Thomas

"Public Employee Unions, Privatization and the New Federalism," by Dr. James T. Bennett, Professor of Political Economy and Public Policy, Department of Economics, George Mason University, and Dr. Thomas DiLorenzo, Assistant Professor of Economics, George Mason University, discusses the idea of "New Federalism," a term coined by the Regan administration for its strategy to transfer some federal government activities to state and local governments.