The Privatization Decision: Public Ends, Private Means.

• Author: Glastris, Paul

The Privatization Decision: Public Ends, Private Means The Privatization Decision: Public Ends, Private Means. John Donahue. Basic Books, $22.95. For years the literature on privatization has been so dull or biased that it's been hard to make up one's mind about it. Conservatives, business leaders, and other proponents, who never really have believed in government or the idea that bureaucracies can be reformed, can't be trusted. But neither can privatization's main opponents--liberals and public employee unions who feel there's nothing wrong with the civil service that a stiff pay raise won't solve. Donahue takes on the subject with the fair-mindedness extolled at the Kennedy School where he teaches, and where one might fear dreary quantification, he offers clear and compelling prose.

Most of the world understands privatization as meaning divesting government-owned assets like steel mills and airlines. In the U.S., where government has never owned such ventures, privatization has come to refer largely to "contracting out": paying tax dollars to private companies, rather than government bureaucracies, to accomplish public tasks. Donahue makes clear that the private sector does have Rotary Club advandtages over the public sector: focused accountability, lower labor costs, fewer work rules, more incentives to watch costs and exploit innovations. The problem is finding public tasks for private companies where those qualities can flourish, and yet where others common to government contractors, like overbilling, shoddy workmanship, price collusion, influence peddling, bribery, etc., do not.

Privatization works and probably ought to be expanded, says Donahue, for public tasks that are relatively simple and where competitors are plentiful: garbage collection, firefighting, and bus and janitorial services. Privatizing usually makes matters worse, however, when the public mandate for an endeavor is complicated, vague, or everchanging; where hoped-for results cannot be specified in advance without reams of contractual paper; and where high entry and exit costs mean few companies can...