Privatization and the new public management.

• Author: Savas, E.S.
• Position: Government contracting

Privatization is now commonplace throughout the world: in communist, socialist, and capitalist countries; in developed and developing countries; in democracies and dictatorships. In the United States privatization is being practiced by Democrats and Republicans, liberals and conservatives, blacks and whites. It is no longer a partisan or ideological issue, but rather a pragmatic and increasingly routine approach to governing and to managing public services. (1)

Privatization means greater reliance on the private institutions of society and less dependence on government to satisfy people's needs. Those private institutions are: (1) the marketplace and its participants; (2) voluntary associations of all kinds, formal and informal; and (3) the family, which is, after all, the original Department of Housing, Social Services, Health, and Education.

Privatization takes many forms: contracting, franchising, and "vouchering"; selling and leasing government-owned assets to the private sector; and shedding services and deregulating. The various forms of privatization all operate by allowing markets to provide desired goods and services to consumers.

Contracting out common government services and selling off government-owned businesses and assets continues, but has advanced far beyond the conventional contracting out of garbage collection and selling off of in rem properties. Private towing services rescue foundering pleasure boats for a fee, something the U.S. Coast Guard once did at taxpayers' expense. (2) Privatized approaches are protecting the environment: North Atlantic salmon are protected by private environmental entrepreneurs who use market forces to buy and retire fishing rights, an improvement over government conservation efforts. (3) Private groups are saving open space: in ten years, 1200 local land trusts permanently protected 2.7 million new acres from development. (4) A market-based approach, namely, international emissions trading, is called for in the Kyoto Protocol to reduce pollution that is said to contribute to global warming. (5)

New York State has turned over Stewart and Niagara Falls Airports to foreign airport operators--British and Spanish respectively--on ninety-nine year leases. New Hampshire and Georgia have leased state parks and resorts to private firms. (6) Churches in Indianapolis maintain neighborhood parks under city contracts. (7) Bryant Park, in the middle of Manhattan, was transformed from a crime-ridden haven for junkies to a six-acre jewel by a voluntary local business association. Nearby Central Park, one of the world's most famous urban open spaces, is managed by another private, nonprofit organization. (8) New York sold its popular convention center, the Coliseum, to developers who will take advantage of its premier location, (9) and is selling hundreds of millions of dollars of other prime real estate. (10) The federal government is auctioning 27,000 acres of land near Las Vegas, Nevada, worth 500 million to one billion dollars. (11)

A relatively new area for local-government contracting can be found in Riverside County, California, which contracts with a private company to manage its twenty-five branch library system. (12) Whereas contracting out individual services such as solid waste management is now commonplace, a private firm, appropriately named City Municipal Services, Inc., is serving as a public-works department for several towns in Michigan, performing the entire array of traditional public works functions. (13) The same type of work is being done in Monmouth, Illinois. (14) Municipal parking also is being privatized in interesting ways. The City of Richmond, Virginia contracted with a company to manage its on-street parking program, including enforcement. (15) Parking tickets in New York City can be paid automatically by credit card twenty-four hours a day via a toll-free number from any telephone in the United States. A computer checks the validity of the card and...