<p> Local Government and Civil Society:</p><p>Privatization and Contracting Out</p><p>THE PROBLEM</p><p>Models of Social Services Systems: The Context of Privatization and Contracting</p><p>I. Overview: Concepts- New Public Management Principles</p><p> a. Social Services</p><p> b. Re-inventing Government</p><p> c. Subsidiarity</p><p> d. Privatization</p><p> e. Contracting Out II. Private Provision of Services: </p><p> a. Use of conventional Markets: no public sector involvement (Purely private)</p><p> b. Contracts with public agencies</p><p> c. Monopoly Franchises</p><p> d. Management Contracts</p><p> e. Vouchers</p><p> f. Consumer Cooperatives</p><p>III. Service Delivery Systems and Categories of Service Delivery- Issue- Size: hard services or soft with capital or recurrent costs</p><p> a. Macro- Physical Services- Highways, Sewerage Main Lines, Electricity [Deconcentrated or Privatized] b.Micro- Physical Services- [Devolved, or Delegated ]</p><p> c. Social Services-Health, Education or Community Development (such as Social Funds) [Delegated or Contracted]</p><p> d. Investment or Production [Privatized]</p><p>IV. Private Provision: Defined </p><p> a. Use of conventional Markets</p><p> g. Contracts with public agencies</p><p> h. Monopoly Franchises</p><p> i. Management Contracts</p><p> j. Vouchers</p><p> k. Consumer Cooperatives V. Privatization A Process: The process of divesting direct civil service responsibility for the provision of public services or the collection of revenues</p><p>1. Ideal: Key to the provision of efficient and effective goods and services (Savas)</p><p> a. The Need for Exclusion</p><p> b. User Fees not taxes: the principle of tolls</p><p> c. Need to exclude Collective, and some would argue, common pool goods from privatization</p><p> d. Worthy goods (health, education, etc.) are not collective goods</p><p>2. Reasons: (Madsen Pirie)</p><p> a. High Production costs b. Low levels of efficiency c. Featherbedded labor costs</p><p> d. Pork Barrel Capital Allocations</p><p> e. Low level consumer input</p><p> f. Poor Maintenance and loss of service</p><p> g. Inability of political leaders to impose cost control</p><p> h. Free Riders</p><p>2. Means:</p><p> a. Liquidation- Close down (Load Shedding)</p><p> b. Divestiture- Sell off in whole or in part government shares</p><p> c. Public-Private partnerships</p><p> d. Commercialization- autonomy and user fees</p><p> e. Public Sector Reform- Cutback- the infamous 19% first cut f. Transfer to a public service organization or union</p><p> g. Contracting Out</p><p>3. Criticism: </p><p> a. Private sector and NGOs are not necessarily more effective and efficient than government agencies (Paul Nelson)</p><p> b. Loss of Coverage for social services (Rule of Structural Adjustment)</p><p> c. Can replicate private sector within government (Core of Reinventing Government argument-Osborne and Gabler)</p><p>1. Steering rather than Rowing</p><p>2. Customer Driven Government</p><p>3. Competition within Government and between units 4. Key is decentralization not privatization d. Privatization enhances corruption. Enhanced by cultural differences (Gifts vs. Kickbacks; corruption as lobbying the Executive- Klitgaard) REFERENCES</p><p>Robert Klitgaard, Controlling Corruption (Berkeley: University of California Press, 1988).</p><p>David Osborne and Ted Gaebler, Reinventing Government: How the Entrepreneurial Spirit is Transforming the Public Sector (New York: Plume Books, 1992).</p><p>Madsen Pirie, Dismantling the State: The Theory and Practice of Privatization (Dallas, TX: National Center for Policy Analysis, 1986).</p><p>Gabriel Roth, The Private Provision of Public Services in Developing Countries (Washington, D.C.: World Bank and Oxford University Press, 1987).</p><p>E.S. Savas, Privatization: The Key to Better Government (Chatham, NJ: Chatham House, 1987).</p>