In this way, government has some similarities with private companies.
While some would argue that the two groups are completely different, both
have gone through a variety of phases in which new management practices
were tried. Some succeeded, some failed, and others were adapted to fit spe-
cific needs. In fact, some of the pressures on public agencies to try new bud-
geting and management approaches have come from successes in the private
sector. Corporate executives and taxpayers alike expected public officials to
keep pace with private businesses as they struggled to stay competitive.

Public agencies traditionally have felt less pressure for accountability
because they enjoyed a sense of monopoly power and had the taxing power
to generate required revenues. Many of the services provided are considered
critical to the well-being of residents. For example, there is only one police
or fire department to provide services in a city. As long as the service seemed
effective, relatively little pressure was mounted to reduce costs or imple-
ment better management practices.

Most businesses, on the other hand, continually face new competitors
trying to find new markets. They offer improved products, lower prices,
better services, and expanded features to attract customers. Businesses have
had to find ways to reduce costs in order to compete effectively with new
firms. Improved management practices have been an important part of
increasing the competitiveness of these companies.

The experiences of businesses in "tightening their belts" and becoming
more efficient to meet competitive pressures have caused business leaders
and taxpayers alike to demand similar actions by governments. Nationally,
a major thrust arose in the early 1990s, under the title of Reinventing Gov-
ernment, to help public agencies adopt innovative approaches to determin-
ing markets, implement new management techniques, and otherwise
become more efficient. Much of this initiative was created by the work of
Osborne and Gaebler ( 1992). The national attention paid to these issues by
Vice President Al Gore in the National Performance Review stimulated
interest in many approaches, including privatization alternatives. In fact,
the increased attention cemented interest in the issues by both Republicans,
who are usually associated with private sector interests, and Democrats,
who are traditionally seen as representing a labor constituency.

Governments have always bought services from companies and, for a
long time, have hired private businesses to manage or deliver services
through a contract. The pony express was one prominent, visible example
of privatization from the nineteenth century, although it was not labeled as
such at the time. Street and road construction and maintenance have often
involved contracting with private builders. Because of the complexity and
technical knowledge needed, water treatment has involved contractual
arrangements between cities and private companies that can achieve signif-
icant economies of scale by providing this service. While these arrange-
ments have existed for decades, and even centuries, the term privatization

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