Privatization and Public-Private Partnerships

By E. S. Savas | Go to book overview

CHAPTER ELEVEN Obstacles to Privatization

Privatization is like dismantling a bomb--it must be done very carefully, 1 for wrong decisions can have nasty consequences. There are obstacles to be overcome, arguments to be rebutted, proponents to be mobilized, and opponents to be thwarted.


Operational Barriers

Several surveys in the United States inquired about the principal operational barriers to privatization. In 1987 a survey was conducted of city officials in all cities with populations of more than 5,000 and county officials in all counties with populations greater than 25,000; the response rate was 19 percent. The responses differed by type of privatization: contracting, infrastructure development, or asset sales. The greatest impediment to privatization by contracting is the fear of loss of control, which was named by 51 percent of the responding officials. Employee (and union) resistance is second, identified by 47 percent of respondents, and politics is third, named by 42 percent. Politics and loss of control are named most frequently as impediments to infrastructure privatization and to the sale of government assets--each is cited by about 38 percent of the respondents. 2 The labor issue is not as significant in asset sales, because the number of workers affected is relatively small.

A similar survey of U.S. state governments in 1992 drew 158 responses. Loss of control and labor problems are ranked by state officials as the principal impediments to contracting for services, the same as their ranking by local officials. The need for enabling legislation, the fear of loss of control, and the lack of awareness of methods are the main impediments to privatization of infrastructure and to the sale of government assets. 3

Another survey looked at social services and health services. 4 Contracting is the principal mechanism for privatization of these services;

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