The Possibilities and Limitations of Privatization

Abstract

Privatization, a perennial feature of American governance, expanded significantly in the second Bush Administration but is now subject to an extensive re-assessment. Government by Contract, edited by Jody Freeman and Martha Minow, is an excellent and timely collection of essays on the subject. The contributors are all highly knowledgeable, have read each other’s work, and responded to each other in ways that deepen the debate. This review identifies the common ground that they trace out as a result of their dialogue: first, that policy making should remain in the control of politically accountable government authorities; second, that the primary purpose of privatization is to achieve greater efficiency; and third, that this efficiency gain depends on the claim that private contractors are competitive entities in a competitive environment. It then identifies some of areas where which the contributors disagree, the most significant being the competitiveness of the contracting process and the resulting level of efficiency that it achieves. Finally, it discussed some of the possibilities for privatization that lie beyond the realm of contractor efficiency. These considerations suggest that privatization is not an issue that will yield to a simple or uniform solution. Rather, what will be required, as we move forward into a new era of American governance, is a fine-grained microanalysis of the possibilities and limitations of privatization in the many situations where it is potentially applicable.

Keywords: privatization, government contracts, governance, administration