White Paper on Privatization

by Ellen J. Dannin, Professor of Law

Most of what we hear about privatizing public services these days carries the same simple message -- privatizing is good. More sophisticated stories explain that the reason privatizing is good is that only the private sector can deliver a quality product at the lowest possible price.

However, like most things in life, privatization is more complex than this. Whether to have certain public services and how to deliver them are decisions with profound impacts on all of us. As San Diego, California, and the country move towards privatizing, it's time has we members of the public learn more about this issue or risk forfeiting our role in this democracy.

This paper takes a look at some of the most commonly held beliefs about privatizing public services. Some of what you read here may surprise you or raise issues you hadn't seen discussed before.

1. Governments are broke because public services and tax dollars have been mismanaged.

Here are some important reasons governments are finding themselves with budget problems these days.

2. Government spending is full of incompetence, waste and fraud. Privatizing would eliminate this problem.

3. Market forces and competition ensure that the private sector delivers a higher quality service at a lower cost than the public sector.

4. It's impossible to get rid of bad public employees, so they don't care about their jobs.

5. Private corporations make more efficient use of funds and eliminate waste.

6. Money paid in taxes would make us all richer if spent in the private sector.

7. All the studies show that privatization is better.

The Hebdon report found:

In conclusion, we found privatization to be, at best, a disruptive, socially destabilizing, and ultimately harmful method of cost saving. At its worst, privatization can actually increase costs, lower the quality of services, reduce public accountability, and marginalize citizen involvement in the democratic process. ... The rational solution is to seek creative alternatives to the way services are currently provided by improving the utilization of the existing workforce. The practical answer, we believe, can be found in fundamental reform of pubic sector work process through dialogue, discussion, and negotiations. This is the challenge for politicians, management officials in the public sector, public employee unions, and employees.

Ellen J. Dannin, Professor of Law
California Western School of Law
225 Cedar Street, San Diego, CA 92101
(619) 525-1449 phone
(619) 696-9999 fax
ejd@cwsl.edu - email