Wednesday, December 28, 2011

This article ("The Dangers of Creeping College Privatization") from the Bacon's Rebellion blog describes the incremental privatization of state universities in Virginia.  In a nutshell, Virginia has been gradually de-funding its top state universities in exchange for the schools having more autonomy to raise tuition and restructure programs.  My favorite part of this article is the section where it describes the stealth aspect of incremental privatization:

To be sure, state education bureaucrats and legislators call it not “privatizing” but “restructuring.” This euphemism means the schools will gradually demand tuition closer to what is charged at the top national, private institutions but won’t have to go through the hassle that true privatization would entail — such as the selling of public property and making good on repaying decades of public investment.

The Privatization Blog has covered this issue as a nationwide trend previously here and here.  As stated previously, the eventual result of privatized higher education is that religious/sectarian schools come to dominate the field. The secular private colleges of today were nearly all started as sectarian schools to train ministers; many went secular partly to compete with the state-run universities. Among new colleges that start today, the trend is the same - the vast majority are religious-sectarian. Education is not a very profitable business, and requires heavy subsidization; for-profit universities are simply exploiting the taxpayer-funded student loans, and will collapse if the government stops the flow of free tuition money. The private sector rarely starts or maintains good colleges except when a sectarian group channels  money into it. In the end, higher education is funded mostly by taxpayer dollars or by church tithes. 

Tuesday, December 27, 2011

Nebraska Privatization of Welfare Services Increases Costs

This opinion piece recounts eloquently the failed attempt to privatize welfare services in Nebraska.  The following quote relays the basic facts:

From a business standpoint, there’s no doubt that privatization was unsuccessful. It did not rein in expenses, as leaders had said it would. Rather, much money was wasted in the name of saving money. Since the state privatized child welfare services in 2009, three of the five contractors dropped out because of financial management issues, and state spending actually increased by 27 percent instead of decreasing.

Unfortunately, this story seems to be rather typical of experiences with privatized welfare services, but many states do not try to reverse the change when things go badly.

Wednesday, December 14, 2011

Review - Delegation of Governmental Power to Private Parties

Delegation of Governmental Power to Private Parties: A Comparative Perspective, by Catherine M. Donnelly (Oxford University Press, 2008); ISBN-10: 0199298246, ISBN-13: 978-0199298242

This is one of the best books I have read about privatization from the standpoint of delegated government power.  The thoroughness of the research is astonishing - the author surveys all relevant court decisions from the U.S. (both state and federal), U.K., and the EU, as well as the leading academic articles and books.  The writing style is very readable, and the author takes a perfectly balanced approach to the issues presented by privatization/outsourcing. It's a major contribution to the field, comprehensive enough to be a reference book that I would use in a number of future article projects.  Here is a quote from the OUP page summarizing it:

Through a comparative analysis of England, the European Union, and the United States, this book considers legal responses to delegation of governmental power to private parties. It is argued that although private delegation has the potential to enhance the efficency and effectiveness of governance, it should not be assumed to have this result. Moreover, private delegation creates risks to democracy, accountability, and human rights. Any legal controls must therefore respond to the challenge of enhancing the potential effectiveness of private delegation, while minimising the risks associated with this phenomenon...The legal responses of the three jurisdictions to private delegation are categorised in a two-fold and functional way: responses which impose controls on the delegator of governmental power, and responses which impose controls on the private delegate of governmental power. 

Catherine Donnelly, author
That is a good overview of the structure of the book.  The upshot, however, is that in the U.S. and U.K., there really are not enough legal controls to prevent abuses in the context of privatization.  When a private firm is running a government service (such as a welfare office or licensing bureau), a citizen with a valid legal complaint often has trouble obtaining any legal recourse - the contractor says that it has no legal duty to the constituents, but only to uphold the terms of its contract, and the agency can often escape liability by saying that the acts were done by a private party, not a state actor.  Even though some courts have recognized that there should be due process concerns when a private party can use the power of the state to infringe on others' rights, usually courts have declined to be the arbiters in this arena, seeing it instead as a legislative-executive problem.  Yet there is also very little political accountability for privatization mishaps, and addressing the delegation problems through the contract terms has so far proved largely unsuccessful.

Tuesday, December 13, 2011

Problems with Privatized Rec Centers in Baltimore

This article describes the problems in Baltimore with privatizing recreational centers.  

Here's a quote:

Baltimore Mayor Stephanie Rawlings-Blake is getting a lesson in one of the major downsides of privatizing government services: When you ask outside groups to take over something the city has always done, their agendas won't always be the same as yours. That's what's happening with the mayor's plan to privatize some of Baltimore's recreation centers. One of the nonprofits that is bidding to take over two centers would provide programs not just for the kids that have traditionally been the rec centers' focus but also ex-criminal offenders and psychiatric patients. Another group seeking to take over two other centers would charge fees for the use of the facility, ranging from $30 a year for evening basketball and dance programs to $75 a week for summer camp.

Saturday, December 3, 2011

Virtually educated? Or not...

...nobody seems to know one way or another.

In her column in today's New York times, Gail Collins reports that online educators are targeting poor families. And business is booming! Especially since lobbyists for a powerful online education company convinced Tennessee legistators to scrap the state's own online education program in favor of a privately-run program.

But apparently, nobody has studied whether the online education is a success or not. If other attempts at privatization are any indicator, probably not.