TEMPLE UNIVERSITY
Department of Economics
Ritter Hall Annex 815
Tel. (215) 204-5037
Economics and Management of Privatization
Instructor: Dr. Simon Hakim
General:
This course reviews, analyzes, and exhibits experiences in restructuring efforts of state and local governments. It will center on privatization, a phenomenon, which is widely applied in the U.S., Western Europe, South America, and the nations, which were created from the former Soviet Union. The field of public finance has grown over the period of increased government intervention in the marketplace. Privatization is a new trend that spread internationally at the end of this century and is expected to further intensify. Services, which were traditionally within the domain of governments, are transferred to private profit and non-profit entities. There are three general forms of privatization: Divestment (Sale, free transfer, and liquidation), Delegation (Contract, franchise, grant, voucher, mandate), and displacement (Default, withdrawal, and deregulation).
Global privatization efforts include, for example land, manufacturing, police, courts, correctional institutions, mass transit, highways, rail, ports, state and local infrastructure, telecommunications, airlines, gas works, waste water facilities and schools. Students will be able to participate in such efforts with either government or corporations, which provide similar services.
The theory is derived from microeconomics, and planning theory. Experiences will be evaluated using managerial and economic models. The main objective of the course is to develop skills by the participants to actually evaluate and implement such techniques to government agencies and private contractors. The course is designed as a "how to", such that its graduates will enjoy specific skills at the market place. Such skills will be enhanced by the independent projects conducted by individual or teams and evaluated by the entire class. Readings for the course include actual implementation cases, which the students can review in order to design their own project.
The course is designed on the theme of a planning process. The stages will include in a sequential order the identification of the problem (s), statement of goals and objectives, data collection, development of alternative actions, evaluation of the alternatives, selection of the preferred action, improvement of the preferred alternative, development of a detailed plan, and implementation. A variety of evaluation techniques will be presented and students will be required to use a particular model in their individual project.
The questions, which arise, are:
What are the criteria to be satisfied in order to privatize an asset or service?
Could any other managerial methods be used to improve service delivery under government control?
What are the services and assets, which could be privatized?
What type, if any, of government control should still exist?
How to actually conduct the transfer?
What can be learnt from the experience gained at other places?
Description of the Course:
This is a course, which introduces the student to the theory of privatization. It will further involve description, and analysis of such efforts, and design implementation procedures. The objectives will be reached through class work, and independent research projects of students. Teams of students will preferably conduct these projects.
The success of the course depends upon few elements:
-- Constant feedback to the instructor, which includes criticism, and suggestions about material, covered and class conduct.
-- Extensive reading by students of the books and articles at the reserve section of the library. If certain readings are unavailable at the library then the instructor should be notified.
-- Extensive class participation of the students.
-- It is required that students attend all meetings. The nature of the course and its requirements make it very difficult for students to succeed without being in class.
--We will conduct debates on the various subject matters: police, correctional institutions, schools, and transportation. Students will be grouped into three groups: pro and con privatization, and a jury group. Ground rules for debate:
n Each side prepares ahead of time the opening statement that includes the issues to be addressed. Only issues raised by the two sides can be addressed in the debate.
n Each side will support the statements with facts. Hypothetical statements will be discounted in value.
n The debate includes the opening statement, debate, and closing statement.
n The jury will control the entire debate. The jury will provide a written document that summarizes the debate, the decision about the winner, and the justification for their choice of the winner.
Textbooks:
The single most important source of information is the publication section of the web page of the Center for Competitive Government. See, http://www.sbm.temple.edu/ccg/publications.
1. E. S. Savas, 2000. Privatization and Public-Private Partnerships. Seven Bridges Press, Chatham House Publishers, New York.
Recommended Books: All books are listed on our website: http://www.fox.temple.edu/ccg/publications and are available in the library. I request that you do not keep books for longer than three days so others have the opportunity to review them.
3. Gary Bowman et al. 1993. Privatizing Correctional Institutions. Transaction publishers, New Brunswick, New Jersey: 51-74.
4. Simon Hakim et al. 1994. Privatizing Schools and Educational Choice, Praeger Publishers, Westport, Conn.
5. Simon Hakim et al. 1996. Privatizing Transportation Systems, Praeger Publishers, Westport, Conn.
6. Paul Seidenstat, Michael Nadol, and Simon Hakim 2000. America’s Water and Wastewater Industries: Competition and Privatization. Public Utilities Reports, Vienna, Virginia.
7. Privatization and Competition in Telecommunications: International Developments. Daniel Ryan (ed.), 1997.
8. Smart Contracting for Local Government Services- Processes and Experience. Kevin Lavery (ed.), 1999.
9. Restructuring State and Local Services-Ideas, Proposals, and Experiences. Arnold Raphaelson (ed.), 1998.
10. Privatization and restructuring of Electricity Provision. Daniel Czamanski (ed.), 1999.
11. Making Government Work: Lessons from America’s Governors and Mayors. Paul Andrisani, Simon Hakim, and Eva Leeds, Rowman & Littlefield, Lanham, Md. 2000.
12. Restructuring Education. Simon Hakim, Judith Stull, and Daniel Ryan, Praeger, 2000.
13. The New Public Management: Lessons from Innovating Governors and Mayors, Kluwer Academic Press, 2002.
Books 2 through 10 are mostly part of our book series with Praeger Publishers. All books and files by subject matters are available at the reserve section of the library.
Course contents:
First week:
In the first meeting the requirements of the course will be discussed. Suggestions will be made for the required papers.
Principles of privatization: Public Finance theory. Characteristics of public goods, when and at what level is government intervention necessary. Introduction of Bowman et al., 1992. Chapters 1 through 3 in Savas, 2000. See also Introduction to Privatization under Publications on the Center’s web page
Second week:
Dichotomy of privatization. Savas,E.S. 1992. "Privatization", in Encyclopedia of Government and Politics, vol. 2, New York: Routledge, pp. 821-836. The process held for privatization. U.S. General Accounting Office, Privatization: lessons learned by State and Local Governments, March 1997. (On reserve).
Privatizing the justice system-- police, adjudication, and corrections. False alarm and private response. See, in ccg: Publications, Articles (http://www.sbm.temple.edu/ccg/publications.html).
Debate: Public - private policing, analysis of specific police services.
Police: Bowman, Hakim, and Seidenstat, reference 2.
Erwin Blackstone, and Simon Hakim. 1996 Police Services: The Private Challenge. Independent Institute Report, Oakland, CA.
Erwin Blackstone, and Simon Hakim. 1996. "Crying wolf with public safety". American City and County Magazine. August: 54-64.
Third week:
Corrections: Reference 3.
Simon Hakim and Erwin Blackstone, 1996.
"Privately managed prisons go before the review board", in American city and county, April: 40-50.
Debate: Public-private construction, management, and contracting out of correctional services.
Child Welfare: See our articles in the Publications section on the Center’s web Page. http://sbm.temple.edu/ccg/cj22n3-6.pdf. http://www.catoinstitute.org/pubs/journal/cj22n3/cj22n3-6.pdf
· U.S. Department of Health and Human Services, Administration for children and Families, The AFCARS Report, June 2001.
· U.S. Department of Justice, Office of Juvenile Justice and Delinquency Prevention, “Family Disruption and Delinquency”, Juvenile Justice Bulletin, September 1999.
· Richard P. Barth, “Effects of Age and Race on the Odds of Adoption versus Remaining in Long-Term Out-Of-Home Care,” Child Welfare, March/April 1997.
· The Evan B. Donaldson Adoption Institute, Adoption in the U.S., October 2000. http://www.adoptioninstitute.org.
· Conna Craig et al., “Blueprint for the Privatization of Child Welfare”, Reason Public Policy Institute, Policy Study No. 248, December 1998.
Forth week:
Educational choice: theory, types of choice, experiences, and lessons.
Reference 4. Chapters 1, 6, and 15.
Ref.: http://www.swcollege.com/bef/policy_debates/vouchers.html
www.manhattan-institute.org/html/mi_publications.htm.
Debate: Public - private educational choice, voucher system, privatization of schools, state takes over of schools.
Transportation systems: airports, water ports, highways, and mass transit. Reference 5.
Highways: Peter Samuel, "Highway Aggravation: The case for privatizing the highways. www.his-com/~cwealth. See our article in American City and County Magazine.
Debate: Public - private ownership and operation of airports, highways, and mass transit. A separate debate will be conducted for each of the above three areas.
Students will present their research projects in the forth and fifth weeks.
Other tentative debates are:
Debate: Deregulation of telecommunications and the airline industries.
Debate: Privatizing the state liquor industry in Pennsylvania. See Arnold Raphaelson, Restructuring State and Local Services, Praeger Publisher, 1998. Chapter 10. It is available on the Web: http://oll.temple.edu/economics/wkpapers.htm. Under Working Papers on the Center’s web page.
Course Requirements: One major paper, presentation of the paper, and participation in the debates. Attendance is required. In case that a student misses a class it is his/her responsibility to contact another student or the instructor about what happened in class and the requirements for the forthcoming meetings. The final grade depends upon the completion of all requirements.
The paper should deal with a particular field of privatization and should differ from each other. Joint work in teams of 2-4 students is welcomed. "Power Point" presentations are most desired.
The teams will present the research findings in class. The paper should be structured as a regular scientific article including division to sections, informative title for the paper and for all sections, fully cited references, and footnotes. The paper should be 8 to 14 pages, and double spaced.
Articles and reports for the paper are available in the reserve section of the library. The reports and papers are organized in files by subject areas and the students are requested not to misplace any of the material. It is also possible to search the Internet for relevant material. Check the library's ProQuest, and the search engines: www.metacrowler.com and www.dogpile.com.
Within one week from the start of the semester, each student must submit a typed outline for the paper. The outline should include:
-The subject of the paper.
5 to 10 sentences that summarize the paper.
-The planned sections of the paper, and 2-3 sentences outlying the contents of each section.
-Fully cited references that will be used.
The final grade in the course will be derived in the following manner:
Paper 40 percent
Outline of paper 10
Class presentation 20
Participation in class 10
Participation in debates 20