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Article Summary

Henig, Jeffrey 1989-90. Privatization in the United States: Theory and Practice. Political Science Quarterly. 104(4):649-670.

Henigs article is an analysis of how privatization has become part of current public policy debates. He begins by discussing the theory of privatization, then moves to development and legitimation of the idea. He discusses how theory appropriates practice, and then how the practice became a partisan program. Finally, the article discusses a possible backlash to privatization and looks to the future.

Theory and Practice A theory of privatization, with its origins possibly as far back as Adam Smith, has played a key role in the emergence of it into current political debate. He points out that the privatization theory has indirectly helped the cause, but has not been married with actual implementation. Henig explains that the privatization movement has pointed to many local and state level measures, undertaken as managerial responses to fiscal constraints rather than pro-privatization experiments. The theory, as opposed to the practical implementation through government measures, has helped to both revive economic, laissez faire principles to explain government behavior, and to redefine preexisting local government practices.

Establishing the theoretical infrastructure Henig explains that privatization remained a fringe idea until recent decades because Americans had come to accept the welfare state and the necessity of government to protect groups such as the elderly, handicapped, orphans, and to protect the rights of racial minorities. Economist Milton Friedman helped push the idea that the government is a part of the economy (acting like a private monopoly) rather than a separate entity. He characterized government regulation as anti-consumer and helped create the distinction between government responsibility and government provision. Public-choice theorists helped to solidify the theory.

Becoming a Partisan Issue One of the results of the emergence of privatization theory to classify preexisting efforts by local governments to privatize was a new partisan nature to the issue. As privatization was brought to the national agenda in the 1980s, it was invested with a partisan content that undermined the atmosphere of pragmatic adjustment in which the practice initially took root.

Deregulation and Privatization The middle to late 1970s brought a deregulation movement that foreshadowed the privatization policies of the Reagan Administration. The decade was also a time that the strain of pragmatic skepticism at the core of American culture had to be assuaged. Studies by Savas and Roger Ahlbrandt tried to prove that privatization really works. Reagan turned privatization as economic theory into privatization as political strategy.

Reagans Agenda Reagans election allowed privatization advocates to get support at the national level:

1) Aggressive proposals for the sale of a wide range of government assets (federally owned parks, National Weather Service satellites, Conrail and Amtrak.)

2) Adoption of the term privatization and its definition as allowing the government to provide services without producing them.

3) Helped define the role of privatization by identifying contracting out, grants and subsidies, tax incentives, deregulation, vouchers, franchises and divestitures as elements of privatization that had already been used successfully at the state and local level.