Chapter 9: The Problems with Privatization.

As one might expect, if a man writes a book about privatization being the key to better government he most likely won't find many problems with it. Chapter 9 is about the problems associated with privatization. Savas claims that the first problem is the use of the word turns people off. "Public" denoted brotherhood, sharing, and community and people mistakenly interpret private to mean the negation of the important values. Savas believes that as a means privatization can be employed effectively by the welfare state (through vouchers), and as an end it is inimical to the welfare state. Another problem Savas identifies is fulfilling the necessary conditions for successful privatization. These conditions are pretty much the same conditions for a successful free market. There must be a large number of suppliers, well spelled out specifications for the services, and well informed consumers. There are also issues in regard to hard and soft services. Contractors for soft services (human services) have their performance evaluated according to their adherence to rules, not their output. This stifles innovation. In all, Savas doesn't see problems with privatization, but he does see obstacles. User charges (price discrimination), opposition to deregulation of franchises, halting ribbon cutting, the contracting out of human services to receive federal funds, and cream skimming (taking most profitable patients or services, leaving government services to provide residual care) are all seen as obstacles. While Savas discusses the effects (or lack of) of privatization on minorities (for hiring) in chapter 4, he doesn't see it as a problem.