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You Don't Always Get What You Pay For: The Economics of Privatization (A Century Foundation Book)

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Today, nearly all public services―schools, hospitals, prisons, fire departments, sanitation―are considered fair game for privatization. Proponents of privatization argue that private firms will respond to competitive market pressures and provide better service at lower cost. While this assertion has caused much controversy, the debate between both sides has consisted mainly of impassioned defenses of entrenched positions.

In You Don't Always Get What You Pay For, Elliott D. Sclar offers a balanced look at the pitfalls and promises of public sector privatization in the United States. By describing the underlying economic dynamics of how public agencies and private organizations actually work together, he provides a rigorous analysis of the assumptions behind the case for privatization.

The competitive-market model may seem appealing, but Sclar warns that it does not address the complex reality of contracting for government services. Using specific examples, such as mail service and urban transportation, he shows that ironically privatization does not shrink government―the broader goal of many of its own champions. He also demonstrates that there is more to consider in providing public services than trying to achieve efficiency; there are issues of equity and access that cannot be ignored.

Sclar believes that public officials and voters will soon realize the limitations of "contracting out" just as private corporations have come to understand the drawbacks of outsourcing. After examining the effectiveness of alternatives to privatization, he offers suggestions for improving public sector performance―advice he hopes will be heeded before it is too late.

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About the Author:

Elliott D. Sclar is Professor of Urban Planning at Columbia University, where he is also director of Graduate Programs in Urban Planning. An economist by training, he is a research associate at the Economic Policy Institute in Washington, D.C. Sclar is the co-author of several books, including Access for All: Transportation and Urban Growth and Shaky Palaces: Home Ownership and Social Mobility in Boston's Suburbanization.

Review:

"Elliot Sclar's important new book, You Don't Always Get What You Pay For: The Economics of Privatization....shows, in an accessible and non-technical style that, to understand the strengths and weaknesses of public service privatization, it is necessary to understand the theory behind the policy."



"Elliott Sclar's critique will serve as a valuable reality check against the rush to private contracting as the solution to government's problems. In this empirically rich, closely reasoned book, Sclar shows how privatization diverts attention from effective strategies for government reform that are based on innovation, employee involvement, and the redesign of services."

(Martin D. Hanlon, Queens College of the City University of New York)

"Sclar... has written a highly readable... account... which ought to be required reading for those engaged in contracting out government services. Recommended for public, academic, and professional library collections."

(Choice, October, 2000.)

"Proponents of greater reliance of private contracting for government services, among whom I count myself, often speak as if privatization guarantees better results at lower costs. But Elliott Sclar's careful analysis of the historical record will persuade all but the most hardened skeptic that this is not always true. You Don't Always Get What You Pay For should be required reading for government reform advocates from all parts of the political spectrum."

(Robert H. Frank, Cornell University)

"The domestic enthusiasts of privatization seem to believe that if you want a job done right you must ask the private sector to do it...Before they bubble over with giddy, rich-kid ideas like letting Federal Express take over the local post office, they should sit quietly in a corner and read Elliot D. Sclar's new book, You Don't Always Get What You Pay For... With breathtaking clarity, Professor Sclar reminds us that today's privatization is nothing more than a fancy label for yesterday's public contracting...But as this book demonstrates with one delicious and well documented example after another, you don't have to be corrupt to botch public contracting... The wisest lesson that Professor Sclar offers is that poorly managed privatization can collide with important public values... His examples and his analysis―and most of all his plea for sensible attention to good public management techniques―deserve wide notice. Even if politicians don't heed his advice, taxpayers should.."



"How to describe You Don't Always Get What You Pay For―as practical assessment anchored by theory, or as theory enriched by real-world examples? From either angle, Elliott Sclar freshens and deepens an important debate."

(John D. Donahue, Harvard University, author of The Privatization Decision)

"This book by Elliot Sclar is essential reading for anyone who wants to understand the bases and consequences of the still powerful drive to privatize... In short, Sclar's book is a work of enlightenment... It should be studied closely by anybody with a serious interest in these important issues."

(Edward S. Herman, University of Pennsylvania. Texas Observer, September 2000)

"You Don't Always Get What You Pay For is an excellent book on an extremely important topic, discussing in depth the theory and practice, and pitfalls as well as promises, of privatization. Elliott Sclar does a wonderful job of placing the debate in its proper theoretical context, which few others do, and explaining rather complex concepts in an easily understood style―no small feat. I was stunned by Sclar's ability to describe rather obtuse theories so readily―there are 'gems' throughout. He has a gift."

(Bruce Wallin, Northeastern University)

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