Mildred E. Warner

Building social capital:: The role of local government

This paper explores the constructability of social capital and specifically the role formal state supported institutions can play in structuring community level interventions to build social capital.

Applying Market Solutions to Public Services An Assessment of Efficiency, Equity, and Voice

Political fragmentation in metropolitan regions makes equitable and efficient delivery of public services difficult. Regionalism, although promoted as more equitable and rational, has found limited political support. Public choice theory argues, against regionalism, that political fragmentation can promote competition and efficiency by creating markets for public services. The authors assess the efficacy of market solutions for metropolitan public service provision by comparing privatization with intermunicipal cooperation and evaluating each on efficiency, equity, and democracy grounds. Using probit regression analysis of a national survey of local government service delivery from 1992 and 1997, the authorsfind that both alternatives promote efficiency, but equity and voice are more associated with intermunicipal cooperation than privatization.

Beyond the market versus planning dichotomy: Understanding privatisation and its reverse in US cities

Abstract City service delivery requires planners and city managers to move beyond the public–private dichotomy and explore the benefits of interaction between markets and planning. Using International City County Management survey data on US local governments from 1992, 1997 and 2002, we find a shift where reverse contracting (re-internalisation) now exceeds the level of new contracting out (privatisation). We model how a theoretical shift from new public management to new public service in public administration mirrors a behavioural shift among city managers. Results confirm the need to balance economic concerns with political engagement of citizens and lend empirical support to a theory of social choice that links communicative planning with market management.

Rural—Urban Differences in Privatization: Limits to the Competitive State

Despite two decades of experience with privatization, US local government use of contracting in public service delivery remains relatively flat. Market approaches to public goods provision emphasize the competitive state, and attribute limited degree of privatization to bureaucratic resistance. Rural development theory emphasizes the uneven impact of market solutions in rural communities. Using national data on US local government service delivery from 1992 and 1997, we analyze differences in local government service-delivery patterns by metropolitan status. Discriminant analysis suggested that structural features of markets are more important than the managerial capacity of government leaders in explaining lower rates of privatization among rural governments. These structural constraints limit the applicability of competitive approaches to local government service delivery. Our results suggest that cooperation, as an alternative to privatization at the local level and as a source of redistributive aid at the state level, may provide a more equitable alternative for disadvantaged rural communities.

The Uneven Distribution of Market Solutions for Public Goods

Using national data on local government service delivery from 1992 and 1997, this article assesses the distribution of privatization and inter–municipal cooperation across localities in the metropolitan region and finds them most common among suburbs. Coasian economics argues market solutions may offer an alternative to regional government in the fragmented metropolitan area. However, our discriminant analysis shows the use of market solutions is highest in suburban communities that also exhibit high income and low poverty. Thus, market solutions appear to reflect the inequality among municipalities in the metropolitan region. Some system of regional market governance is still needed to internalize the costs arising from regional inequality in public service delivery.

Insourcing and Outsourcing

Problem, research strategy, and findings: While contracting for the private delivery of public services is common, reversals from private to public provision are also common. Indeed, our U.S. data indicate insourcing (reverse contracting) is roughly equal to the level of new outsourcing for 2002–2007. We analyze these data to better understand how city managers decide to privatize services, or to reverse their privatization. The International City/County Management Association collected survey data on the form of service delivery for 67 local government services; they also report many community characteristics and city manager opinion data we can use to explain that choice. Our statistical models suggest that transactions costs, market management, monitoring, and political interests are all associated with the decision to contract, or to reverse contract. Municipalities appear to experiment by outsourcing those services with high transactions costs, while insourcing reflects a lack of cost savings and the challenges of monitoring and market management of privatized services. Alternatively, mixed public and private delivery (concurrent sourcing) promotes competition and provides the capacity for public provision should contracts fail. Takeaway for practice: The dynamics of outsourcing and insourcing urban services plausibly reflect pragmatic experimentation by government managers in both directions. For private delivery of public services, monitoring is critical, especially as cities experiment with outsourcing services with high transactions costs. Managing market competition also matters, as does retaining the capacity to provide services in-house. Research support: This research was supported in part by U.S. Department of Agriculture National Institute for Food and Agriculture grant # 2011-68006-30793.

Reversing privatization, rebalancing government reform: Markets, deliberation and planning

Abstract The last decades of the 20th century witnessed a profound experiment to increase the role of markets in local government service delivery. However, that experiment has failed to deliver adequately on efficiency, equity or voice criteria. This has led to reversals. But this reverse privatization process is not a return to the direct public monopoly delivery model of old. Instead it heralds the emergence of a new balanced position which combines use of markets, deliberation and planning to reach decisions which may be both efficient and more socially optimal.

Cities and Sustainability: Polycentric Action and Multilevel Governance

Polycentric theory, as applied to sustainability policy adoption, contends that municipalities will act independently to provide public services that protect the environment. Our multilevel regression analysis of survey responses from 1,497 municipalities across the United States challenges that notion. We find that internal drivers of municipal action are insufficient. Lower policy adoption is explained by capacity constraints. More policy making occurs in states with a multilevel governance framework supportive of local sustainability action. Contrary to Fischel’s homevoter hypothesis, we find large cities and rural areas show higher levels of adoption than suburbs (possibly due to free riding within a metropolitan region).

Local government reform: Privatisation and its alternatives

Abstract Privatisation is only one of several alternatives for local government reform. Problems with lack of cost savings and the challenges of contract management have led local government reformers to explore other alternatives including municipal corporations, relational contracting and dynamic market management. Empirical analysis shows concerns with fiscal stress, efficiency, and managing political and citizen interests drive the reform process more than ideology. We argue that a more comprehensive framework is needed that gives attention to a wider array of alternatives for institutional reform.

Private finance for public goods: social impact bonds

Social impact bonds (SIBs) attract private investment to social programs by paying a market rate of return if predefined outcome targets are met. SIBs monetize benefits of social interventions and tie pay to performance, limiting governmental control once the contract is designed. Despite policy enthusiasm across the globe, SIBs have failed to attract private market investors without substantial additional guarantees. SIBs raise questions about government’s ability to ensure broader public values. Using literature on contracting, performance management, and public private partnerships, this exploratory analysis focuses on institutional design, transaction costs, and performance measurement, outlining the opportunities and concerns SIBs present.