The United States: The Privatization of Real Estate Related Public Goods and Services in the United States

Authors

• Leonard V. Zumpano

Abstract

During the last three decades the privatization or outsourcing of what has traditionally been considered public goods and services has become commonplace. Privatization, however, is not a monolithic concept, and encompasses many different and some newly emerging delivery systems. This study provides an overview of the current status of privatization in the U.S. as we move into the new millennium. Although the survey data discussed in this paper reveals that privatization is continuing to expand, the rate of privatization activity in the U.S. appears to have slowed from the levels reported in earlier studies. While the principal motive for outsourcing remains cost containment, there is increasing concern being expressed about the true cost of privatization. While past experience with outsourcing suggests that government officials are relatively satisfied with the results, the surveys also reveal room for improvement. Insuring the quality and the effectiveness of privatization will probably require greater monitoring and compliance activities on the part of government authorities, which will raise costs. Studies of outsourced public housing projects suggest that operating costs can be reduced without a significant loss in the quality of services. This does not mean, however, that citizens always benefit from privatization or that outsourcing is always the best course of action. This study also suggests that the quality of public service delivery systems can be improved when government agencies compete against the private sector for the right to continue delivering governmental services. In other cases, franchising, vouchers, and subsidies may prove more effective.