PIA 2528 n Governance Local Government and Civil

PIA 2528 n Governance, Local Government and Civil Society

Overall Theme GOVERNANCE

Prelude: Discussion of Readings-1 n Berger, On Pain (Author of the Week) n Paul and Israel, NGOs and Civil Society n Cernea and Clayton, NGOs and Local Development n Esman and Uphoff, Local Organizations

NGOs and Governments: Relief and Development Overall Theme: “Liberalism, Privatization and Governance”

Governance, Local Government and Civil Society: Four Themes n TRADITIONAL VIEWS OF THE STATE n INTERNATIONAL DONORS n IMPACT ON CIVIL SOCIETY n PRIVATIZATION AND CONTRACTING OUT

The Public Sector and The State SUB-THEME: THE RELATIONSHIP TO LOCAL GOVERNMENT

Max Weber-1864 -1920 n Liberalism and the State- Influenced by the Prussian model of the state n Note: It was history that influenced the ideas of two late 19 th century intellectuals, Karl Marx and Max Weber n Myth- Bureaucracy as a neutral actor

Governance Issues Continued Focus on Local Government § Primary unit of government that has both political leadership and bureaucratic structures

Local Government n Focus on the Bureaucratic Structures n A Five Minute History of the Bureaucracy

Evolution of Public Sector: Max Weber 1. Traditional 2. Charismatic 3. Legal Rational

1. Traditional- Fused 1. looked back at China, Egypt, Rome and Africa 2. Fused System- magic, mystification and witchcraft 3. Key- gradual move to rational separation of King from government

2. Charismatic- Revolutionary and the Aftermath of French Revolution, 1789 -1815 1. State identified with the movement and leader 2. Apex under Napoleon 3. Allegiance of civil servant to leader- French revolution- emphasis on science and engineering 4. Highly Centralized State

Charismatic 5. Key: Routinization of Charisma n n -from leader, shift loyalties one step further to nation -basic ministries- finance, foreign affairs, War, Justice, Interior

6. Legal-Rational Model- Modern: specialized/technical: Characteristics n a. Merit Selection n b. Hierarchy- Chain of Command n c. Division of Labor and functional specialization n d. Administrative work: full time, no sinecures e. Contractual agreement

Legal Rational Model, Two f. Professional or technical training g. Fixed salaries h. Formal framework of rules and procedures i. Written records and files j. Separation of office from incumbent- bureau from the occupant. eg. the Bureaucrat

Local Government: Key Principles 1. Build or Transfer Bureaucratic Capacity from National to Local Government 2. Capacity is the Key to Decentralization 3. Key to Development: Planning

Problem: The Failure of the State n Corruption n Ethnic and Religious Conflict n Fragile States n State Collapse

Corruption—the Real Problem? Robert Klitgaard n Corruption: n Graft n Bribery n Nepotism n Kickbacks n Insider bidding (wired) n n Can and should corruption be controlled?

Corruption—the Real Problem? Robert Klitgaard n “Rent Seeking” n Charges higher than market price n Corruption n Too much government or too much privatization?

Corruption Rent Seeking stimulates corruption. Enhanced by cultural differences (Gifts vs. Kickbacks; corruption as lobbying the Executive- Robert Klitgaard)

Corruption—the Real Problem? Robert Klitgaard n Corruption as “functional” and cultural n Are there benefits from corruption? n Getting things done means paying for it n Causes of corruption n Poverty vs. ethnicity

Corruption and Ethics n The Ethical Issues in a society of poverty n Obligation to family vs. obligation to society n The starving children problem: Yours or the World’s?

Local Government and Civil Society: THE PROBLEM? n Alternative Models of Social Services Systems n The Context of Privatization and Contracting n Criticisms of Contracting Out: The Blackwater Problem

Coffee Break n Fifteen Minutes

Privatization and Contracting Out A Survey of the Literature

Overview: Governance&New Public Management Principles A. Privatization B. Contracting Out C. The Nature of Social Services D. Re-inventing Government

Privatization n Privatization- A Process: n The process of divesting direct public sector responsibility for the provision of public services or the collection of revenues n Ideal: Key to the provision of efficient and effective goods and services (Savas)

Privatization- The Private Provision of Services: n Use of conventional Markets: no public sector involvement (Purely private) n Contracts with public agencies n Monopoly Franchises

Privatization, Two n Management Contracts n Vouchers n Consumer Cooperatives

Service Delivery Systems and Categories of Service Delivery • Key to Privatization • Issue- Size: • Hard services or soft • Capital or recurrent costs

Types of Privatization n Intergovernmental or interdepartmental vending agreements n Franchises and Monopolies n Subsidies n Contracting

Types of Services n Macro- Physical Services- Highways, Sewerage Main Lines, Electricity [Deconcentrated or Privatized] n Micro- Physical Services- [Devolved, or Delegated ] n Social Services-Health, Education or Community Development (such as Social Funds) [Delegated or Contracted] n Investment or Production [Privatized]

Dismantling the State: Madsen Pirie- Ideological or rational The arguments in favor of “Dismantling” the State 1. Problem areas of public sector performance n Production, Labor, Consumer, Administrative 2. The Deficiencies of Public Sector Reform n Efficiency, waste and budget control 3. Evaluation of Techniques of Privatization?

Privatization as the key to Better Government: E. S. Savas Arguments for Privatization: n Ideological n n Pragmatic n n normative, too big Commercial n n size of government generate private sector development Populist n empowerment, choice, and community based activities

Privatization as the key to Better Government: E. S. Savas Twin Dilemnas n Keynesian vs. Neo-Orthodoxy n Arguments about exclusion

Private Provision: Defined 1. Use of conventional Markets 2. Contracts with public agencies 3. Monopoly Franchises 4. Management Contracts 5. Vouchers 6. Consumer Cooperatives

Privatization as the key to Better Government: E. S. Savas Services, Local Government and an Assessment of the Privatization Arguments n Government---Taxes n Government---Fees, or tolls n Government---Vending Mchanisms

Ways and Means of Privatization a. Liquidation- Close down (Load Shedding) b. Divestiture- Sell off in whole or in part government shares c. Public-Private partnerships d. Commercialization- autonomy and user fees

Ways and Means of Privatization, Two e. Public Sector Reform- Cutback- the infamous 19% first cut f. Transfer to a public service organization or union g. Contracting Out

Reasons for Privatization a. High Production costs n b. Low levels of efficiency n c. Featherbedded labor costs n d. Pork Barrel Capital Allocations

Reasons for Privatization n e. Low level consumer input n f. Poor Maintenance and loss of service n g. Inability of political leaders to impose cost control n h. Free Riders

Privatization: Theory a. The Need for Exclusion b. User Fees not taxes: the principle of tolls c. Need to exclude Collective, and some would argue, common pool goods from privatization d. Worthy goods (health, education, etc. ) are not collective goods

Private Provision—Contracting: Gabriel Roth n Making the Choice n Contracting and Non-profits n Issues of privilege n Debate about transaction costs n Cost recovery vs. subsidies

Privatization Issues n Private Sector n Indigenous vs. Foreign (or Pariah) n Contracting vs. Grants n Sub-contracting and sub-grants: n Foreign Aid and a Blurring the lines

Criticism of Privatization a. Private sector and NGOs are not necessarily more effective and efficient than government agencies (Paul Nelson) b. Loss of Coverage for social services (Rule of Structural Adjustment) c. Can replicate private sector within government (Core of Reinventing Government argument-Osborne and Gabler)

Reaction to Privatization n Reinventing Government and Public Private Partnerships

Renewed Faith in the Decentralized State n The Need for Minimalist Functions n Pursuit of Sound Economic Policies n Promoting of Decentralized Democratic Governance n Support for Institutionalization of private secotr and civil society

Reinventing Government: David Osborne and Ted Gaebler 1. Steering Rather Than Rowing- Weberian Bureauracy: Bankrupt? 2. Customer Driven Government 3. Competition within Government and between units and Entrepreneurial Government 4. Earning as well as spending--charging fees and selling goods and services 5. Key is decentralization not privatization 6. Third sector vs. Private sector Use of Non-governmental organizations rather than Privatization

Reinventing Government: David Osborne and Ted Gaebler n Community Based Government n Subsidiarity n People as citizens or consumers n Is there a difference? n TQM—add on to consumers n Government agencies compete with themselves

Reinventing Government: David Osborne and Ted Gaebler n Mission vs. Rules based government: n NASA and the Moon—Output based government n Incremental vs. Zero Based (or targeted) budgets n Development State and Civil Society

Decentralization and Democracy n The Circle Rounds n Transparency, Accountability, Responsiveness, n Participation and Equitable Treatment

Literature n REFERENCES n Robert Klitgaard, Controlling Corruption (Berkeley: University of California Press, 1988). n David Osborne and Ted Gaebler, Reinventing Government: How the Entrepreneurial Spirit is Transforming the Public Sector (New York: Plume Books, 1992).

Literature n Madsen Pirie, Dismantling the State: Theory and Practice of Privatization (Dallas, TX: National Center for Policy Analysis, 1986). n Gabriel Roth, The Private Provision of Public Services in Developing Countries (Washington, D. C. : World Bank and Oxford University Press, 1987). n E. S. Savas, Privatization: The Key to Better Government (Chatham, NJ: Chatham House, 1987).

Interlude: Discussion of Readings-2 n Huntington, Clash of Civilization and Harrison and Huntington, On Culture n Clark and Bastian and Luckham, On Democracy n Devi, Dhowli n Cheema and Rondinelli, On Decentralization n The Picard Stuff