Economics and Management of Privatization
(Econ. 3511/1), Spring 2012.
Tuesday, Thursday 2:00-3:20, Titleman 400AB
Instructor: Professor Simon Hakim
1. Description of the Course
The course centers on the contemporary trend of government shedding nonpublic services and contracting-out (outsourcing) public services to competitive
markets. This is part of the general trend where business and non-business
entities concentrate on their main mission while contracting out peripheral
services to companies that concentrate on those specific services. By so doing,
greater competition in the provision of these peripheral services leads to more
efficient production, technological and managerial innovations, and economies of
scale of the producing firms. Privatization and Public Private Partnerships (PPP)
enable better utilization of the financial markets, expertise of private providers,
and dissemination of innovations from the private to the public sector.
The course incorporates both public finance theory and case studies in the
security industry, transportation, water and wastewater, education, prisons, and
welfare services.
2. Goals of Course, and methods to Achieve them
1. Learn the theory and practices for government’s role in the economy
Methods: Lectures. Exams include case studies, Harvard Style) for public decisionmaking.
2. Improve students’ independent research ability.
Methods: Introduce the students to a research process, and a planning style
structure of paper. See, http://www.fox.temple.edu/ccg/#presentations
Economics and Management of Privatization (#4 from top).
3. Objectives of the Course
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 Introduce the attributes of services where shedding, contracting out, and
PPP are possible, and the financial and managerial nature of such
reorganizations. The theory will guide in the selection of efficient
reorganization models.
 Review ‘best practices’ of the shift from public to private ownership,
finance, and/or delivery of services.

Help students conduct independent assessment of a public service
reorganization effort.
4. Subjects of the Course
 Public Finance theory on the attributes of public goods, and criteria for
privatization.
 Managerial and financial methods on efficient transfer of services and the
choice of the preferred PPP model.
 Review of privatization and PPP case studies. Evaluation of successful and
unsuccessful experiences, and lessons for public and private policy makers.
5. Bibliography
E. S. Savas, 2000. Privatization and Public-Private Partnerships. Seven Bridges
Press, Chatham House Publishers, New York.
Our publications and Power Point presentations:
http://www.fox.temple.edu/ccg/publications.html and on Blackboard for the
course.
Also, see the presentations: http://astro.temple.edu/~shakim (under Economics
3511)
6. Course Requirements
Requirements include one major paper, presentation of the paper, participation in
the debates, and an exam. Attendance is required. In case that a student misses a
class it is his/her responsibility to contact another student or the instructor to get
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the noted of the missed class, and the requirements for the forthcoming meetings.
The final grade depends upon the completion of all requirements.
The paper should deal with a particular field of privatization. Joint work in teams of
2-4 students is welcomed. "Power Point" presentations are most desired. I suggest
choosing a subject matter from the Center’s publication list. Final paper is required
in hardcopy by December 1, 2011. No extensions will be offered.
The teams must present the research findings in class. The paper should be
structured as a regular scientific article including division to sections, informative
title for the paper and for all sections, fully cited references, and footnotes. The
paper should be 8 to 14 pages, and double spaced.
7. Structure of Paper:
1. Cover page: Name, course, term, contact information
2. Abstract: problem, significance of problem, client, research question, major
findings
3. Introduction: problem, significance of problem, client, research questions,
contents of sections.
4. Background or literature review or historical review.
5. Description of alternatives. Include a summary table.
6. Evaluation of alternatives. Include a summary table with costs and benefits.
7. Summary and conclusions. Include the choice of the preferred alternative
and rationale. Summary and policy implications.
8. References used in the paper.
Within two weeks, students are required to submit a proposal for the term paper
which includes
 The subject of the paper. 5 to 10 sentences that summarize the paper.
 The planned sections of the paper and 2-3 sentences outlying the contents of
each section.
-Fully cited references that will be used.
The structure of the paper, the references can be changed in the course of the
work.
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8. Debates
Two debates will take place. The suggested topics are exposing schools to markets
(contracting out school management, vouchers, educational alternatives, charter
schools etc.) and privatization of prisons. Ground rules for the debate:
 Dividing the class to three teams: for and against privatization, and the court.
 Each side prepares the opening statement which is e-mailed at least two days
prior to the debate to the entire class.
 The court may establish its own rules and e-mail it to the class.
 Evidence should be prepared and submitted to the other side and the court
after made at the debate.
 The court has complete control of the debate. It starts with the opening
statements of each side, followed by the arguments that appeared in the
opening statement, concluding statements by each side.
 The court prepares and sends e-mail with its:
1. Summary of the main issues raised by both sides
2. The winner by two categories—the issue and the level of preparation and
presentations by both teams
3. An e-mail to the instructor with grades for each participant in the
debate.
9. Schedule of Classes
First week
In the first meeting the requirements of the course will be discussed. Suggestions
will be made for the required papers.
Roland, Gerard, 2008. Privatization: Success or Failure, Columbia University
Press, New York, New York. Read the Forward by Joseph Stieglitz, and the
Introduction by Gerard Roland.
http://books.google.com/books?id=lUNqywVGWLwC&printsec=frontcover#v=onep
age&q&f=false
Second Week
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Principles of privatization: Public Finance theory. Characteristics of public goods,
when and at what level is government intervention necessary. Introduction of
Bowman et al.1992. Chapters 1 through 3 in Savas, 2000.
Third week
Dichotomy of privatization. Savas,E.S. 1992. "Privatization", in Encyclopedia of
Government and Politics, vol. 2, New York: Routledge, pp. 821-836. The process
held for privatization. U.S. General Accounting Office, Privatization: lessons
learned by State and Local Governments, March 1997 (on reserve).
Forth Week
Public-private Partnerships, Contracting out
Fifth Week
Review of privatization efforts
Privatizing transportation systems: airports, water ports, highways, and mass transit.
Highways: Peter Samuel, "Highway Aggravation: The case for privatizing the
highways. http://www.his-com/~cwealth. Eduardo Engel, A new Approach to Private
Roads, Regulation Magazine, 2002.
http://www.cato.org/pubs/regulation/index.html
Buses: http://www.manhattan-institute.org/html/cr_30.htm
Seventh Week
Educational choice: theory, types of choice, experiences, and lessons. Reference 4.
Chapters 1,6, and 15.
Ref.: http://www.swcollege.com/bef/policy_debates/vouchers.html
www.manhattan-institute.org/html/mi_publications.htm.
http://www.independent.org/tii/media/pdf/tir72coulson.pdf
http://www.nytimes.com/2002/11/10/politics/10EDU.html?ex=1037965779&ei=1&e
n=11a4537201f9b56a
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Herbert Walberg, School Choice: The Findings, Cato Institute, Washington, D.C.
2007.
Debate: Public - private educational choice, voucher system, privatization of
schools, state’s take-over of schools.
Midterm exam
Eighth Week
Review of privatization efforts
Child Welfare: See our two articles in the Publications section on the Center’s
web Page: The Cato Journal, and Children and Youth Services Review. See also at
the bottom of website the links to other articles on adoption and foster care.
 U.S. Department of Health and Human Services, Administration for children
and Families, The AFCARS Report, June 2001.
 U.S. Department of Justice, Office of Juvenile Justice and Delinquency
Prevention, “Family Disruption and Delinquency”, Juvenile Justice Bulletin,
September 1999.
 Richard P. Barth, “Effects of Age and Race on the Odds of Adoption versus
Remaining in Long-Term Out-Of-Home Care,” Child Welfare, March/April
1997.
 The Evan B. Donaldson Adoption Institute, Adoption in the U.S., October
2000. http://www.adoptioninstitute.org.
 Conna Craig et al., “Blueprint for the Privatization of Child Welfare”, Reason
Public Policy Institute, Policy Study No. 248, December 1998.
Ninth-tenth-Eleventh Weeks
Review of privatization efforts: police, correctional institution, homeland security
Privatizing the justice system-- police, adjudication, and corrections. False alarm and
private response. See on our web site under publications the articles in Regulation,
the Cato Review of Business and Government, Privatization Watch, Evaluation
and Program Planning, and the Milken Review: A Journal of Economic Policy.
Also see the discussion Papers under Publications, Articles:
http://www.fox.temple.edu/ccg/publications.html
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Police:
Bowman, Hakim, and Seidenstat. Privatizing the US Justice System.
See, http://sbm.temple.edu/ccg/just.html
Erwin Blackstone, and Simon Hakim. 1996 Police Services: The
Private Challenge. Independent Institute Report, Oakland, CA.
Erwin Blackstone, and Simon Hakim. 1996. "Crying wolf with public
safety". American City and County Magazine. August: 54-64.
Homeland Security: First chapter: Safeguarding the Homeland:
Governors & Mayors Speak Out.
The rest of the semester is devoted to students' presentations of their
long-term papers.
10.
Midterm Exam
Debates, class participation
Presentation of final paper
Final paper
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Course Requirements
35 percent
15
10
40