Becky Anderson

Instructor Morris

Pols 460B

March 2, 2014

Case Study: Privatization and Inequality

1. This case study of privatization and inequality is about how inequality increases due to

privatization of public goods (Llorens et al, 97). A nonprofit group researched the effects of

privatizing public goods. Their findings indicate that government contracting increases

inequality (Llorens et al, 97). The nonprofit group found five ways in which government

contracting of public goods hurts the poor: creating new user fees, increase in existing fees,

privatization of the social safety net, decreased wages and benefits, and increased class and racial

segregation (Llorens et al, 97).

The inequality brought about from privatization of government goods is a great exercise

and example of how the contemporary world of public human resources management operates.

Budgeting is an aspect within the planning function of human resource managers. It is in the

budgeting process that resources get allocated (Llorens et al, 83). The government has a lot of

programs and public agencies, but it doesn’t necessarily have the funds needed to provide needed

services. Contracting and/or privatization has been, and may continue to be a solution.

2.1. While contracting out is a current solution, I do think that the potential for increased

inequality within a community should be a factor in evaluating contracting and/or privatizing

decisions. I understand the truth in what this chapter says, “The government response to revenue

shortfalls draws attention more broadly to the productivity of public agencies (Llorens et al, 89).

It makes sense that in order for the government to continue providing services, it needs to look
into contracting with private organizations to supply these services. A private company may be

able to provide a service at a lower cost (Llorens et al, 91). However, I fully agree with the text

when it says that “public-private partnerships that involve the use of contractors or privatization

means an increase in the number of organizations involved with service delivery and complicate

traditional notions of accountability between elected officials and administrators” (Llorens et al,

90).

Decreased accountability is not the only concern. By contracting out public goods, public

agencies are behaving more like private agencies in valuing efficiency (Llorens et al, 85). One of

the values for public HRM is social equity. This means to adequately represent all groups

(Llorens et al, 4). The report put out by In the Public Interest shows that contracting and/or

privatization is in conflict with the value of social equity (Llorens et al, 97). Government is

supposed to protect the public health, safety, and/or welfare. The report indicates the

privatization movement is doing the opposite (Llorens et al, 97).

Privatization also conflicts with the traditional HRM value of employee rights (Llorens et

al, 97). Contracts with private companies threatens the job security of public employees (Llorens

et al, 4). Threatening public job securities also increases inequality within a community. If we

value social equity, we will put the citizens’ needs first.

2.2. Social equity may at times conflict with efficiency. Making contracting and/or

privatization decisions can reduce public agency’s costs (Llorens et al, 98). This comes in

conflict with the value of employee rights. This traditional value protects employees from

political interference, from arbitrary treatment, from threats against job security, and from

interfering with job performance (Llorens et al, 4). Contracting out will have an impact on a

public HRM’s role. The budgeting process will look different in how funds are allocated
(Llorens et al, 83). Our text states that "public HRMs need to predict the pay and benefit costs

associated with alternative program delivery options" (Llorens et al, 87). Decisions to contract

out will effect staffing needs. At the same time, it increases the need for the public HR

department to perform contract negotiations (Llorens et al, 87). Downsizing may also result from

contracting out public goods (Llorens et al, 87).

3. Downsizing can be a function of a public HRM. This chapter was interesting; I learned

a lot more about the planning function of human resources management. I liked that the text

explained human resources planning as "that aspect of public HRM that mediates between the

political environment and managerial implementation of public programs through core HRM

activities" (Llorens et al, 81). However, this chapter has left me with questions. What can public

HRMs actually do to influence policy? This text indicated that a public HRM can give briefs or

reports, but it is up to the policymakers to act or not act (Llorens et al, 82). Our text also states

that a responsive question would be: "Is the goal we set out to accomplish worthwhile in light of

the other goals we might have chosen?" (Llorens et al, 86). What can we do to decrease the

inequality? If we reallocate funds, would we still need to contract and/or privatize? Is there a

way we can tax e-commerce to make up for loss in sales tax?