Summary :
IT IS BY NOW commonplace to note that “decentralization” and “privatization” are worldwide movements. Not only in Western Europe and the United States, but also in the Third World, governments are trying to lessen their presence (at least in the economy), unload state enterprises, and rely more on private markets. At least in the Western democracies, common themes are reducing the role of national government, lowering public spending, reducing the direct provision of services, and intervening less in the lives of citizens. In each society, however, these ideas have different meanings and policies and raise different issues. In the United States, decentralization, deregulation, and privatization are usually thought of along two historic dimensions: the allocation of authority between units of government and between state and market.Within organizations, whether public or private, decentralization refers to the process of assigning more responsibilities to lower organizational units. The allocations and reallocations of organizational authority are conscious activities. What drives them? In the United States, there are two strands that are mutually reinforcing. The first is the taxpayer’s revolt, which began in 1978 when California voters passed a referendum sharply reducing the local property taxes. The antitax movement spread quickly to the other states as well as the national government. Not only is it exceedingly difficult to raise taxes, but there is also strong support to reduce taxes. The taxpayer’s revolt—which shows no signs of abating soon— plus national and state deficits have resulted in a significant downward flow of governmental authority. As will be discussed more fully in subsequent chapters, the federal government continues to mandate state programs, and states continue to mandate county and local programs, but neither provide sufficient funding. Despite recently enacted legislation purporting to check federally imposed unfunded mandates, it is unlikely that this situation will substantially change in the near future. This tactic serves the interests of national and state politicians, but increases the responsibilities at state and local levels. More and more public activities are being carried out at the local level, and indeed, local taxes are increasing. Another consequence of the taxpayer revolt and the resulting squeeze at the local level is the increasing use of the private sector. Here, we speak primarily of contracting public services to private for-profit or not-forprofit organizations in order to save money. Again, we will have a lot to say about privatization and contracting out in subsequent chapters.

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