Public Finance 101 - I worked on financing PPP, Public Private Partnerhships and Public Service Concessions for decades and became very aware of both their Advantages and Disadvantages. Like many "remedies" in other fields, these contracting and management tools have both pluses and minuses, side effects and other unintended consequences. The "proof is in the pudding", in the overall Results. A good PPP contract delivers reasonably good results over time, a bad PPP fails to deliver most of the desired results, while really UGLY PPPs can lead to financial crises and social, economic and political turmoil, as we saw in Portugal in 2010.
Because PPP contracts are very long term, 20+ years, the practical reality can extend for many years, which is good if it's good, but if the PPP is bad, it can be horrid. Even if we assume the theory that a PPP or Concession contract is well balanced at the start, if is is granted under a well managed and trasnsparent public tender or competetion, it requires a lot of rigor and good will to maintain that balance over the long duration.
The article below about Goverment Outsourcing in the U.S. calls attention to need to evaluate the ex-post Results of PPP, Concession and other outsourcing arrangements on the basis the same criteria as one evaluates other Public Governance and Public Services activities.
One simplified "rule-of-thumb" is the 3 EEEs, Equity (coverage), Efficiency (sustainablity) and Effectiveness (impact or results):
Trump’s DOGE campaign accelerates 50-year trend of government privatization of public services, by Laura Hood, Published: March 11, 2025
"Government Outsourcing, cut civil servants, bring in contractors which take a 30% cut and reduce take-home pay for the actual workers who provide the public services AND capture the state
At first glance, total U.S. government spending appears stable over time. In 2024, federal, state and local expenditures made up 35% of the U.S. economy, the same as in 1982. However, my analysis of Bureau of Economic Analysis data offers a new perspective, recasting privatization as a macroeconomic phenomenon. I find that U.S. economic activity has become increasingly more privatized over the past 50 years. This shift happened in three key ways.
First, government involvement in economic production has declined. Historically, public institutions have played a major role in sectors such as electric power, water delivery, waste management, space equipment, naval shipbuilding, construction, and infrastructure investments. In 1970, government spending on production accounted for 23% of the economy. By 2024, that figure had fallen to 17%, leaving the private sector to fill the gaps. This means a growing share of overall government spending has been used to fund the private sector economy.
The meaning of privatization: Privatization can be understood as two interconnected processes: the retreat of government from economic production, and the rise of contracting. The government remains a major economic actor in the U.S., although now as more of a procurer of goods and services than a provider or employer.
The government’s shift away from production largely stems from mainstreamed austerity politics – a “starve the beast” approach to government – and backlash against the New Deal’s expansion of federal economic involvement. In 1971, the controversial “Powell Memo,” written by future Supreme Court Justice Lewis Powell, mobilized business leaders around the goal of expanding private sector power over public policy. This fueled the rise of conservative think tanks, including the Heritage Foundation, the eventual architect of the Project 2025 privatization agenda.
While government production shrank, government contracting expanded on promises of cost savings and efficiency. These contracting decisions are usually made by local administrators managing budgets under fiscal stress and interest group pressure, including from businesses and public sector unions.
Yet research shows that contracting frequently fails to reduce costs, while risking monopolies, weakening accountability and public input, and sometimes locking governments into rigid contracts. In many cases, ineffective outsourcing forces a return to public employment.
See more in https://theconversation.com/
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