Privatization is rooted in
the free-enterprise economic system, and the efficiencies produced by
competition. The concept describes the process whereby the private sector
performs functions previously provided by a public sector, government unit.
Privatization already exists to a limited degree
Downriver, although original research into this area of economic development did
not exist until this study.
Several variations of
– a private sector unit provides a product or service for compensation.
Private garbage collection is one of the most best examples of contracting out
in the Downriver area.
– a private sector unit is given a specific territory or marketplace.
Franchising can also be related to shedding, as in the example of privatized
– a public sector, government unit sells off its assets or services which are
then either undertaken by a private firm or discontinued. Most international
examples of privatization fit into the category of shedding, such as when a
national government sells a public airport, as the Thatcher government in Great
Britain has on several occasions. Ecorse Receiver Louis Schimmel has used
shedding as a strategy to sell the Department of Public Works Building and city
– a public sector, government unit applies the cost of a service to the
consumers of the service. The user fee introduces a pricing mechanism into the
delivery of a government service, imposing a cost only on those who choose to
use it, while giving others the option not to purchase the service. The user fee
allocates the cost of public services more equitably, and reduces government
control to a minimum. Admission fees to Downriver public ice arenas and other
recreational facilities fit the definition of user fees.
– a public sector, government unit provides a benefit or service, but gives the
user maximum flexibility to select from competing private vendors. Some suggest
that education be considered a voucher candidate.
For Downriver community
leaders, it is extremely important to realize that business firms "vote with
their feet," so to speak, in the economic marketplace. An important aspect of
economic development is not just tax burden, but the mix of taxes and
 The high and increasing tax burdens of the Downriver area can
only be offset by extraordinary public services. Otherwise, they become
economic disincentives. Unfortunately, this has not been generally viewed as the
case in the Downriver area.
Downriver has generally
been perceived as an area of inefficient municipal government. Two communities
in particular have contributed to this perception – Ecorse and River Rouge although other Downriver
communities are providing questionable services, and other services in a
Privatization has played a
role in improving economic development possibilities in Ecorse, while the
concept is being considered in River Rouge.
In Ecorse, privatization of
public services has successfully been implemented to reduce a $6 million budget
 Contracting out and shedding have both been utilized. In River
Rouge, privatization is an option for reducing the existing $4.4 million budget