Crime prevention through environmental design

From Wikipedia, the free encyclopedia

https://en.wikipedia.org/wiki/Crime_prevention_through_environmental_design 

 

Crime prevention through environmental design (CPTED) is an agenda for manipulating the built environment to create safer neighborhoods.

It originated in America around 1960, when urban renewal strategies were felt to be destroying the social framework needed for self-policing. Architect Oscar Newman created the concept of ‘defensible space’, developed further by criminologist C. Ray Jeffery who coined the term CPTED. Growing interest in environmental criminology led to detailed study of specific topics such as natural surveillance, access control and territoriality. The "broken window" principle that neglected zones invite crime reinforced the need for good property maintenance to assert visible ownership of space. Appropriate environmental design can also increase the perceived likelihood of detection and apprehension, known to be the biggest single deterrent to crime. And there has been new interest in the interior design of prisons as an environment that significantly affects decisions to offend.

Wide-ranging recommendations to architects include the planting of trees and shrubs, the elimination of escape routes, the correct use of lighting, and the encouragement of pedestrian and bicycle traffic in streets. Tests show that the application of CPTED measures overwhelmingly reduces criminal activity.

History

CPTED was originally coined and formulated by criminologist C. Ray Jeffery. A more limited approach, termed defensible space, was developed concurrently by architect Oscar Newman. Both men built on the previous work of Elizabeth Wood, Jane Jacobs and Schlomo Angel. Jeffery's book, "Crime Prevention Through Environmental Design" came out in 1971, but his work was ignored throughout the 1970s. Newman's book, "Defensible Space: – Crime Prevention through Urban Design" came out in 1972. His principles were widely adopted but with mixed success. The defensible space approach was subsequently revised with additional built environment approaches supported by CPTED. Newman represented this as CPTED and credited Jeffery as the originator of the CPTED term. Newman's CPTED-improved defensible space approach enjoyed broader success and resulted in a reexamination of Jeffery's work. Jeffery continued to expand the multi-disciplinary aspects of the approach, advances which he published, with the last one published in 1990. The Jeffery CPTED model is more comprehensive than the Newman CPTED model, which limits itself to the built environment. Later models of CPTED were developed based on the Newman Model, with criminologist Tim Crowe's being the most popular.

As of 2004, CPTED is popularly understood to refer strictly to the Newman/Crowe type models, with the Jeffery model treated more as multi-disciplinary approach to crime prevention which incorporates biology and psychology, a situation accepted even by Jeffery himself. (Robinson, 1996). A revision of CPTED, initiated in 1997, termed 2nd Generation CPTED, adapts CPTED to offender individuality, further indication that Jeffery's work is not popularly considered to be already a part of CPTED. in 2012 Woodbridge introduced and developed CPTED in prison and showed how design flaws allowed criminals to keep offending.

1960s

In the 1960s Elizabeth Wood developed guidelines for addressing security issues while working with the Chicago Housing Authority, placing emphasis on design features that would support natural surveillability. Her guidelines were never implemented but stimulated some of the original thinking that led to CPTED.

Jane Jacobs' book, The Death and Life of Great American Cities (1961) argued that urban diversity and vitality were being destroyed by urban planners and their urban renewal strategies. She was challenging the basic tenets of urban planning of the time: that neighborhoods should be isolated from each other; that an empty street is safer than a crowded one; and that the car represents progress over the pedestrian. An editor for Architectural Forum magazine (1952–1964), she had no formal training in urban planning, but her work emerged as a founding text for a new way of seeing cities. She felt that the way cities were being designed and built meant that the general public would be unable to develop the social framework needed for effective self-policing. She pointed out that the new forms of urban design broke down many of the traditional controls on criminal behavior, for example, the ability of residents to watch the street and the presence of people using the street both night and day. She suggested that the lack of "natural guardianship" in the environment promoted crime. Jacobs developed the concept that crime flourishes when people do not meaningfully interact with their neighbors. In Death and Life, Jacobs listed the three attributes needed to make a city street safe: a clear demarcation of private and public space; diversity of use; and a high level of pedestrian use of the sidewalks.

Schlomo Angel was an early pioneer of CPTED and studied under noted planner Christopher Alexander. Angel's Ph.D. thesis, Discouraging Crime Through City Planning, (1968) was a study of street crime in Oakland, CA. In it he states "The physical environment can exert a direct influence on crime settings by delineating territories, reducing or increasing accessibility by the creation or elimination of boundaries and circulation networks, and by facilitating surveillance by the citizenry and the police." He asserted that crime was inversely related to the level of activity on the street, and that the commercial strip environment was particularly vulnerable to crime because it thinned out activity, making it easier for individuals to commit street crime. Angel developed and published CPTED concepts in 1970 in work supported and widely distributed by the United States Department of Justice (Luedtke, 1970).

1970s

The phrase crime prevention through environmental design (CPTED) was first used by C. Ray Jeffery, a criminologist from Florida State University. The phrase began to gain acceptance after the publication of his 1971 book of the same name.

Jeffery's work was based on the precepts of experimental psychology represented in modern learning theory. (Jeffery and Zahm, 1993:329) Jeffery's CPTED concept arose out of his experiences with a rehabilitative project in Washington, D.C. that attempted to control the school environment of juveniles in the area. Rooted deeply in the psychological learning theory of B.F. Skinner, Jeffery's CPTED approach emphasized the role of the physical environment in the development of pleasurable and painful experiences for the offender that would have the capacity to alter behavioral outcomes. His original CPTED model was a stimulus-response (S-R) model positing that the organism learned from punishments and reinforcements in the environment. Jeffery "emphasized material rewards . . . and the use of the physical environment to control behavior" (Jeffery and Zahm, 1993:330). The major idea here was that by removing the reinforcements for crime, it would not occur. (Robinson, 1996)

An often overlooked contribution of Jeffery in his 1971 book is outlining four critical factors in crime prevention that have stood the test of time. These are the degrees to which one can manipulate the opportunity for a crime to occur, the motivation for the crime to occur, the risk to the offender if the crime occurs, and the history of the offender who might consider committing the crime. The first three of these are within the control of the potential victim while the last is not. 

For reasons that have received little attention, Jeffery's work was ignored throughout the 1970s. Jeffery's own explanation is that, at a time when the world wanted prescriptive design solutions, his work presented a comprehensive theory and used it to identify a wide range of crime prevention functions that should drive design and management standards. 

Concurrent with Jeffery's largely theoretical work was Oscar Newman and George Rand's empirical study of the crime-environment connection conducted in the early 1970s. As an architect, Newman placed emphasis on the specific design features, an emphasis missing in Jeffery's work. Newman's "Defensible Space – Crime Prevention through Urban Design (1972) includes extensive discussion of crime related to the physical form of housing based on crime data analysis from New York City public housing. "Defensible Space" changed the nature of the crime prevention and environmental design field and within two years of its publication substantial federal funding was made available to demonstrate and study defensible space concepts. 

As established by Newman, defensible space must contain two components. First, defensible space should allow people to see and be seen continuously. Ultimately, this diminishes residents' fear because they know that a potential offender can easily be observed, identified, and consequently, apprehended. Second, people must be willing to intervene or report crime when it occurs. By increasing the sense of security in settings where people live and work, it encourages people to take control of the areas and assume a role of ownership. When people feel safe in their neighborhood they are more likely to interact with one another and intervene when crime occurs. These remain central to most implementations of CPTED as of 2004. 

In 1977, Jeffery's second edition of Crime Prevention Through Environmental Design expanded his theoretical approach to embrace a more complex model of behavior in which variable physical environments, offender behavior as individuals and behavior of individual members of the general public have reciprocal influences on one another. This laid the foundation for Jeffery to develop a behavioral model aimed at predicting the effects of modifying both the external environment and the internal environment of individual offenders.

1980s

By the 1980s, the defensible space prescriptions of the 1970s were determined to have mixed effectiveness. They worked best in residential settings, especially in settings where the residents were relatively free to respond to cues to increase social interaction. Defensible space design tools were observed to be marginally effective in institutional and commercial settings. As a result, Newman and others moved to improve defensible space, adding CPTED based features. They also deemphasised less effective aspects of defensible space. Contributions to the advance of CPTED in the 1980s included:

• The "broken windows" theory, put forth by James Q. Wilson and George L. Kelling in 1982, explored the impact that visible deterioration and neglect in neighborhoods have on behavior. Property maintenance was added as a CPTED strategy on par with surveillance, access control and territoriality. The Broken Windows theory may go hand in hand with CPTED. Crime is attracted to the areas that are not taken care of or abandoned. CPTED adds a pride of ownership feeling to the community. With no more "broken windows" in certain neighborhoods, crime will continue to decline and eventually fall out completely.
• Canadian academicians Patricia and Paul Brantingham published Environmental Criminology in 1981. According to the authors, a crime takes place when all of the essential elements are present. These elements consist of: a law, an offender, a target, and a place. They characterize these as "the four dimensions of crime", with environmental criminology studying the last of the four dimensions.
• British criminologists Ronald V. Clarke and Patricia Mayhew developed their "situational crime prevention" approach: reducing opportunity to offend by improving design and management of the environment.
• Criminologist Timothy Crowe developed his CPTED training programs.

1990s

Criminology: An Interdisciplinary Approach (1990), was Jeffery's final contribution to CPTED. The Jeffery CPTED model evolved to one which assumes that

The environment never influences behavior directly, but only through the brain. Any model of crime prevention must include both the brain and the physical environment. ... Because the approach contained in Jeffery's CPTED model is today based on many fields, including scientific knowledge of modern brain sciences, a focus on only external environmental crime prevention is inadequate as it ignores another entire dimension of CPTED – i.e., the internal environment. (Robinson, 1996)

Crime Prevention Through Environmental Design (1991) by criminologist Tim Crowe provided a solid base for CPTED to move forward into the rest of the 1990s.

From 1994 through 2002, Sparta Consulting Corporation led by Severin Sorensen, CPP managed the US Government's largest CPTED technical assistance and training program titled Crime Prevention Through Environmental Design (CPTED) in Public Housing Technical Assistance and Training Program, funded by the US Department of Housing and Urban Development. During this period Sorensen worked with Ronald V. Clarke and the Sparta team to develop a new CPTED Curriculum that used Situational Crime Prevention as an underlying theoretical basis for CPTED measures. A curriculum was developed and trained to stakeholders in public and assisted housing, and follow-up CPTED assessments were conducted at various sites. The Sparta-led CPTED projects showed statistical reductions in self reported FBI UCR Part I crimes between 17% to 76% depending on the basket of CPTED measures employed in specific high crime, low income settings in the United States. 

In 1996, Oscar Newman published an update to his earlier CPTED works, titled, Creating Defensible Space, Institute for Community Design Analysis, Office of Planning and Development Research (PDR), US Department of Housing and Urban Development (HUD). 

In 1997, an article by Greg Saville and Gerry Cleveland, 2nd Generation CPTED, exhorted CPTED practitioners to consider the original social ecology origins of CPTED, including social and psychological issues beyond the built environment.

2000s

By 2004, elements of the CPTED approach had gained wide international acceptance due to law enforcement efforts to embrace it. The CPTED term "environment" is commonly used to refer to the external environment of the place. Jeffery's intention that CPTED also embrace the internal environment of the offender seems to have been lost, even on those promoting the expansion of CPTED to include social ecology and psychology under the banner of 2nd Generation CPTED. In 2012 Woodbridge introduced and developed the concept of CPTED within a prison environment, a place where crime still continues after conviction. Jeffery's understanding of the criminal mind from his study in rehabilitative facilities over forty years ago was now being used to reduce crime in those same type of facilities. Woodbridge showed how prison design allowed offending to continue and introduced changes to reduce crime. 

CPTED techniques are increasingly benefiting from integration with design technologies. For instance, models of proposed buildings developed in Building Information Modelling may be imported into video game engines to assess their resilience to different forms of crime.

Strategies for the built environment

CPTED strategies rely upon the ability to influence offender decisions that precede criminal acts. Research into criminal behavior shows that the decision to offend or not to offend is more influenced by cues to the perceived risk of being caught than by cues to reward or ease of entry. Certainty of being caught is the main deterrence for criminals not the severity of the punishment so by raising the certainty of being captured, criminal actions will decrease. Consistent with this research, CPTED based strategies emphasise enhancing the perceived risk of detection and apprehension. 

Consistent with the widespread implementation of defensible space guidelines in the 1970s, most implementations of CPTED by 2004 were based solely upon the theory that the proper design and effective use of the built environment can reduce crime, reduce the fear of crime, and improve the quality of life. Built environment implementations of CPTED seek to dissuade offenders from committing crimes by manipulating the built environment in which those crimes proceed from or occur. The six main concepts according to Moffat are territoriality, surveillance, access control, image/maintenance, activity support and target hardening. Applying all of these strategies is key when trying to prevent crime in any neighborhood crime ridden or not.

Natural surveillance and access control strategies limit the opportunity for crime. Territorial reinforcement promotes social control through a variety of measures. Image/maintenance and activity support provide the community with reassurance and the ability to inhibit crime by citizen activities. Target hardening strategies round up all of these techniques to resolve crime into one final step.

Natural surveillance

This curved street with balconies allows for additional opportunities for residents to spot suspicious activity, while also making it difficult for criminals to plan escape routes.

Natural surveillance increases the perceived risk of attempting deviant actions by improving visibility of potential offenders to the general public. Natural surveillance occurs by designing the placement of physical features, activities and people in such a way as to maximize visibility of the space and its users, fostering positive social interaction among legitimate users of private and public space. Potential offenders feel increased scrutiny, and thus inherently perceive an increase in risk. This perceived increase in risk extends to the perceived lack of viable and covert escape routes.

• Design streets to increase pedestrian and bicycle traffic
• Place windows overlooking sidewalks and parking lots.
• Leave window shades open.
• Use passing vehicular traffic as a surveillance asset.
• Create landscape designs that provide surveillance, especially in proximity to designated points of entry and opportunistic points of entry.
• Use the shortest, least sight-limiting fence appropriate for the situation.
• Use transparent weather vestibules at building entrances.
• When creating lighting design, avoid poorly placed lights that create blind-spots for potential observers and miss critical areas. Ensure potential problem areas are well lit: pathways, stairs, entrances/exits, parking areas, ATMs, phone kiosks, mailboxes, bus stops, children's play areas, recreation areas, pools, laundry rooms, storage areas, dumpster and recycling areas, etc.
• Avoid too-bright security lighting that creates blinding glare and/or deep shadows, hindering the view for potential observers. Eyes adapt to night lighting and have trouble adjusting to severe lighting disparities. Using lower intensity lights often requires more fixtures.
• Use shielded or cut-off luminaires to control glare.
• Place lighting along pathways and other pedestrian-use areas at proper heights for lighting the faces of the people in the space (and to identify the faces of potential attackers).
• Utilizing curved streets with multiple view points to multiple houses' entrances, as well as making the escape route difficult to follow.

Natural surveillance measures can be complemented by mechanical and organizational measures. For example, closed-circuit television (CCTV) cameras can be added in areas where window surveillance is unavailable.

Natural access control

A picket fence reduces access, while allowing bystanders to see suspicious activity.

 

Natural access control limits the opportunity for crime by taking steps to clearly differentiate between public space and private space. By selectively placing entrances and exits, fencing, lighting and landscape to limit access or control flow, natural access control occurs.

• Use a single, clearly identifiable, point of entry
• Use structures to divert persons to reception areas
• Incorporate maze entrances in public restrooms. This avoids the isolation that is produced by an anteroom or double door entry system
• Use low, thorny bushes beneath ground level windows. Use rambling or climbing thorny plants next to fences to discourage intrusion.
• Eliminate design features that provide access to roofs or upper levels
• In the front yard, use waist-level, picket-type fencing along residential property lines to control access, encourage surveillance.
• Use a locking gate between front and backyards.
• Use shoulder-level, open-type fencing along lateral residential property lines between side yards and extending to between back yards. They should be sufficiently unencumbered with landscaping to promote social interaction between neighbors.
• Use substantial, high, closed fencing (for example, masonry) between a backyard and a public alley instead of a wall which blocks the view from all angles.

Natural access control is used to complement mechanical and operational access control measures, such as target hardening.

Natural territorial reinforcement

A dilapidated chain link fence signals that the building it is protecting is not very secured, while a well maintained bush indicates risk due to evidence of recent activity.

 

Territorial reinforcement promotes social control through increased definition of space and improved proprietary concern. An environment designed to clearly delineate private space does two things. First, it creates a sense of ownership. Owners have a vested interest and are more likely to challenge intruders or report them to the police. Second, the sense of owned space creates an environment where "strangers" or "intruders" stand out and are more easily identified. By using buildings, fences, pavement, signs, lighting and landscape to express ownership and define public, semi-public and private space, natural territorial reinforcement occurs. Additionally, these objectives can be achieved by assignment of space to designated users in previously unassigned locations.

• Maintained premises and landscaping such that it communicates an alert and active presence occupying the space.
• Provide trees in residential areas. Research results indicate that, contrary to traditional views within the law enforcement community, outdoor residential spaces with more trees are seen as significantly more attractive, more safe, and more likely to be used than similar spaces without trees.
• Restrict private activities to defined private areas.
• Display security system signage at access points.
• Avoid chain link fencing and razor-wire fence topping, as it communicates the absence of a physical presence and a reduced risk of being detected.
• Placing amenities such as seating or refreshments in common areas in a commercial or institutional setting helps to attract larger numbers of desired users.
• Scheduling activities in common areas increases proper use, attracts more people and increases the perception that these areas are controlled.
• Motion sensor lights at all entry points into the residence.

Territorial reinforcement measures make the normal user feel safe and make the potential offender aware of a substantial risk of apprehension or scrutiny. When people take pride in what they own and go to the proper measures to protect their belongings, crime is deterred from those areas because now it makes it more of a challenge. Criminals don't want their job to be hard, because if it was hard, then they wouldn't do it. The more difficult it is to commit a crime in certain areas, the less crime will occur.

Other CPTED elements

Maintenance and activity support aspects of CPTED were touched upon in the preceding, but are often treated separately because they are not physical design elements within the built environment.

Maintenance

Maintenance is an expression of ownership of property. Deterioration indicates less control by the intended users of a site and indicate a greater tolerance of disorder. The Broken Windows Theory is a valuable tool in understanding the importance of maintenance in deterring crime. Broken Windows theory proponents support a zero tolerance approach to property maintenance, observing that the presence of a broken window will entice vandals to break more windows in the vicinity. The sooner broken windows are fixed, the less likely it is that such vandalism will occur in the future. Vandalism falls into the broken windows category as well. The faster the graffiti is painted over, the less likely one is to repeat because no one saw what has been done. Having a positive image in the community shows a sense of pride and self-worth that no one can take away from the owner of the property.

Activity support

Activity support increases the use of a built environment for safe activities with the intent of increasing the risk of detection of criminal and undesirable activities. Natural surveillance by the intended users is casual and there is no specific plan for people to watch out for criminal activity. By placing signs such as caution children playing and signs for certain activities in the area, the citizens of that area will be more involved in what is happening around them. They will be more tuned in to who is and who isn't supposed to be there and what looks suspicious on a day-to-day life.

Effectiveness and criticism

CPTED strategies are most successful when they inconvenience the end user the least and when the CPTED design process relies upon the combined efforts of environmental designers, land managers, community activists, and law enforcement professionals. The strategies listed above can't be fulfilled without the community's help and it requires the whole community in the location to make the environment a safer place to live. A meta-analysis of multiple-component CPTED initiatives in the United States has found that they have decreased robberies between 30 and 84% (Casteel and Peek-Asa, 2000).

In terms of effectiveness, a more accurate title for the strategy would be crime deterrence through environmental design. Research demonstrates that offenders might not always be prevented from committing some crimes by using CPTED. CPTED relies upon changes to the physical environment that will cause an offender to make certain behavioral decisions, and some of those decisions will include desisting from crime. Those changes are crafted so as to encourage behavior, and thus they deter rather than conclusively "prevent" behavior. 

Beyond the attraction of being cost effective in lowering the incidence of crime, CPTED typically reduces the overall costs of preventing crime. Retrofitting an existing environment to meet CPTED can sometimes be costly, but when incorporated in the original design phase of facility planning, cost of designing to CPTED principles are often lower than with traditional approaches. Operational costs are often lower also, as CPTED lighting designs can significantly lower energy use. Adding to the attraction of CPTED is that it lowers liability. At times the entire street style must be changed and buildings have to be up to code with more windows and changing their view and access points to other areas around the building like the parking lot or store front.

Crime science

From Wikipedia, the free encyclopedia

https://en.wikipedia.org/wiki/Crime_science 

 

Crime science is the study of crime in order to find ways to prevent it. Three features distinguish crime science from criminology: it is single-minded about cutting crime, rather than studying it for its own sake; accordingly it focuses on crime rather than criminals; and it is multidisciplinary, notably recruiting scientific methodology rather than relying on social theory.

Crime science in the United Kingdom was conceived by the British broadcaster Nick Ross in the late 1990s (with encouragement from the then Commissioner of the Metropolitan Police, Sir John Stevens and Professor Ken Pease) out of concern that traditional criminology and orthodox political discourse were doing little to influence the ebb and flow of crime (e.g. Ross: Police Foundation Lecture, London, 11 July 2000 (jointly with Sir John Stevens); Parliamentary and Scientific Committee, 22 March 2001; Barlow Lecture, UCL, 6 April 2005). Ross described crime science as, "examining the chain of events that leads to crime in order to cut the weakest link" (Royal Institution Lecture 9 May 2002).

Jill Dando Institute of Crime Science

The first incarnation of crime science was the founding, also by Ross, of the Jill Dando Institute of Crime Science (JDI) at University College London in 2001. In order to reflect its broad disciplinary base, and its departure from the sociological (and often politicised) brand of criminology, the Institute is established in the Engineering Sciences Faculty, with growing ties to the physical sciences such as physics and chemistry but also drawing on the fields of statistics, environmental design, psychology, forensics, policing, economics and geography.

The JDI grew rapidly and spawned a new Department of Security and Crime Science, which itself developed into one of the largest departments of its type in the world. It has established itself as a world-leader in crime mapping and for training crime analysts (civilian crime profilers who work for the police) and its Centre for the Forensic Sciences has been influential in debunking bad science in criminal detection. It established the world's first secure data lab for security and crime pattern analysis and appointed the world's first Professor of Future Crime whose role is to horizon-scan to foresee and forestall tomorrow's crime challenges. The JDI also developed a Security Science Doctoral Research Training Centre (UCL SECReT), which was Europe’s largest centre for doctoral training in security and crime science.

Design Against Crime Research Centre

Another branch of crime science has grown from its combination with design science. At the Central Saint Martins College of Arts and Design a research centre was founded with the focus of studying how design could be used as a tool against crime - the Design against Crime Research Centre. A number of practical theft-aware design practices have emerged there. Examples are chairs with a hanger that allows people to keep their bags within their reach for the whole time, or foldable bicycles that can serve as their own safety lock by wrapping around static poles in the environment.

International Crime Science Network

An international Crime Science Network was formed in 2003, with support from the EPSRC. Since then the term crime science has been variously interpreted, sometimes with a different emphasis from Ross's original description published in 1999, and often favouring situational crime prevention (redesigning products, services and policies to remove opportunities, temptations and provocations and make detection more certain) rather than other forms of intervention. However a common feature is a focus on delivering immediate reductions in crime.

New crime science departments have been established at Waikato, Cincinnati, Philadelphia and elsewhere.

Growth of the Crime Science Field

The concept of crime science appears to be taking root more broadly with:

• The establishment of crime science departments at the University of Waikato in New Zealand, Cincinnati and Philadelphia in the US, and elsewhere.
• Crime Science courses at several institutions including Northumbria University in the UK and at the University of Twente in the Netherlands.
• A Crime Science Unit at DSTL, the research division of the UK Ministry of Defence.
• The term crime science increasingly being adopted by situational and experimental criminologists in the US and Australia.
• An annual Crime Science Network gathering in London which draws police and academics from across the world.
• A Springer Open Access Interdisciplinary journal devoted to Crime Science. Crime science increasingly being cited in criminology text books and journals papers (sometimes claimed as a new branch of criminology, and sometimes reviled as anti-criminology).
• A move in traditional criminology towards the aims originally set out by Ross in his concern for a more evidence-based, scientific approach to crime reduction.
• Crime science featuring in several learned journals in other disciplines (such as a special issue of the European Journal of Applied Mathematics devoted to "crime modelling").

Privatization

From Wikipedia, the free encyclopedia

https://en.wikipedia.org/wiki/Privatization 

 

Privatization (or privatisation in British English) can mean different things including moving something from the public sector into the private sector. It is also sometimes used as a synonym for deregulation when a heavily regulated private company or industry becomes less regulated. Government functions and services may also be privatised (which may also be known as "franchising" or "out-sourcing"); in this case, private entities are tasked with the implementation of government programs or performance of government services that had previously been the purview of state-run agencies. Some examples include revenue collection, law enforcement, water supply, and prison management.

Another definition is the purchase of all outstanding shares of a publicly traded company by private investors, or the sale of a state-owned enterprise or municipally owned corporation to private investors. In the case of a for-profit company, the shares are then no longer traded at a stock exchange, as the company became private through private equity; in the case the partial or full sale of a state-owned enterprise or municipally owned corporation to private owners shares may be traded in the public market for the first time, or for the first time since an enterprise's previous nationalization. The second such type of privatization is the demutualization of a mutual organization, cooperative, or public-private partnership in order to form a joint-stock company.

Etymology

The Economist magazine introduced the term "privatisation" (alternatively "privatisation" or "reprivatisation" after the German Reprivatisierung) during the 1930s when it covered Nazi Germany's economic policy. It is not clear if the magazine coincidentally invented the word in English or if the term is a loanword from the same expression in German, where it has been in use since the 19th century.

Definition

The word privatization may mean different things depending on the context in which it is used. It can mean moving something from the public sphere into the private sphere, but it may also be used to describe something that was always private, but heavily regulated, which becomes less regulated through a process of deregulation. The term may also be used descriptively for something that has always been private, but could be public in other jurisdictions.

There are also private entities that may perform public functions. These entities could also be described as privatized. Privatization may mean the government sells state-owned businesses to private interests, but it may also be discussed in the context of the privatization of services or government functions, where private entities are tasked with the implementation of government programs or performance of government services. Gillian E. Metzger has written that: "Private entities [in the US] provide a vast array of social services for the government; administer core aspects of government programs; and perform tasks that appear quintessentially governmental, such as promulgating standards or regulating third-party activities." Metzger mentions an expansion of privatization that includes health and welfare programs, public education, and prisons.

History

Pre-20th century

The history of privatization dates from Ancient Greece, when governments contracted out almost everything to the private sector. In the Roman Republic private individuals and companies performed the majority of services including tax collection (tax farming), army supplies (military contractors), religious sacrifices and construction. However, the Roman Empire also created state-owned enterprises—for example, much of the grain was eventually produced on estates owned by the Emperor. David Parker and David S. Saal suggest that the cost of bureaucracy was one of the reasons for the fall of the Roman Empire.

Perhaps one of the first ideological movements towards privatization came during China's golden age of the Han Dynasty. Taoism came into prominence for the first time at a state level, and it advocated the laissez-faire principle of Wu wei (無為), literally meaning "do nothing". The rulers were counseled by the Taoist clergy that a strong ruler was virtually invisible. 

During the Renaissance, most of Europe was still by and large following the feudal economic model. By contrast, the Ming dynasty in China began once more to practice privatization, especially with regards to their manufacturing industries. This was a reversal of the earlier Song dynasty policies, which had themselves overturned earlier policies in favor of more rigorous state control.

In Britain, the privatization of common lands is referred to as enclosure (in Scotland as the Lowland Clearances and the Highland Clearances). Significant privatizations of this nature occurred from 1760 to 1820, preceding the industrial revolution in that country.

20th century onwards

The first mass privatization of state property occurred in Nazi Germany between 1933–1937: "It is a fact that the government of the National Socialist Party sold off public ownership in several state-owned firms in the middle of the 1930s. The firms belonged to a wide range of sectors: steel, mining, banking, local public utilities, shipyard, ship-lines, railways, etc. In addition to this, delivery of some public services produced by public administrations prior to the 1930s, especially social services and services related to work, was transferred to the private sector, mainly to several organizations within the Nazi Party."

Great Britain privatized its steel industry in the 1950s, and the West German government embarked on large-scale privatization, including sale of the majority stake in Volkswagen to small investors in public share offerings in 1961. However, it was in the 1980s under Margaret Thatcher in the United Kingdom and Ronald Reagan in the United States that privatization gained worldwide momentum. Notable privatization attempts in the UK included privatization of Britoil (1982), Amersham International PLC (1982), British Telecom (1984), Sealink ferries (1984), British Petroleum (gradually privatized between 1979 and 1987), British Aerospace (1985 to 1987), British Gas (1986), Rolls-Royce (1987), Rover Group (formerly British Leyland, 1988), British Steel Corporation (1988), and the regional water authorities (mostly in 1989). After 1979, council house tenants in the UK were given the right to buy their homes (at a heavily discounted rate). One million purchased their residences by 1986. 

Such efforts culminated in 1993 when British Rail was privatized under Thatcher's successor, John Major. British Rail had been formed by prior nationalization of private rail companies. The privatization was controversial, and the its impact is still debated today, as doubling of passenger numbers and investment was balanced by an increase in rail subsidy.

Privatization in Latin America flourished in the 1980s and 1990s as a result of a Western liberal economic policy. Companies providing public services such as water management, transportation, and telecommunication were rapidly sold off to the private sector. In the 1990s, privatization revenue from 18 Latin American countries totaled 6% of gross domestic product. Private investment in infrastructure from 1990 and 2001 reached $360.5 billion, $150 billion more than in the next emerging economy.

While economists generally give favorable evaluations of the impact of privatization in Latin America, opinion polls and public protests across the countries suggest that a large segment of the public is dissatisfied with or have negative views of privatization in the region.

In the 1990s, the governments in Eastern and Central Europe engaged in extensive privatization of state-owned enterprises in Eastern and Central Europe and Russia, with assistance from the World Bank, the U.S. Agency for International Development, the German Treuhand, and other governmental and nongovernmental organizations. 

Ongoing privatization of Japan Post relates to that of the national postal service and one of the largest banks in the world. After years of debate, the privatization of Japan Post spearheaded by Junichiro Koizumi finally started in 2007. The privatization process is expected to last until 2017. Japan Post was one of the nation's largest employers, as one-third of Japanese state employees worked for it. It was also said to be the largest holder of personal savings in the world. Criticisms against Japan Post were that it served as a channel of corruption and was inefficient. In September 2003, Koizumi's cabinet proposed splitting Japan Post into four separate companies: a bank, an insurance company, a postal service company, and a fourth company to handle the post offices and retail storefronts of the other three. After the Upper House rejected privatization, Koizumi scheduled nationwide elections for September 11, 2005. He declared the election to be a referendum on postal privatization. Koizumi subsequently won the election, gaining the necessary supermajority and a mandate for reform, and in October 2005, the bill was passed to privatize Japan Post in 2007.

Nippon Telegraph and Telephone's privatization in 1987 involved the largest share offering in financial history at the time. 15 of the world's 20 largest public share offerings have been privatizations of telecoms.

In 1988, the perestroika policy of Mikhail Gorbachev started allowing privatization of the centrally planned economy. Large privatization of the Soviet economy occurred over the next few years as the country dissolved. Other Eastern Bloc countries followed suit after the Revolutions of 1989 introduced non-communist governments. 

The United Kingdom's largest public share offerings were privatizations of British Telecom and British Gas during the 1980s under the Conservative government of Margaret Thatcher, when many state-run firms were sold off to the private sector. The privatization received very mixed views from the public and the parliament. Even former Conservative prime minister Harold Macmillan was critical of the policy, likening it to "selling the family silver". There were around 3 million shareholders in Britain when Thatcher took office in 1979, but the subsequent sale of state-run firms saw the number of shareholders double by 1985. By the time of her resignation in 1990, there were more than 10 million shareholders in Britain.

The largest public shares offering in France involved France Télécom.

Egypt undertook widespread privatization under Hosni Mubarak. Following his overthrow in the 2011 revolution, most of the public began to call for re-nationalization, citing allegations of the privatized firms practicing crony capitalism under the old regime.

Forms of privatization

There are five main methods of privatization:

1. Share issue privatization: shares sale on the stock market.
2. Asset sale privatization: asset divestiture to a strategic investor, usually by auction or through the Treuhand model.
3. Voucher privatization: distribution of vouchers, which represent part ownership of a corporation, to all citizens, usually for free or at a very low price.
4. Privatization from below: start of new private businesses in formerly socialist countries.
5. Management buyout or employee buyout: distribution of shares for free or at a very low price to workers or management of the organization.

The choice of sale method is influenced by the capital market and the political and firm-specific factors. Privatization through the stock market is more likely to be the method used when there is an established capital market capable of absorbing the shares. A market with high liquidity can facilitate the privatization. If the capital markets are insufficiently developed, however, it would be difficult to find enough buyers. The shares may have to be underpriced, and the sales may not raise as much capital as would be justified by the fair value of the company being privatized. Many governments, therefore, elect for listings in more sophisticated markets, for example, Euronext, and the London, New York and Hong Kong stock exchanges.

Governments in developing countries and transition countries more often resort to direct asset sales to a few investors, partly because those countries do not yet have a stock market with high capital.

Voucher privatization occurred mainly in the transition economies in Central and Eastern Europe, such as Russia, Poland, the Czech Republic, and Slovakia. Additionally, privatization from below had made important contribution to economic growth in transition economies.

In one study assimilating some of the literature on "privatization" that occurred in Russian and Czech Republic transition economies, the authors identified three methods of privatization: "privatization by sale", "mass privatization", and "mixed privatization". Their calculations showed that "mass privatization" was the most effective method.

However, in economies "characterized by shortages" and maintained by the state bureaucracy, wealth was accumulated and concentrated by "gray/black market" operators. Privatizing industries by sale to these individuals did not mean a transition to "effective private sector owners [of former] state assets". Rather than mainly participating in a market economy, these individuals could prefer elevating their personal status or prefer accumulating political power. Instead, outside foreign investment led to the efficient conduct of former state assets in the private sector and market economy.

Through privatization by direct asset sale or the stock market, bidders compete to offer higher prices, generating more revenue for the state. Voucher privatization, on the other hand, could represent a genuine transfer of assets to the general population, creating a sense of participation and inclusion. A market could be created if the government permits transfer of vouchers among voucher holders.

Secured borrowing

Some privatization transactions can be interpreted as a form of a secured loan and are criticized as a "particularly noxious form of governmental debt". In this interpretation, the upfront payment from the privatization sale corresponds to the principal amount of the loan, while the proceeds from the underlying asset correspond to secured interest payments – the transaction can be considered substantively the same as a secured loan, though it is structured as a sale. This interpretation is particularly argued to apply to recent municipal transactions in the United States, particularly for fixed term, such as the 2008 sale of the proceeds from Chicago parking meters for 75 years. It is argued that this is motivated by "politicians' desires to borrow money surreptitiously", due to legal restrictions on and political resistance to alternative sources of revenue, viz, raising taxes or issuing debt.

Results of privatization

Literature reviews find that in competitive industries with well-informed consumers, privatization consistently improves efficiency. The more competitive the industry, the greater the improvement in output, profitability, and efficiency. Such efficiency gains mean a one-off increase in GDP, but through improved incentives to innovate and reduce costs also tend to raise the rate of economic growth. Although typically there are many costs associated with these efficiency gains, many economists argue that these can be dealt with by appropriate government support through redistribution and perhaps retraining. Yet, some empirical literature suggests that privatization could also have very modest effects on efficiency and quite regressive distributive impact. In the first attempt at a social welfare analysis of the British privatization program under the Conservative governments of Margaret Thatcher and John Major during the 1980s and 1990s, Massimo Florio points to the absence of any productivity shock resulting strictly from ownership change. Instead, the impact on the previously nationalized companies of the UK productivity leap under the Conservatives varied in different industries. In some cases, it occurred prior to privatization, and in other cases, it occurred upon privatization or several years afterward.

A study by the European Commission found that the UK rail network (which was privatized from 1994–97) was most improved out of all the 27 EU nations from 1997–2012. The report examined a range of 14 different factors and the UK came top in four of the factors, second and third in another two and fourth in three, coming top overall.

Privatizations in Russia and Latin America were accompanied by large-scale corruption during the sale of the state-owned companies. Those with political connections unfairly gained large wealth, which has discredited privatization in these regions. While media have widely reported the grand corruption that accompanied those sales, studies have argued that in addition to increased operating efficiency, daily petty corruption is, or would be, larger without privatization, and that corruption is more prevalent in non-privatized sectors. Furthermore, there is evidence to suggest that extralegal and unofficial activities are more prevalent in countries that privatized less.

A 2009 study published in The Lancet medical journal initially claimed to have found that as many as a million working men died as a result of economic shocks associated with mass privatization in the former Soviet Union and in Eastern Europe during the 1990s, although a further study revealed that there were errors in their method and "correlations reported in the original article are simply not robust." Historian Walter Scheidel, a specialist in ancient history, posits that economic inequality and wealth concentration in the top percentile "had been made possible by the transfer of state assets to private owners."

In Latin America, there is a discrepancy between the economic efficiency of privatization and the political/social ramifications that occur. On the one hand, economic indicators, including firm profitability, productivity, and growth, project positive microeconomic results. On the other hand, however, these results have largely been met with a negative criticism and citizen coalitions. This neoliberal criticism highlights the ongoing conflict between varying visions of economic development. Karl Polanyi emphasizes the societal concerns of self-regulating markets through a concept known as a "double movement". In essence, whenever societies move towards increasingly unrestrained, free-market rule, a natural and inevitable societal correction emerges to undermine the contradictions of capitalism. This was the case in the 2000 Cochabamba protests.

Privatization in Latin America has invariably experienced increasing push-back from the public. Some suggest that implementing a less efficient but more politically mindful approach could be more sustainable.

In India, a survey by the National Commission for Protection of Child Rights (NCPCR) —Utilization of Free Medical Services by Children Belonging to the Economically Weaker Section (EWS) in Private Hospitals in New Delhi, 2011-12: A Rapid Appraisal—indicates under-utilization of the free beds available for EWS category in private hospitals in Delhi, though they were allotted land at subsidized rates.

In Australia a "People's Inquiry into Privatisation" (2016/17) found that the impact of privatisation on communities was negative. The report from the inquiry "Taking Back Control" https://d3n8a8pro7vhmx.cloudfront.net/cpsu/pages/1573/attachments/original/1508714447/Taking_Back_Control_FINAL.pdf?1508714447 made a range of recommendations to provide accountability and transparency in the process. The report highlighted privatisation in healthcare, aged care, child care, social services, government departments, electricity, prisons and vocational education featuring the voices of workers, community members and academics.

Opinion

Arguments for and against the controversial subject of privatization are presented here.

Support

Studies show that private market factors can more efficiently deliver many goods or service than governments due to free market competition. Over time, this tends to lead to lower prices, improved quality, more choices, less corruption, less red tape, and/or quicker delivery. Many proponents do not argue that everything should be privatized. According to them, market failures and natural monopolies could be problematic. However, anarcho-capitalists prefer that every function of the state be privatized, including defense and dispute resolution.

Proponents of privatization make the following arguments:

• Performance: state-run industries tend to be bureaucratic. A political government may only be motivated to improve a function when its poor performance becomes politically sensitive.
• Increased efficiency: private companies and firms have a greater incentive to produce goods and services more efficiently to increase profits.
• Specialization: a private business has the ability to focus all relevant human and financial resources onto specific functions. A state-owned firm does not have the necessary resources to specialize its goods and services as a result of the general products provided to the greatest number of people in the population.
• Improvements: conversely, the government may put off improvements due to political sensitivity and special interests—even in cases of companies that are run well and better serve their customers' needs.
• Corruption: a state-monopolized function is prone to corruption; decisions are made primarily for political reasons, personal gain of the decision-maker (i.e. "graft"), rather than economic ones. Corruption (or principal–agent issues) in a state-run corporation affects the ongoing asset stream and company performance, whereas any corruption that may occur during the privatization process is a one-time event and does not affect ongoing cash flow or performance of the company.
• Accountability: managers of privately owned companies are accountable to their owners/shareholders and to the consumer, and can only exist and thrive where needs are met. Managers of publicly owned companies are required to be more accountable to the broader community and to political "stakeholders". This can reduce their ability to directly and specifically serve the needs of their customers, and can bias investment decisions away from otherwise profitable areas.
• Civil-liberty concerns: a company controlled by the state may have access to information or assets which may be used against dissidents or any individuals who disagree with their policies.
• Goals: a political government tends to run an industry or company for political goals rather than economic ones.
• Capital: a privately held companies can sometimes more easily raise investment capital in the financial markets when such local markets exist and are suitably liquid. While interest rates for private companies are often higher than for government debt, this can serve as a useful constraint to promote efficient investments by private companies, instead of cross-subsidizing them with the overall credit-risk of the country. Investment decisions are then governed by market interest rates. State-owned industries have to compete with demands from other government departments and special interests. In either case, for smaller markets, political risk may add substantially to the cost of capital.
• Security: governments have had the tendency to "bail out" poorly run businesses, often due to the sensitivity of job losses, when economically, it may be better to let the business fold.
• Lack of market discipline: poorly managed state companies are insulated from the same discipline as private companies, which could go bankrupt, have their management removed, or be taken over by competitors. Private companies are also able to take greater risks and then seek bankruptcy protection against creditors if those risks turn sour.
• Natural monopolies: the existence of natural monopolies does not mean that these sectors must be state owned. Governments can enact or are armed with anti-trust legislation and bodies to deal with anti-competitive behavior of all companies public or private.
• Concentration of wealth: ownership of and profits from successful enterprises tend to be dispersed and diversified -particularly in voucher privatization. The availability of more investment vehicles stimulates capital markets and promotes liquidity and job creation.
• Political influence: nationalized industries are prone to interference from politicians for political or populist reasons. Examples include making an industry buy supplies from local producers (when that may be more expensive than buying from abroad), forcing an industry to freeze its prices/fares to satisfy the electorate or control inflation, increasing its staffing to reduce unemployment, or moving its operations to marginal constituencies.
• Profits: corporations exist to generate profits for their shareholders. Private companies make a profit by enticing consumers to buy their products in preference to their competitors' (or by increasing primary demand for their products, or by reducing costs). Private corporations typically profit more if they serve the needs of their clients well. Corporations of different sizes may target different market niches in order to focus on marginal groups and satisfy their demand. A company with good corporate governance will therefore be incentivized to meet the needs of its customers efficiently.
• Job gains: as the economy becomes more efficient, more profits are obtained and no government subsidies and less taxes are needed, there will be more private money available for investments and consumption and more profitable and better-paid jobs will be created than in the case of a more regulated economy.

Opposition

Opponents of certain privatizations believe that certain public goods and services should remain primarily in the hands of government in order to ensure that everyone in society has access to them (such as law enforcement, basic health care, and basic education). There is a positive externality when the government provides society at large with public goods and services such as defense and disease control. Some national constitutions in effect define their governments' "core businesses" as being the provision of such things as justice, tranquility, defense, and general welfare. These governments' direct provision of security, stability, and safety, is intended to be done for the common good (in the public interest) with a long-term (for posterity) perspective. As for natural monopolies, opponents of privatization claim that they aren't subject to fair competition, and better administrated by the state.

Although private companies will provide a similar good or service alongside the government, opponents of privatization are careful about completely transferring the provision of public goods, services and assets into private hands for the following reasons:

• Performance: a democratically elected government is accountable to the people through a legislature, Congress or Parliament, and is motivated to safeguarding the assets of the nation. The profit motive may be subordinated to social objectives.
• Improvements: the government is motivated to performance improvements as well run businesses contribute to the State's revenues.
• Corruption: government ministers and civil servants are bound to uphold the highest ethical standards, and standards of probity are guaranteed through codes of conduct and declarations of interest. However, the selling process could lack transparency, allowing the purchaser and civil servants controlling the sale to gain personally.
• Accountability: the public has less control and oversight of private companies.
• Civil-liberty concerns: a democratically elected government is accountable to the people through a parliament, and can intervene when civil liberties are threatened.
• Goals: the government may seek to use state companies as instruments to further social goals for the benefit of the nation as a whole.
• Capital: governments can raise money in the financial markets most cheaply to re-lend to state-owned enterprises.
• Cuts in essential services: if a government-owned company providing an essential service (such as the water supply) to all citizens is privatized, its new owner(s) could lead to the abandoning of the social obligation to those who are less able to pay, or to regions where this service is unprofitable.
• Natural monopolies: privatization will not result in true competition if a natural monopoly exists.
• Concentration of wealth: profits from successful enterprises end up in private, often foreign, hands instead of being available for the common good.
• Political influence: governments may more easily exert pressure on state-owned firms to help implementing government policy.
• Profit: private companies do not have any goal other than to maximize profits. A private company will serve the needs of those who are most willing (and able) to pay, as opposed to the needs of the majority, and are thus anti-democratic. The more necessary a good is, the lower the price elasticity of demand, as people will attempt to buy it no matter the price. In the case of a price elasticity of demand of zero (perfectly inelastic good), the demand part of supply and demand theories does not work.
• Privatization and poverty: it is acknowledged by many studies that there are winners and losers with privatization. The number of losers—which may add up to the size and severity of poverty—can be unexpectedly large if the method and process of privatization and how it is implemented are seriously flawed (e.g. lack of transparency leading to state-owned assets being appropriated at minuscule amounts by those with political connections, absence of regulatory institutions leading to transfer of monopoly rents from public to private sector, improper design and inadequate control of the privatization process leading to asset stripping).
• Job loss: due to the additional financial burden placed on privatized companies to succeed without any government help, unlike the public companies, jobs could be lost to keep more money in the company.
• Reduced wages and benefits: a 2014 report by In the Public Interest, a resource center on privatization, argues that "outsourcing public services sets off a downward spiral in which reduced worker wages and benefits can hurt the local economy and overall stability of middle and working class communities."
• Inferior quality products: private, for-profit companies might cut corners on providing quality goods and services in order to maximize profit.

Economic theory

In economic theory, privatization has been studied in the field of contract theory. When contracts are complete, institutions such as (private or public) property are difficult to explain, since every desired incentive structure can be achieved with sufficiently complex contractual arrangements, regardless of the institutional structure (all that matters is who are the decision makers and what is their available information). In contrast, when contracts are incomplete, institutions matter. A leading application of the incomplete contract paradigm in the context of privatization is the model by Hart, Shleifer, and Vishny (1997). In their model, a manager can make investments to increase quality (but they may also increase costs) and investments to decrease costs (but they may also reduce quality). It turns out that it depends on the particular situation whether private ownership or public ownership is desirable. The Hart-Shleifer-Vishny model has been further developed in various directions, e.g. to allow for mixed public-private ownership and endogenous assignments of the investment tasks.