Public, private, and shared, as long as we both shall prosper?

The Urbanophile points out that while corporations take on cost risk and demand risk in privatization deals, the public takes on a host of remaining risks. It strikes me that these same deal attributes could apply to shared services arrangements promoted by state governments to lower municipal costs. Both the privatizing of public services and the aggregating of them start out as generative deals for a community. (Though not for the community whose services were disintermediated.) Handing-off ownership of a service creates or expands entities that in turn can become significant employers and stakeholders in post-industrial communities. Political battles ensue.  

Combining an enlarged public mission and a new way of doing something is a form of entrepreneurship--a new solution to a problem that a market wants solved. But whether through the risks the Urbanophile lists, disappointing sinecure appointments, or regulatory requirements, at some point the public can end up paying for a bureaucracy over whom they have no direct control. The deal that promised relief can roll right into the high fixed costs environment holding the city back. Inevitable? Or can these deals be structured to improve the landscape and make a city more attractive for business?