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Public infrastructure is largely managed in America by state and local governments, which also provide most of the financing. In fact, local government has more fiscal responsibility in the U.S. than do local governments in any other nation in the developed world, says Cornell professor Mildred Warner. One popular answer to more effective use of funds has been to bring market and business principles to such services, and in particular to privatize them. But Warner, based on her own comprehensive empirical studies, says the experiment in privatization at the state and local level has not been satisfactory. State and local governments thus need substantially more federal financial support. She provides guidelines as to how and when privatization can be valuable and when it will fail.

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