Category Archives: Public Policy and Governance

Lessons We Are Learning

The upside of a very down time is that the grifters, clowns and neo-Nazis currently laying waste to American government and our international reputation are (accidentally, to be sure) illuminating longstanding structural weaknesses that have facilitated the damage they’re now doing.

One of those weaknesses is a result of the so-called “privatization” movement–especially as that movement co-opted organizations in the nonprofit sector. When I was still on the university faculty, that co-option was the subject of several of my academic publications.

The privatization movement overall was a response to the belief that government agencies don’t do anything well. (The people who criticise “bureaucratic waste” somehow never notice that similar problems with redundancies and “red tape” are present in any large organization, public or private…) The results of that anti-government bias have been profound–vouchers that send tax dollars to private, mostly religious schools that demonstrably don’t perform any better than the public schools, and the delivery of a wide variety of social services through not-for-profit organizations.

There are several problems with “contracting out,” the practice of paying businesses and nonprofits to provide government services.

With respect to nonprofits, one problem is “mission creep.” Mission creep occurs when a nonprofit organization has become dependent on government dollars, and the government program that they’ve been delivering ends. If the government is launching a different program–one that isn’t really consistent with the nonprofit’s mission–the organization will often contract to provide that service, despite the mismatch with its mission, in order to keep the dollars flowing.

When government benefits are delivered through nonprofit organizations, there is also a significant lack of transparency. Citizens are typically unaware that they are benefitting from a government program. (Remember the guy who shouted “keep your government hands off my Medicare at a Congressman? That was a rather extreme example…)

More troubling is the substantial research showing that the practice of contracting with for-profit and nonprofit organizations to deliver government services “hollows out”–erodes–important government capacities. In addition, managing and monitoring a contract with an outside provider requires skills that differ from those needed in most government work. Those  skills are frequently lacking, increasing the potential for waste (and worse).

The practice of contracting out also masks the growth of government. Delivering services through private or nonprofit entities doesn’t shrink the public sector–it governmentalizes the private sector. Private contractors are a significant portion of the “true” federal workforce, with some studies suggesting that their number exceeds the number of direct federal employees.

Then there’s the state action problem.

In the American legal system, the difference between public and private action matters.  Public or state action is action taken by a unit of government.   The Bill of Rights restrains only government, so it is important to know whether a particular act was public (i.e. governmental) or private.  Government cannot insist upon random drug testing of its employees, for example, although a private employer may legally do so. Public schools cannot insist that students pray, but private schools can. Government cannot ban books, discriminate against women or Wiccans, or deny citizens due process of law. Under certain circumstances, private organizations can do all of those things. The distinction between public and private is absolutely central to American constitutional law and the idea of limited government.

Contracting out can make it difficult to distinguish private from public activity. On the one hand, if a city buys computers or pencils from a private company, that vendor shouldn’t suddenly be considered part of the public sector. But what happens when the city or state engages a private company or nonprofit organization to deliver services that had previously been delivered by government employees? Can the private company engage in practices that would be unconstitutional if the government did them?

All of these issues preceded Trump. But his administration’s efforts to stamp out anything our mad would-be king considers “woke” or “DEI” or critical of him has uncovered a previously unrecognized threat. When nonprofits are dependent on government dollars, they either bend the knee or lose critical funding.

In addition to threats to revoke the tax exemptions of disfavored organizations, the administration has paused distribution of federal grants and loans. Though courts stepped in to block some actions, those initial freezes caused fear and planning uncertainty. Other administration actions have included halting previously-appropriated funding for environmental, health, and community programs, which indirectly hurt nonprofits dependent on those grants.

We need to put “rethinking government contracting” on our list of items to address once we eject the Keystone Kops who are running amok in Washington.

Comments

Fascism Versus Market Capitalism

Thomas Edsall’s columns in the New York Times share a consistent pattern: Edsall poses a question or initiates an inquiry, then contacts several experts, posing the relevant questions, and sharing their responses. Most recently, he explored the mechanisms that have characterized the Trumpian replacement of market capitalism with a “bend the knee in order to earn government’s blessing” approach that–like so much of Trump’s administration–is reminiscent of bygone fascist regimes.

It has become common to label Trump’s administration fascist, but usually that accusation arises in the context of ICE thuggery, the attacks on minorities and the evisceration of constitutional rights–actions echoing the Fascist regimes that focused on whitewashed pasts, and claimed traditional class structures and gender roles were essential to the “social order.”

These comparisons are accurate but incomplete; fascism also–and importantly–engaged in a thoroughgoing and intentional subversion of market economics.

Fascism is sometimes called “national Socialism,” but its approach to the economy differs significantly from socialism. The most striking aspect of fascist systems, of course, is the elevation of the nation—a fervent nationalism is central to fascist philosophy. That nationalism accompanies a union between business and the state; although there is nominally private property, fascist governments control business decisions.

In one of his recent columns, Edsall explored the current echoes of that approach, and how dramatically it differs from former Republican agendas and beliefs. As he notes, Trump and his administration regularly apply a “financial and regulatory chokehold” on businesses, corporations and nonprofits that he believes are antagonistic to him, from electric cars and wind energy projects to service-providing nonprofits and television networks.

“The administration has terminated, to use one of Trump’s favorite words, wind energy projects and ended tax and other incentives for electric-powered vehicles, two industries he believes are the creation of Democratic policies.”

As Edsall notes, the Trump administration’s extensive intrusions into the private sector are in direct conflict with traditional Republican and conservative beliefs, which held that government interference with the free market should be limited. Trump, of course, is  neither conservative nor Republican–for that matter, he appears incapable of developing anything remotely like a coherent agenda, economic or otherwise. For him, government regulation is not ideologically an anathema; it is a tool to exercise power and control in his constant pursuit of self-aggrandizement.

Trump is often referred to as “transactional,” but a more accurate description of his corrupt dealings would be “quid pro quo.” Private sector businesses needing government approvals (or needing government authorities to ignore improper activities)  “bend the knee” in exchange for those desired outcomes. In effect, they have acquiesced to the government’s control of business decisions–the sort of control that characterized fascist regimes.

The administration’s growing chokehold on the private sector are also tools allowing Trump and MAGA to pursue their culture-war aspirations. According to an email to Edsall from a political historian at George Washington University,

The president’s use of the government’s power to approve corporate mergers, the fear — and the actuality — of lost research funding and government contracts have enabled Trump to shift the culture in his ideological direction. Social media companies have lifted bans on far-right hatemongers and made X and Facebook more hospitable to pro-MAGA content. Universities such as Columbia; law firms like Skadden, Arps, Slate, Meagher and Flom; and media institutions like ABC News have reached settlements with the Trump administration to stave off existential threats, including canceled licenses, loss of research funding and revoked security clearances.

CBS, once a key source of critical reporting on the Trump administration, has, for example, been taken over by Larry and David Ellison, Trump allies, who put Bari Weiss, the anti-woke publisher of The Free Press (and a former writer and editor for Times Opinion), in charge of the news division.

The takeover of information sources may be Trump’s most politically consequential victory. As Edsall reports, “key platforms and hubs in the social media complex — TikTok, Meta, X — have been taken over by Trump allies or have shifted right to accommodate Trump,” shielding low-information voters from vital information, and spreading bigotry and propaganda.

These incursions haven’t been limited to the private sector; as noted sociologist Kim Lane Scheppele wrote:

The entire nongovernment community (or — as we might say in tax parlance — the 501(c)(3) sector) has been threatened with a combination of loss of tax exemptions, cuts to federal funding and potential investigations.

Some statistics indicate that fully one-third of NGOS incorporated in the U.S. lost funding in the first half of 2025.

As a professor of public policy noted in his email, every part of Trump’s government is intent upon bringing private institutions to heel.

The old GOP is long gone.

Comments

What Is Government For?

Right now, the United States is being “governed” by a dangerous fool–a madman entirely ignorant of governance, cause and effect, or anything other than his own self-importance. Perilous as the current situation is–and it is–he will be gone, and given his obvious and accelerating decline, probably sooner than later, making it imperative that Americans engage in an important–an essential–debate: what is government for? What are the core responsibilities that markets and individuals and voluntary organizations cannot provide?

In my last few posts, I’ve emphasized that there are two questions pertinent to the operation of governing institutions: what and how–and I’ve explained the importance of the “how.” Today, I want to talk about the “what.”

I think most reasonable people look to government to provide essential infrastructure. There’s broad agreement about its responsibility to build and maintain physical infrastructure. There is far less understanding or agreement about social infrastructure–what is sometimes called the “social safety net.” Ideologues of the Right dismiss efforts to strengthen that social infrastructure by labeling it “socialism” (a label that is supposed to justify a hysterical repudiation of whatever the proposal may be). That response ignores the reality that all first world countries have mixed economies. The issue isn’t whether we should “socialize” certain activities, it is the much harder questions of which ones and why.

Resistance to expansion of America’s social infrastructure– our inadequate social safety net– keeps millions from accessing medical care. It keeps working people impoverished and mothers out of the workforce. It reduces economic mobility and amplifies historic inequities.  Ironically, it costs considerably more and delivers much less than is the case in other first-world countries. As researchers have amply documented, the inadequacies of our social infrastructure push numerous problems downstream: Jails and prisons become de facto mental-health providers; emergency rooms substitute for primary care; Police and courts manage crises unrelated to public safety. Our insistence upon limiting “help” via means-testing adds millions in bureaucratic costs.

Despite the claims of “fiscal conservatives,” keeping safety nets inadequate doesn’t save money or eliminate costs—it adds many and reallocates others inefficiently.

And what about the argument that “big” government (i.e. government administering a more capacious safety net) erodes individual liberty?

The new mayor of New York begs to differ. And I agree with him. As Heather Cox Richardson recently reported,

The policies [Mamdani] promised are not simply about lowering costs, he said, but about “the lives we fill with freedom.” For too long, he said, “freedom has belonged only to those who can afford to buy it.” “Here,” he said, “where the language of the New Deal was born, we will return the vast resources of this city to the workers who call it home.”

Mamdani’s speech was a declaration of a new kind of modern politics that focuses on “freedom to” rather than “freedom from.” For decades, the Republican Party has called for dismantling the government, arguing that regulations and taxes were destroying Americans’ freedom from constraints. But for most Americans, government regulation and investments in social welfare like education and infrastructure guarantee freedom to build a life that is not cramped by preventable obstacles, including those imposed by the wealthy and powerful.

The idea of government regulation and a basic social safety net to permit Americans to live their lives to their fullest potential was a key principle of the New Deal launched by Democratic president Franklin Delano Roosevelt in 1933, and Mamdani was right to note that the New Deal was born in New York City.

A number of political philosophers have argued that liberty is, indeed, “freedom to” rather than “freedom from.” When every day is a struggle for survival, the promise of “freedom” to follow one’s dreams rings pretty hollow.

For a long time, proponents of a minimal state have argued that the absence of social supports results in a system where “merit” allows talented individuals to prosper. If our current government demonstrates anything, it is the idiocy of that assumption. The “captains of industry” who have clawed their way to power are anything but the best and brightest–they are beneficiaries of a social system that elevates some at the expense of others, and they are busy dismantling another important part of our social infrastructure: the rule of law.

When we rid ourselves of the current kakistocracy, we need a national discussion about the nature of liberty and the dimensions–and costs–of our social infrastructure, and what we expect government to do (not to mention what we expect a legitimate government to refrain from doing….)

Comments

Markets And The Rule Of Law

I talk a lot about the rule of law–mostly in the context of ensuring fair play and civil peace. But as a recent essay by Catherine Rampell reminds us, the rule of law is also essential to the operation of a market economy.

A country that protects property rights; that has free capital markets; that has a stable and predictable regulatory regime; where all citizens are equal before the law; where individuals don’t fear being expropriated by the state without cause; and where private contracts can be enforced regardless of political connections is generally a better place to do business. All these features are among the reasons the United States has long been the richest country on earth. It’s also why we have attracted so much foreign capital.

When property rights aren’t protected and the justice system operates to reward friends and punish enemies, doing business is harder. People don’t have the certainty they need to invest here, or study here, or start businesses here.

Rampell is absolutely correct. Economic experts have long emphasized the importance of the rule of law to market performance. Predictability is particularly significant–it allows businesses to plan, invest and price goods with reasonable certainty that everything won’t go south without warning.

Even more important is the enforcement function. A reliable and impartial legal structure allows confidence that contracts will be enforced in accordance with their terms. When a business owner cannot rely on the courts to enforce agreements and laws mandating fair economic play, like anti-trust, companies end up depending on personal relationships– family networks, political influence, or bribery-based “arrangements”– which are both far less predictable and far less fair. (Can we spell Russia?)

Then there’s the protection that rule of law regimes provide for property rights. Critics of capitalism tend to dismiss the importance of that protection, but it is critical to the operation of the economy. Investment only occurs when ownership is secure–when clear legal title allows business-people to buy, sell, collateralize and insure property. When any property can be arbitrarily seized (either by the state or by powerful actors), capital investment gives way to defensive hoarding.

Numerous economists will also point out that the ability to rely on a fair and impartial legal system lowers transaction costs and makes markets more efficient. Rule of law systems with standardized rules reduce the need for expensive private enforcement, constant renegotiation, or the excessive premiums necessitated by increased risk. As an economist friend once told me, the rule of law obviates the need for private militias, political patrons, or corrupt intermediaries. 

 Bottom line: the rule of law makes markets cheaper to operate, and it should go without saying that lower transaction costs benefit consumers–a lesson we’re re-learning as Trump’s tariffs increase those transaction costs.

One of the most worrisome aspects of the kakistocracy we increasingly inhabit is the steady erosion of genuine market capitalism and its replacement by what is sometimes called corporatism, or crony capitalism. When power replaces the rule of law, markets devolve into corruption, uncertainty, capital flight, and monopoly power.

What defenders of capitalism often misunderstand is that markets can’t operate properly in the absence of regulation. Antitrust law, bankruptcy law, and anti-corruption laws prevent powerful folks and insiders from rigging the marketplace. Sound laws and regulations ensure that investments will flow to firms that are seen as productive, rather than to firms that are politically connected. Crony capitalism suppresses productivity and innovation.

A market economy is not self-sustaining without an adequate rule of law.

I consider myself a capitalist. I’m a fan of market economics, and accordingly, I recognize the importance of the rule of law to the proper operation of those markets. But I also understand that there are functions that markets cannot perform. Economists talk about “market failures” that require government intervention, but the simpler explanation is that, in any society, there are functions that require collective rather than competitive action. 

Government is our mechanism for those collective activities, for providing the physical and social infrastructure within which markets can operate and people can pursue their individual life goals. The rule of law is an essential part of that infrastructure.

The thorny issue that underlies our most important policy debates is identifying which goods should be provided collectively by government and which should be left to the market. (If we’ve learned anything from the failures of “privatization ideology,” it is that things like education and health care are not consumer goods.)

Tomorrow, I’ll consider that fundamental question…

Comments

Harnessing Hate Only Goes So Far

When the Electoral College installed Trump in the Oval Office in 2016–allowing Red states to overrule his loss by some three million votes cast largely by voters in Blue ones–it seemed clear to me that his appeal rested largely on his willingness to abandon “dog whistles” for out-and-proud bigotry. The people who had been appalled by the presence of a Black man in the White House applauded Trump for “telling it like it is”–and took his “candor” for permission to express sentiments that “political correctness” had  suppressed.

Those of us who immediately made that connection ran up against the protests of (far nicer) folks who wanted to attribute Trump’s electoral success to economic distress, or other, more typical political reasons, but by the end of his first term, political science research had largely confirmed that “racial resentment” motivated most votes for Donald Trump.

 By the conclusion of 2025, the first year of Trump’s second term–there was no longer room for doubt.

As an article in Lincoln Square recently put it, overt racism and antisemitism are the defining features of what is now Trump’s  GOP.  That article listed several examples, but the one that managed to astonish me was language included in the administration’s recently published National Security Strategy.

That document said, among other things, that the NATO treaty was signed with Europe when Europe was overwhelmingly white, and that since immigration has changed the continent, the NATO treaty might no longer be valid. The strategy joined naked racism to a pro-Putin approach to Europe and appalled the entire foreign policy establishment. The publication of the strategy shined a bright new light on the ugly bigotry that had been in plain sight all along. A few weeks later, at a meeting of Turning Point USA, J.D. Vance gave a speech where he invited Nazis, Groypers, and other hate-groups into the administration’s political coalition.

I’ve previously reported on the administration’s numerous domestic efforts to turn back the clock to a time when racism and misogyny were considered “normal” and “Christian,” and I won’t repeat that litany here. Suffice it to say that most sane Americans (a somewhat smaller percentage than I’d previously. hoped, but still a majority) are now fully aware that continued support for MAGA and Trump is grounded in hate of the “Other.” 

As that awareness has grown, comparisons with Nazi Germany have also proliferated–but increasingly, with an interesting twist. Historians and pundits who previously highlighted the measures that allowed Hitler to come to power have begun focusing on the decisions that ultimately defeated him. 

I no longer recall where I read this, but one historian has pointed to a fatal error in judgment: as the tide on the battlefields was turning against Germany, the Nazis increasingly deployed their scarce strategic resources toward the destruction of the Jews. Trains that could have moved troops, for example, were used instead to deliver human beings to death camps.

The parallel is instructive.

To the best of our knowledge, Trump, Miller, et al aren’t yet establishing death camps, but they are creating horrific “holding areas” like Alligator Alcatraz, throwing humans in foreign dungeons in places like El Salvador, and spending enormous amounts unleashing ICE thugs on Americans who don’t present as lily-white.  The administration is redoubling efforts to re-legalize discrimination against women and minorities, and increasingly engaging in language demeaning those who aren’t White Christian males. Their hatreds consume them.

As the linked article noted, the administration is ramping up its cruelest race-based policies at the very moment when the forces of resistance are turning the tide.

At a time when majorities of Americans are deeply opposed to all of this–a time when polling and survey research confirm that Trump and MAGA are deeply unpopular, a time when millions of citizens keep taking to the streets in protest and Republicans have been losing election after election–the Trump administration is doubling down on the bigotry, cruelty and stupidity that have powered the resistance and been responsible for their plunging approval ratings.

I am increasingly convinced that we are at an important turning point–that 2025 was the low, and that 2026 will see the growth of a resistance that not only takes advantage of the daily missteps of a monumentally inept administration, but that –especially–rebels massively against the bigotries that fuel Trump and MAGA.

A number of pundits scorn those of us who insist that “America is better than this.” But we are better than this–and I am increasingly convinced that this is the year we will prove it.

Comments