Tag Archives: privatization

Reduction by Addition

Over at the Washington Post, John DiIlio (late of the Bush White House Office of Faith-Based and Community Initiatives) makes a point I’ve frequently made--if we want to reduce the actual size of government, we need to hire more federal workers.

As DiIlio points out, the number of federal civilian workers (excluding postal workers) has been flat for quite some time. When George W. Bush became president, the executive branch employed about 1.8 million civilians–virtually the same number as when John F. Kennedy won the White House.

There were more federal bureaucrats (about 2.2 million) when Ronald Reagan won reelection in 1984 than when Barack Obama won reelection in 2012 (about 2 million)…

This is the dirty secret behind all those debates over the size of government. Yes, government is big and is dangerously debt-financed, but it is also administered by outsiders — and that is what guarantees that our big government produces bad government, too.

DiIlio calls this state of affairs “Leviathan by proxy,” and it’s an apt phrase.

America has had a 30-plus year love affair with “privatization.” The problem is, what we’ve been doing is not privatization–it’s contracting out, a very different animal. As my friend Morton Marcus is fond of pointing out, privatization is what Margaret Thatcher did; she sold off enterprises that government didn’t need to operate. They became private, they paid taxes, they either prospered or failed. What Americans call privatization is dramatically different–we provide government services through third-party, for-profit or non-profit surrogates.

Not only does this mode of service delivery lead to the inefficiencies and management problems that DiIlio identifies in his article, it makes the size and reach of government less visible. It enables Leviathan.

The last time I looked, there were approximately 18 million people working for federal, state and local governments who were not on any government’s payroll. The number of employees who work for contractors doing the work of government agencies–people whose full-time jobs are to deliver government services and who are paid with tax dollars– dwarfs the number of bureaucrats actually employed by those governments. It is virtually impossible to keep track of them, let alone ensure their accountability–constitutional or otherwise.

As DiIlio notes,

Big government masquerading as state or local government, private enterprise, or civil society is still big government. And privatization that involves “acquisition workforce” bureaucrats contracting out work to entrenched interests is not really privatizing. The growth of this form of big government is harder to constrain, and its performance ills are harder to diagnose and fix, than they would be in a big government more directly administered by an adequate number of well-trained federal bureaucrats.

When you demonize government, but demand services, this is what you get.

It isn’t pretty–and it isn’t privatization.

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Academics Say the Darnedest Things…

It’s too bad that articles in academic journals are so filled with jargon, because they often contain valuable information, or make important points that get ignored or glossed over, even by other members of the academy.

Case in point, a recent article in Public Administration Review, a very highly-regarded journal focusing on issues of public management. The title ” Governance, Privatization and Systemic Risk in the Disarticulated State” was calculated to make your eyes glaze over, and I will admit I only read it because I know both of the co-authors (one is a SPEA colleague) and know them to be first-rate scholars.

Ignore the wonky title. This is yet another analysis of government’s love-affair with privatization.

The authors apply research on “systemic risk” to the public-private partnerships that have become ever more common over the past quarter-century or so, the networks of for-profit and non-profit organizations increasingly used by public-sector agencies to do government’s work and deliver public services. As they note, such public networks are similar to financial systems: they are complex, interdependent and risky. Furthermore, if and when they fail, that failure has “potentially catastrophic” effects on citizens who depend upon public services.

One of those risks is that an organization in one of these privatized networks will try to benefit at the expense of the others. The article cites several examples: halfway houses in New Jersey were found to have falsified records in order to have high-risk inmates placed in their (understaffed) facilities; in Tucson, Arizona, a downtown development project employed a network of developers and consultants that spent millions of taxpayer dollars and failed to produce anything.

The risk isn’t confined to dishonesty and self-dealing. The Providence Service Corporation is the largest provider of privatized social services in North America. When the 2008 Great Recession hit, investors dumped their stock in the company (it went from $36 per share to less than a dollar). The loss of capital threatened the ability of the company to continue delivering services to 70,000 clients.

After an extensive discussion of the nature and extent of the dangers involved, the authors conclude that, “reliance upon third parties to produce government services is fraught with risk at all levels.”

This analysis joins a growing and steady accumulation of evidence that the wholesale embrace of privatization of public services is too often costly, risky and counter-productive.

The rush to privatize–to offload public responsibilities–is part and parcel of the assault on the whole enterprise of government that has always been part of American political discourse, but which really gained traction during the Reagan Administration. It’s an attitude, rather than a philosophy, and it plays to the very American desire to address messy, complicated realities with simple, bumper-sticker remedies.

As we are learning the hard way, government can’t privatize away its responsibilities, and too often, the effort to do just that ends up making matters worse.

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The Devil and the Details

I see where applications for Indiana’s private school vouchers have doubled, in the wake of the legislature’s action last session relaxing the criteria.

School Choice Indiana’s president was quoted as ecstatic, and noted that participation in the program has quadrupled since it was first introduced.

Happy days. Public schools not up to snuff? Don’t bother fixing them–privatize! (We all know that government can’t do anything right, and the private sector can’t do anything wrong.)

I’m sure it doesn’t mean anything that in Madison, Wisconsin, private schools that are currently participating in that state’s voucher program are vigorously resisting proposed new requirements that they make public their students’ achievement data.

Accountability is evidently only for public schools.

The sponsor of the Wisconsin measure, Senator Luther Olsen, is the Republican chair of the state legislature’s Education Committee. He wants the Legislature to be a “careful steward of taxpayer dollars.” As he put it, “No matter if you’re a public school, a charter school or a choice school, if you get a check, you should get a check up.”

That seems eminently reasonable. If tax dollars are going to private schools, the very least we should expect is information about the effectiveness of the programs those dollars are supporting. Furthermore, if parents are going to make informed choices about where to send their children to school, it seems only fair that they should have access to basic information about the performance of the schools they are considering.

According to news reports, however, Wisconsin’s non-public schools are adamantly opposed to making their results public, and the legislature is unlikely to pass the measure.

Interesting, isn’t it? The most vocal critics of public schools–the advocates and beneficiaries of voucher programs that bleed resources from the public system to support their own institutions, the people who insist upon testing and accountability for public schools–aren’t so enthusiastic about performance reviews when they are the ones being evaluated.

I guess sauce for the goose gets kind of bitter when it’s poured on the gander.

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A Little-Noted Lesson from the Fiscal Cliff

Apparently, the country will be taking a leap off the so-called fiscal cliff, since–despite a flurry of last-minute activity and a vote by the Senate–midnight came and went without passing anything. (And even the Senate’s measure didn’t remotely resemble a “grand bargain.”)

For most of us, the tax consequences are likely to be short-term. Incredibly, a significant number of Representatives refused to vote in 2012 to terminate the Bush tax cuts for rich folks, but are perfectly willing to come back early in 2013 after the cuts have expired and vote to reinstate them just for the non-rich. Why is that, you might reasonably ask, when the result will be exactly the same? Because they can then tell their constituents they never voted for a tax increase. They evidently think the American public is really, really stupid–and we elected them, so maybe they’re right.

Then there’s the issue of spending cuts. If a larger deal cannot be negotiated, and the dreaded “sequester” goes into effect, we’re told that government spending will be sharply reduced. And that’s true–as far as it goes. But the nasty little secret is that government is no longer a word that describes…government. As in public sector employees and elected and appointed officials. After decades of privatization and contracting out, government is all of us and everywhere–defense contractors, civil engineers, social service agencies and other for-profits and nonprofits that depend upon government contracts to survive. The last analysis I saw–and it is now several years old–counted some eighteen million people working full-time at ostensibly private and nonprofit sector jobs that were wholly supported by our tax dollars.

Retrenchment in those government contracts–required by the sequester–will affect more than just those 18+ million people who are employed in what we might call the “quasi-government” sector. When the defense contractor loses his biggest customer, his suppliers lose theirs, and so on down the line. The economic contraction would be rapid and severe.

I say it “would be” because I believe that the reality of that outcome will quickly become apparent even to the less-than-brilliant policymakers in Congress. (Their constituents can be counted on to point it out, if they somehow don’t get it.) Call me Pollyanna, but I think we’ll see some sort of acceptable-but-not-ideal agreement early in January.

Even if we evade economic disaster via fiscal cliff-diving, however, it may be worth pondering the largely unrecognized extent to which the private and nonprofit sectors are now part and parcel of that “bloated and wasteful” government we routinely excoriate, and the extent to which demands for cuts in “government spending” threaten to reduce our own incomes. That’s certainly not an argument for unrestrained spending; it is, however, an argument for recognizing economic reality and the extent to which “privatization”–which has increased, rather than reduced, the size of government–has made necessary spending cuts infinitely more difficult.

Happy New Year.

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School Choice of Fact

Yesterday, I noted that school privatization brings with it a number of unintended–and unfortunate–incentives. In Ohio, those incentives were financial; the Ohio Superintendent forced to resign was gaming the system for money.

Today’s lesson, children, centers upon a different incentive: the opportunity for proselytization. Welcome to Bobby Jindal’s Louisiana.  

Mother Jones reports on Jindal’s sweeping voucher program, which has received glowing reports from advocates of school choice and privatization. There is no doubt that Louisiana schools are in need of dramatic reform, but as the article notes, the state is poised to spend billions of tax dollars with virtually no accountability.

The early result? Of the 119 private schools participating in the program, at least 19 teach creationism in lieu of science, and substitute religious dogma for documented history.

These schools rely on textbooks and curricula produced by Bob Jones University. (The texts are quoted and referenced in the article available at the hyperlink.) They teach bible-based “facts,” including:

Dinosaurs and humans were on earth at the same time.

God used the Trail of Tears to bring Indians to Christ.

Most slave masters “treated their slaves well.”

In some areas of the country the KKK “tried to be a means of reform, fighting the decline in morality and using the symbol of the cross. Klan targets were bootleggers, wife-beaters and immoral movies.”

Steinbeck’s Grapes of Wrath was part of a propaganda campaign to make the Depression sound worse than it was.

If rejection of science and rewritten history aren’t your thing, the schools also teach law (“Ignoring 3,500 years of Judeo-Christian civilization, religion, morality and law, the Burger Court held that an unborn child was not a living person…”) and literature (“Mark Twain’s outlook was both self-centered and ultimately hopeless”…Emily Dickenson’s poems “show a presumptuous attitude concerning her eternal destiny…she never accepted [the bible] as an inerrant guide to life.”)

Louisiana tax dollars at work.

I’d worry about this more, but global climate change is a sign that the Rapture is imminent…..

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