Privatization Gone Wild

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American History, Bush Administration, economy

First off, let me assure you I will not be writing an “April Fool” post today. As long as George Bush is in the White House, every day is April Fool’s Day in America.

Raw Story reports (via Gun Toting Liberal) that the Bush Administration’s fixation on privatization is causing long-term damage to our government.

Due to its increasing practice of contracting out to private firms and agencies, the U.S. government is quickly losing its expertise and competence in vital national security and defense programs, according to a Wall Street Journal report.

“Since the 2001 terrorist attacks and wars in Afghanistan and Iraq, the federal government’s demand for complex technology has soared,” writes by Bernard Wysocki, Jr. for the Journal. “But Washington often doesn’t have the expertise to take on new high-tech projects, or the staff to oversee them.

“As a result,” he continues, “officials are increasingly turning to contractors, in particular the hundreds of companies in Tysons Corner and the surrounding Fairfax County that operate some of the government’s most sensitive and important undertakings.”

The supposed superiority of private enterprise over public bureaucracy is a cornerstone of right-wing ideology. Privatization, along with tax cuts and deregulation, is one of the Right’s favorite knee-jerk answers to all of life’s problems.

Googling around this morning I came across the Reason Foundation’s Annual Privatization Report 2006: Transforming Government Through Privatization. Much of the “report” reads like alternative historical fiction; thanks to privatization, since 1990 government has been getting better and better, it says. Sure.

I particularly like this brilliant bit of satire called “Advancing Limited Government, Freedom, and Markets” by Mark Sanford, Governor of South Carolina. Here’s just the first two paragraphs —

Any read through history demonstrates how essential limited government is to preserving freedom and individual liberty. What life experience shows us is that limited government is equally important in both making your economy flourish and in enabling citizens to get the most for their investment in government.

Let me be clear up front that in the long run the only way to make government truly efficient is to make it smaller, and this seems to me to be the real clarion call in highlighting the importance of privatization efforts. Efficiency and government are mutually exclusive in our system, and if our Founding Fathers had wanted efficiency I suppose they would have looked more closely at totalitarian systems. They wanted not efficiency, but checks on power in our republic.

I don’t believe “efficiency” was much of an issue in the 18th century, but let’s continue — Gov. Sanford goes on and on about the glories of privatization and “marketbased solutions” for problems in education and health care. He uses the word freedom a lot, although he doesn’t explain how privatization and small government protect civil liberties. (I argue here that the “small government equals freedom” notion made sense before the Industrial Revolution, but not so much after. Righties are a tad slow.)

Let’s go back to Raw Story:

The number of private federal contractors has now risen to 7.5 million, which is four times greater than the federal workforce itself, the report indicates. Such a trend is leading the government to what Wysocki calls the “outsourcing [of] its brain.”

The shift to private firms has not been without its problems, however, with faulty work and government waste becoming rampant.

“Today, the potential pitfalls are legion,” writes Wysocki. “Big contracts are notorious for cost overruns and designs that don’t work, much of which takes place under loose or ineffective government scrutiny.” The outsourcing of these government programs “can be a prescription for enormous fraud, waste and abuse,” Rep. Henry Waxman (D-CA), chairman of the House Oversight and Government Reform Committee, is quoted as saying during a hearing.

Linda Bilmes wrote for Nieman Watchdog last year about the cost of the Iraq War.

Q. Why is this war so expensive?

One reason is the huge reliance on private contractors to do basic military tasks. … Contractors charge many times more than it would cost to have the military do the work. For example Blackwater Security, which provided security to the Coalition Provisional Authority, paid some of its security guards over $10,000 per week.

(For the past 30 years American business has been keen on outsourcing as a cost-saving measure, and in many industries all manner of functions that used to be performed in-house are now contracted out. This may work nicely in some circumstances, but in my experience companies pay — probably more than the CEOs realize — in inefficiency and loss of quality control. Someday they’ll figure this out, and the New New Trend will be insourcing. Just watch.)

There’s a book reviewed today in the NY Times called Radicals for Capitalism: A Freewheeling History of the Modern American Libertarian Movement by Brian Doherty, an editor at Reason magazine. The reviewer, David Leonhardt, is lukewarm about the book. I just want to quote this bit from the review:

Libertarianism has its roots in the writings of a pair of major 20th-century Austrian economists, Ludwig von Mises and F. A. Hayek. Both opposed economic planning and argued that only the forces of supply and demand could allocate re sources fairly and efficiently. If an item becomes scarce, its price will rise, ensuring that people who place the highest value on it — those who can use it most productively — will be able to get it. To this coolly economic argument, Rand and other writers added a moral one: laissez-faire capitalism equaled freedom.

This was a tough sell in the wake of the Depression and the war, but the ground began to shift in the 1970s. As the Vietnam War sputtered to a close and the economy stagnated, the wise men who built “big government” began to look ineffectual. In 1980, Ronald Reagan would win the presidency by campaigning on laissez-faire rhetoric. The day after his election, he was photo graphed on an airplane reading The Freeman, the flagship libertarian magazine, while Nancy Reagan rested her head on his shoulder.

In the nearly three decades since, libertarian arguments have enjoyed a nice run. Tax rates have been reduced; once-regulated industries have been opened to competition; any two consenting adults, including those of the same sex, can now marry in some places. One of today’s most fashionable political labels, “socially liberal and fiscally conservative,” Doherty shrewdly notes, is “the basic libertarian mix.”

Actually, faith in laissez-faire economic policies as the key to salvation goes back to the 19th century; from time to time I rant about how “free market” ideology caused a million Irish to die in the Famine, which began in 1845. American history since the Civil War can be read as a tug-of-war between progressivism and the “free market” fetishists. When people get tired of being ripped off and exploited by the malefactors of great wealth, they turn to government for help. But sooner or later they forget being ripped off and exploited and get taken in by “free market” hype again. Thus the Gilded Age was followed by the Progressive Era, which was followed by the Roaring 20s (also called the Republican Era), which was followed by the Great Depression and New Deal. And when memory of the Great Depression had sufficiently faded, we got Ronald Reagan.

Like I said; every day is April Fool’s Day in America.

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4 Comments

  1. c u n d gulag  •  Apr 1, 2007 @11:37 am

    The Republican/Libertatian privatization scheme may be about to collapse like the Ponzi scheme that it is. Unfortunately, it’ll take the American economy with it. It could make The Great Depression look like the good old days. I hope I’m wrong.

    If the economy collapses, fortunately for the rich (who want to maintain power at any cost), the’ll have their own “private army” to defend them and their property from the rest of us. That “private army” is now honing its skills in Iraq, Afghanistan, and other parts of the world. Those “private soldiers” will not want to join the great unwashed – the rest of us. They will defend the rich from the poor if only to prevent joining their ranks.

    And, the court system, stocked by Bushies, will rule for the rich and powerful if any standoff appears in the court’s.

    Anyone trying to throw a monkey wrench into the works will be demonized. (In the future, they’ll be “disappeared,” or will be thrown into poverty).

    The evidence for this lies in the the Attorneys General scandal. We’re watching excellent laywers be demonized by the halls of power. And the MSM is right there with them, casting the first stones. (Maybe they figure that if they throw stones now, they won’t have to duck any later).

    I hope you enjoy the preview we’re all watching. The rest of the show may be about to follow.

    The only chance for the future lies with this Congress. Right now, some Democrat’s are putting up a fight. We had better hope that they win. We must do all that we can to insure that they do. They are all that stand between us and a Theocratic Fascist government run by the rich.

    Again, I hope that I’m being insanely alarmist here. Please tell me that I am…

  2. Swami  •  Apr 1, 2007 @12:08 pm

    The Salvation Army Correctional Services ? “Let us go rejoicing as we do our court ordered golden flows”

  3. Lesly  •  Apr 1, 2007 @4:02 pm

    Republicans/conservatives don’t trump up public misuse of funds and present privatization as the answer to government waste because they really believe in efficiency and fiscal responsibility. The goal is to starve the treasury and make the mismanagement of public funds through the private sector as proof that government programs and administrative agencies need to be rolled back. It also help that a few rich organizations will get richer in the progress, and appointing abject, incompetent hacks to speed the process along doesn’t hurt.

  4. Doug Hughes  •  Apr 1, 2007 @9:48 pm

    Here’s an outsourcing story for you. The USPS is outsourcing mail delivery. The idea is to sidestep the 2 carrier unions and eliminate medical, vacation, retirement, etc by awarding contracts for private delivery. The company who gets the contract get a background check, but he can employ anyone, who would not necessarily have any background check. It gets worse.

    “BY CHRISTIAN GASTON | 503-243-2122
    [March 29th, 2007] “Beaverton Postmaster John Lee told the letter carrier’s union in January that he was hiring a contractor for delivery in a Beaverton-area suburb because he thought it could save $33,878 a year
    (“You’ve Got Mail,” WW, March 14, 2007).

    But that’s hard to believe given that records show the contractor,
    Christopher Onuliak, is getting $12,279 for a fourmonth “emergency contract.” That means Onuliak is netting $118 for each day of delivery to 20 mailboxes in the Arbor Parc suburb.

    The deal is also a family affair. Onuliak is the son of Mike Onuliak, a manager at the Beaverton post office. That’s allowed as long as Christopher Onuliak is over 21 and not living at home, according to USPS internal purchasing guidelines. Records show Onuliak is 22 and with a different address than Michael Onuliak. ”

    Outsourcing will solve ALL our problems. Hope you pay your bills online.

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