Victors and Spoils By PAUL KRUGMAN NY Times Columnist Rule No. 1: Always have a cover story. The ostensible purpose of the Bush administration's plan to open up 850,000 federal jobs to private competition is to promote efficiency. Competitive vigor, we're told, will end bureaucratic sloth; costs will go down, and everyone — except for a handful of overpaid union members — will be better off. And who knows? Here and there the reform may actually save a few dollars. But I doubt that there's a single politician or journalist in Washington who believes that privatizing much of the federal government — a step that the administration says it can take without any new legislation — is really motivated by a desire to reduce costs. After all, there's a lot of experience with privatization by governments at all levels — state, federal, and local; that record doesn't support extravagant claims about improved efficiency. Sometimes there are significant cost reductions, but all too often the promised savings turn out to be a mirage. In particular, it's common for private contractors to bid low to get the business, then push their prices up once the government work force has been disbanded. Projections of a 20 or 30 percent cost saving across the board are silly — and one suspects that the officials making those projections know that. So what's this about? First, it's about providing political cover. In the face of budget deficits as far as the eye can see, the administration — determined to expand, not reconsider the program of tax cuts it initially justified with projections of huge surpluses — must make a show of cutting spending. Yet what can it cut? The great bulk of public spending is either for essential services like defense and the justice system, or for middle-class entitlements like Social Security and Medicare that the administration doesn't dare attack openly. Privatizing federal jobs is a perfect answer to this dilemma. It's not a real answer — the pay of those threatened employees is only about 2 percent of the federal budget, so efficiency gains from privatization, even if they happen, will make almost no dent in overall spending. For a few years, however, talk of privatization will give the impression that the administration is doing something about the deficit. But distracting the public from the reality of deficits is, we can be sure, just an incidental payoff. So, too, is the fact that privatization is a way to break one of the last remaining strongholds of union power. Karl Rove is after much bigger game. A few months ago Mr. Rove compared his boss to Andrew Jackson. As some of us noted at the time, one of Jackson's key legacies was the "spoils system," under which federal jobs were reserved for political supporters. The federal civil service, with its careful protection of workers from political pressure, was created specifically to bring the spoils system to an end; but now the administration has found a way around those constraints. We don't have to speculate about what will follow, because Jeb Bush has already blazed the trail. Florida's governor has been an aggressive privatizer, and as The Miami Herald put it after a careful study of state records, "his bold experiment has been a success — at least for him and the Republican Party, records show. The policy has spawned a network of contractors who have given him, other Republican politicians and the Florida G.O.P. millions of dollars in campaign donations." What's interesting about this network of contractors isn't just the way that big contributions are linked to big contracts; it's the end of the traditional practice in which businesses hedge their bets by giving to both parties. The big winners in Mr. Bush's Florida are companies that give little or nothing to Democrats. Strange, isn't it? It's as if firms seeking business with the state of Florida are subject to a loyalty test. So am I saying that we are going back to the days of Boss Tweed and Mark Hanna? Gosh, no — those guys were pikers. One-party control of today's government offers opportunities to reward friends and punish enemies that the old machine politicians never dreamed of. How far can the new spoils system be pushed? To what extent will it be used to lock in a permanent political advantage for the ruling party? Stay tuned; I'm sure we'll soon find out.
Privitization can be effective and eliminate waste. But to ensure performance and fidelity to mission, you need to have significant stakeholder participation. Experimental community corporations w/significant stakeholder participation have been very successful in small scale trials in the US and in some European countries. Unfortunately, they're not politically popular. They smell too much of communitarianism for Republicans... and too much of privitization for Democrats.
There's a huge difference between government and private enterprise. It's fun to say that gov't should learn from business, but there are some very good reasons that it simply doesn't work. Primarily, business is about profit. Government is about consistency, reliability, and covering all bases. You privatize some dept (lets say, SS rolls processing), and what happens? The company bids and gets the contract - their goal is to make a profit, so they are certainly charging more than it costs. Right there, if the government did the same job more efficiently, it would cost less because they could take out the profit aspect. Second, the private firm will cut costs which will affect the quality of the work. What happens then? The government can't just go around and get another firm to do it - the costs of changing firms over and over is ridiculous. And what about politics? What if firms contribute to the President's party? Do they buy access to do various jobs? Do we end up with a system run like mob-controlled Chicago? What happens with fraud or errors? The government now has limited control of the process - and is responsible for whatever mistakes the private firm makes. There's a ridiculous number of pitfalls with the privatization concept when applied to government services. The worst case with a private firm doing private work failing or screwing up is that they go under. The worst case with a private firm doing government work is that the gov't and thus the American people are screwed. Bad, bad, bad idea for important government functions. Fine for little things, of course.
Major, In the contract, you build in performance requirements which include customer staisfaction. Have you had any customer satisfaction surveys after using Federal services? How would you have responded? Their service level is in the stone age. Secondly, no civil servant restrictions. People will work and get rewarded like the rest of us, and pay SS taxes too. To think that the government runs these daprtments efficiently, especially when they cannot hire and fire at will, is almost comical. What were you thinking?
In the contract, you build in performance requirements which include customer staisfaction. Of course - but what is the penalty? The government can't just keep changing firms if the contractor doesn't perform well - the costs would be enormous. Second, who picks the new firm? How do you ensure there's no politics involved? You already see it in the military - firms essentially pay for access through politics and get rewarded with huge military contracts. It becomes this massive kickback system. Secondly, no civil servant restrictions. People will work and get rewarded like the rest of us, and pay SS taxes too. To think that the government runs these daprtments efficiently, especially when they cannot hire and fire at will, is almost comical. What were you thinking? I'm not saying they run things efficiently. I'm saying they trade efficiency for other benefits like consistency, control and non-politicization (as much as possible). These things are all far more important with government because the services it provides are far more critical than what a private firm might offer to another private firm. The CSC was created specifically to take the politics out of the hiring and firing process. Yeah, it sucks and has a number of problems, but I'm not sure it's any worse than the hiring / firing process in private industries where friends are rewarded or you get points for schmoozing with the bosses.
Oops, kinda behind the times, although your statement was not entirely accurate either: A The law has changed. Since Jan. 1, 1984, all federal employees have been required to pay into Social Security. Those hired before that date, however, do pay into two government retirement plans. All active US military personnel have been required to pay into Social Security since 1957; reserves have paid in since 1988. And many new state and local government workers pay into Social Security, according to a Social Security spokesman. In some states, however, civil servants do pay into their own public retirement plans, but all have paid into Medicare since 1986. Currently, he says, 154 million workers pay into Social Security, representing 96 percent of the entire US workforce. Most of the "missing 4 percent," he says, is made up of older federal civil servants, and some state and local workers.
Originally posted by Major Of course - but what is the penalty? The government can't just keep changing firms if the contractor doesn't perform well - the costs would be enormous. Second, who picks the new firm? How do you ensure there's no politics involved? You already see it in the military - firms essentially pay for access through politics and get rewarded with huge military contracts. It becomes this massive kickback system. I imagine that it won't solve all of the issues, and would probably create new ones. I just don't like the total lack of accountability when it comes to servicing customers, us, that exists presently. Case in point: My father lost his job in his late sixties, and for the first time in his entire life, he went in to collect unemployment. They made him wait for hours to treat a WWII veteran like crap. But we all just say, 'that's the government, what do you expect'. That doesn't cut it. I'm not saying they run things efficiently. I'm saying they trade efficiency for other benefits like consistency, control and non-politicization (as much as possible). These things are all far more important with government because the services it provides are far more critical than what a private firm might offer to another private firm. The CSC was created specifically to take the politics out of the hiring and firing process. Yeah, it sucks and has a number of problems, but I'm not sure it's any worse than the hiring / firing process in private industries where friends are rewarded or you get points for schmoozing with the bosses. You think friends are rewarded and shmoozing doesn't count in the civil service? I think it keeps a lot of people employed who suck at what they do. Maybe it avoids some other problems, but that alone is enough to change the system, IMO.
