Tag Archives: accountability

Reich’s Rules

What American politicians call privatization has been a focus of much my academic work.(If you go to the “Academic papers” section of this blog and search for privatization, you’ll find a lot of entries.)

I phrase it as “what American politicians call privatization” because–as Morton Marcus pointed out to me years ago– genuine privatization is what Margaret Thatcher did in England. She sold off government-owned assets like railroads and steel mills to the private sector, after which they were private. They paid taxes, and either prospered or failed, but government no longer had much to do with them.

What Americans call “privatization” is very different. The accurate term is “contracting out” –and it refers to the decision by government agencies to provide government services through for-profit or non-profit surrogates. That process should not be confused with procurement–no one expects city hall to manufacture its own computers or the myriad other items it requires in order to function. (Admittedly, the line can get blurry: contracting with a private paving company to fill potholes, for example. But few privatization critics are troubled by those long-standing practices.)

It is important to recognize that when a government agency contracts with a surrogate to provide services that the agency is legally required to provide, government remains legally responsible for the proper delivery of those services.

Robert Reich recently enumerated five rules that should govern these decisions. His rules are very similar to those on my class lecture on the subject.  It should be obvious, for example, that government shouldn’t contract out when keeping a service in-house will be more efficient and cost-effective.

Other rules are less obvious, but no less important.

  • Don’t privatize when the purpose of the service is to bring us together – reinforcing our communities, helping us connect with one another across class and race, linking up Americans who’d otherwise be isolated or marginalized.

 This is why we have a public postal service that serves everyone, even small rural communities where for-profit private carriers often won’t go. This is why we value public education and need to be very careful that charter schools and other forms of so-called school choice don’t end up dividing our children and our communities rather than pulling them together.

  • Don’t privatize when the people who are supposed to get the service have no power to complain when services are poor.

 This is why for-profit prison corporations have proven again and again to violate the constitutional rights of prisoners, and why for-profit detention centers for refugee children at the border pose such grave risks.

  • Don’t privatize when those who are getting the service have no way to know they’re receiving poor quality.

 The marketers of for-profit colleges, for example, have every incentive to exploit young people and their parents because the value of the degrees they’re offering can’t easily be known. Which is why non-profit colleges and universities have proven far more trustworthy.

  • Don’t privatize where for-profit corporations face insufficient competition to keep prices under control.

 Giant for-profit defense contractors with power over how contracts are awarded generate notorious cost overruns because they’re accountable mainly to their shareholders, not to the public.

Perhaps the most troubling contracting practices involve the military; contract soldiers are uncomfortably similar to mercenaries, and the growing use of private companies in America’s  various wars and military actions generates a number of very thorny issues, a topic I’ve explored elsewhere.

One of America’s many overdue conversations should address what services we expect  our various levels of government to provide and the nature and extent of the evidence needed to support a decision to outsource service delivery.

 

 

 

Limiting Power

Credit where credit is due: not only has the Trump administration rekindled civic engagement (scholars tell us that the number of people on the streets protesting exceeds the number who protested the Vietnam War), but his accidental ascension to the Presidency has highlighted the need to revisit constitutional provisions that no longer serve their intended purposes.

The problem, of course, is that We the People are too divided and too historically and civically illiterate to be trusted with the task of constitutional revision.

When–and if–the time ever comes that we are capable of making careful revisions to our foundational document, there are a number of issues to consider. The most obvious, of course, is the Electoral College, but there are also several aspects of federalism that should be reconsidered in light of contemporary technology and transportation. For example, there is no reason elections should continue to be administered by the states. A national, nonpartisan agency could maintain a national registration database, ensure standardized procedures and hours, and dramatically curtail partisan game-playing of the sort we’ve seen in Georgia and the incompetence Hoosiers experienced in Porter County, Indiana.

There is an even more significant assumption that we  need to re-think.

The American Constitution limits the power of the state. It was written at a time when governments were the entities wielding the most power, and focusing on the state made sense because constraining power was the whole point. The protection of personal autonomy–our individual right to direct our own lives, so long as we don’t harm the person or property of others and so long as we are willing to let others do the same–was the goal, and it required restraints on power.

I thought about that when I read this article from Common Dreams. Today, many governments are less powerful than multi-national corporations.

As corporations in the United States and around the world continue to reap record profits thanks to enormous tax cuts, widespread tax avoidance schemes, and business-friendly trade and investment policies, an analysis by Global Justice Now (GJN) published Wednesday found that the world’s most profitable companies are raking in revenue “far in excess of most governments,” giving them unprecedented power to influence policy in their favor and skirt accountability.

Measured by 2017 revenue, 69 of the top 100 economic entities in the world are corporations, GJN found in its report, which was released as part of an effort to pressure the U.K. government to advance a binding United Nations treaty that would hold transnational corporations to account for human rights violations.

“When it comes to the top 200 entities, the gap between corporations and governments gets even more pronounced: 157 are corporations,” GJN notes. “Walmart, Apple, and Shell all accrued more wealth than even fairly rich countries like Russia, Belgium, Sweden.”

As difficult as it can be to subject governments to the rule of law, constitutions and legal systems do provide mechanisms to hold them accountable.  By contrast, it is incredibly difficult for citizens to hold powerful corporations to account.  Increasingly, as the article notes, trade and investment deals allow corporations to demand that governments do their bidding rather than the other way around.

“From a coal mine in Bangladesh that threatens to destroy one of the world’s largest mangrove ecosystems to hundreds of people at risk of displacement from a mega-sugar plantation in Sri Lanka, corporations and big business are often implicated in human rights abuses across Asia” and the world, Friends of the Earth Asia Pacific noted in a blog post on Wednesday, describing the U.N. treaty as a potential “game-changer.”

“Companies are able to evade responsibility by operating between different national jurisdictions and taking advantage of corruption in local legal systems, not to mention the fact that many corporations are richer and more powerful than the states that seek to regulate them,” Friends of the Earth concluded. “We must right this wrong.”

The question, of course, is how?

It is becoming increasingly clear that massive reforms to global law and governance will be required if human liberty is to survive the changes that increasingly confront us. Given the numbers of people who have an overwhelming fear of change and who respond by embracing tribalism and autocracy, the odds of a successful “reboot” look pretty daunting.

Putting Profits Before People

It is really, really difficult to mount effective opposition to even the stupidest, craziest policies of the Trump Administration, because there are so many of them. From the environment to the social safety net to the rule of law, the attacks just keep coming.

So if you haven’t heard about the variety of ways in which Betsy DeVos is protecting her for-profit pals while screwing over taxpayers, students and public schools, that’s unfortunate but entirely understandable.

Lest Betsy get buried in this administration’s growing mountain of excrement, let me share one  decision that highlights her priorities–priorities that perfectly align with those of her fellow Trumpian plutocrats.

Courtesy of the Brookings Institution, we learn

On a Friday in mid-August, Education Secretary Betsy DeVos quietly announced that she would abolish the Obama administration’s gainful employment (GE) regulation–a safeguard that protected students from for-profit career programs that left graduates with poor job prospects and unmanageable student debt.

Her decision means that hundreds of thousands of our nation’s students–chiefly minority students, single moms, veterans, dislocated workers, and working adults–will now be trapped in low-performing for-profit programs and burdened with unaffordable and often life-limiting debts. Her regulatory rollback marks a betrayal not only of our nation’s most vulnerable students, but an abandonment of traditional conservative principles about institutional accountability for taxpayer dollars.

You have to read this jaw-dropping description of how the Department of Education “oversees” for-profit institutions to see just how far this purportedly “conservative” administration has strayed from what used to be bedrock conservative dogma.

To see just how extreme Secretary DeVos’s departure is from conservative principles, we ask this litmus test question: What would it take for a career education program to lose its eligibility for federal student aid under Secretary DeVos’s plan? The answer: A for-profit institution cannot lose its financial lifeline, no matter how poorly it performs its statutory mission to train students for gainful employment in a recognized occupation. One hundred percent of students can drop out of their career program, or not a single graduate could land a job in their field of training, and still the federal government would be willing to keep the taxpayer money pipeline of federal student loans and Pell Grants flowing unabated to the school. It’s a federal free-money plan—“accountability” stripped of consequences.

When I characterize DeVos’ approach as a departure–a U turn!– from what used to be GOP orthodoxy, I’m not exaggerating. In my wildest imagination, I never thought I would point to Bill Bennett–a blowhard I detested–as an example of “doing it right.” (But then, I wouldn’t have believed that I would look back at George W. Bush with something close to fondness, either…)

Bennett, as most of you probably remember, headed up DOE under Saint Ronald Reagan.

When he realized that numerous for-profit colleges were performing abysmally, he proposed new regulations that forced more than 2,000 postsecondary institutions to immediately face a hearing to determine whether their default rate on federal student loans was over 20%. If it was, their participation in federal student aid programs was limited, suspended, or terminated. Bennett especially blasted shoddy trade school programs, calling their “pattern of abuses” “an outrage.”

Then there was Lamar Alexander, also a Republican. He spearheaded the 1992 amendments to the Higher Education Act (HEA), under which postsecondary institutions lost their eligibility for federal student aid if their student default rates exceeded 25 percent for three consecutive years. By 2000, more than a thousand postsecondary schools lost their eligibility–and more than 80% of them were for-profit.

When a political party reverses its longstanding position on an issue, the obvious question is why.

The first and most important cause of the Republican retreat from accountability is the growing power of the for-profit college lobby. By 2005, the eight largest for-profit college chains had a combined market value of $26 billion. For-profit colleges, which always had aggressive lobbying operations, started donating much more money to congressional representatives and switched more of their giving from Democrats to Republican lawmakers. When the Obama administration released its final GE rule, the for-profit lobby donated twice as much to Republican lawmakers ($1.17 million) as to Democratic lawmakers ($583,000).

You really need to read the entire report. And weep.

Local Journalism Matters–And We’re Losing It

Ever since the 2016 Presidential election, most Americans who follow the news have been fixated on Washington, D.C., and the antics of our increasingly surreal federal government. That’s entirely understandable–but while we’ve been tuning in to the national soap-opera, we have continued to lose track of equally important matters closer to home.

Americans depend upon local news sources–newspapers, broadcast news organizations–to tell us what is happening in our communities. How is local government responding to challenges from potholes to policing? How is the local school board addressing deficits in civics education? Is the Secretary of State purging voter rolls, and if so, is that process being handled properly or with partisan intent?

The measures taken by our state legislatures and City Councils affect us more dramatically and immediately than even Trump’s disasters (assuming he doesn’t blow up the world). Recently, the Shorenstein Center held a symposium exploring the continued loss of local news and the consequences of that loss.

When Setti Warren first took office as mayor of Newton, Massachusetts in 2010, the local paper, the Newton Tab, had an editor, a publisher and two reporters dedicated to covering the mayor’s office.  When he left office after his second term in 2018, the paper had lost its editor; its one remaining reporter covered multiple cities. Also during this time, the Boston Globe eliminated its regional editions, including the Globe West, which covered Newton and other parts of the MetroWest region.

The problem isn’t limited to Newton, Massachusetts.

Nationwide, many local news outlets have shuttered entirely – a March 2018 study published in the Newspaper Research Journal finds that from 2004 to 2015, the U.S. newspaper industry lost over 1,800 print outlets as a result of closures and mergers. As Warren suggested, this portends danger — studies show that areas with fewer local news outlets and declining coverage also have lower levels of civic engagement and voter turnout.

Lack of local news can occur without the complete shuttering of a local newspaper; here in Indianapolis, the Star now devotes its (dwindling) column inches primarily to sports and “the bar beat.” Coverage of city hall and the statehouse is sporadic and woefully inadequate.

As I noted in a previous blog, lack of local journalism doesn’t simply frustrate accountability; it even translates into higher costs for taxpayers. “Due diligence” by institutions that purchase municipal bonds  includes investigation of the fiscal probity of the issuer. When no local journalists are covering city hall, buyers demand a higher interest rate to offset the increased risk of the unknown.

At the symposium, Mayor Warren was blunt:

I am gravely concerned about the fact that we don’t have journalists covering city hall, policy decisions, political decisions in an in-depth way, because the citizenry of my own hometown, Newton, Mass., as well as the citizens of the Commonwealth, if they don’t have the facts, they can’t make sound decisions on what directions they want their politicians to go in. So if there’s an absence of good investigative journalism, and there’s a vacuum of having data and facts and reporting, what could get filled into that vacuum is information that is not accurate. Misinformation, disinformation and opinions, not straight reporting. So we are in danger, at the local level, at the state level, and certainly at the national level if we don’t have journalists on the ground doing the interviews, double, triple checking sources. We’re not going to make sound decisions on our policy, whether it’s housing, education, transportation or the ability to protect.

In the absence of good information, a dangerous combination of social media, special interests and people who simply have an ax to grind will fill the void, making it nearly impossible to deliver genuinely responsive governance.

Without legitimate journalism–what has been called the “journalism of verification”–we can’t hold elected or appointed officials accountable.

When no one is watching the store, it’s easy to rob.

When no one is watching government, taxpayers, too, can be robbed. Even under the “best case” scenario, however, if no one is watching, it won’t function properly.

Why News Matters

Regular readers of this blog know that I am semi-obsessed with civic literacy–with the level of civic knowledge necessary to the operation of a representative democracy. And it could hardly have escaped notice that I’ve been pretty hard on what passes for media these days.

The two issues are inextricably entwined. We depend upon verifiable, credible journalism to inform us about our government and to allow us to hold our elected officials accountable.

My belief about the importance of this relationship has recently been confirmed by Pew.

The relative decline of local news — a result of slashed budgets and staffs at newspapers, where the majority of original reporting is still generated — has been an area of grave concern for members of the media as well as everyone who cares about civic health, from policymakers and social scientists to community groups and citizens. A lot of inputs are required to keep communities vibrant, and widely disseminated factual information — a common set of issues and understandings — turns out to be a key ingredient. The Federal Communications Commission spelled out some of these dynamics in its comprehensive 2011 report “Information Needs of Communities.
Academic research backs up these concerns, too. A 2014 study by Lee Shaker of Portland State University, “Dead Newspapers and Citizens’ Civic Engagement,” finds that at the national and local level there is a positive relationship between newspaper readership and civic engagement as measured by contacting or visiting a public official; buying or boycotting certain products or services because of political or social values; and participating in local groups or civic organizations such as the PTA or neighborhood watch. Likewise, a recent paper by Danny Hayes of George Washington University and Jennifer L. Lawless of American University, “As Local News Goes, So Goes Citizen Engagement: Media, Knowledge and Participation in U.S. House Elections,” notes important implications for democracy: “Citizens exposed to a lower volume of coverage are less able to evaluate their member of Congress, less likely to express opinions about the House candidates in their districts, and less likely to vote.”
The million-dollar question, of course, is: What do we do about this situation?