Pseudo-Privatization is a Mistake

Conservatives can be wrong about some things, which is not to say that liberals are right about them. A fundamental change for the worse is taking place at all levels of government in the United States with the acquiescence of conservatives, if not their encouragement, assuming they even notice that it is happening. That change is called "privatization," though it could be better termed a "bait—and—switch operation."

There are two models of privatization. Conservatives have in mind the first; what actually happens is usually the second.

Let's say a city decides to privatize garbage collection. The "bait" model is that the city announces that after a certain date, it will no longer collect garbage. Each business or household will have to contract to have its trash hauled off. Private companies compete to sign it up. The city is out of the garbage business.

In the "switch" model, a dozen city bureaucrats spend months drafting a Request for Proposal (RFP) soliciting bids for a contract. A handful of companies respond, first by paying a bunch of lawyers to prepare written questions about the RFP. After additional months of bureaucratic effort, the city publishes its answers. After still more months, the bids arrive, usually only a few minutes before the deadline.

Some poor devil, such as your author, examines the bids to see whether they meet the minimum requirements and discards those that do not. More months pass, and the city decides upon a "negotiating partner," who consults its officers and lawyers and produces a Best and Final Offer (BAFO). Lawyers for the city and lawyers for the company negotiate a contract, which incorporates the sloppily written RFP, questions, answers, and BAFO by reference.

Notice that not a scrap of paper has yet been taken to the dump. To the contrary, many reams of paper have been expended on this cumbersome process.

So the blessed day arrives, and the contract is signed. Perhaps the Mayor or a member of the City Council makes a speech about the wonders of free enterprise and running the government like a business.

Before the contract can go into effect, months after it is signed, both sides discover problems with it and negotiate contract amendments. They will continue to negotiate amendments throughout the life of the contract, perhaps even long after the last bit of garbage has gone to its final resting place.
Now the city must "manage" the contract, which means that instead of one bureaucracy overseeing garbage collection, there are two. Actually, the contract manages the city because as soon as it is signed, the city loses its leverage, and all it can do if the company performs unsatisfactorily is to call in the lawyers.

So why would anyone other than lawyers prefer the "switch" model? Don't forget the Mayor and City Council. In the bad old days, an irate constituent would call His Honor and complain that trash was piling up next to his driveway. Now, with the government run like a business and free enterprise working its wonders, trash is still piling up next to the driveway, but the irate constituent, now an irate customer, calls the company! Before piles of trash on the curb were an embarrassment; now they are an opportunity for political grandstanding.

Such "privatization" is becoming ordinary. A few companies bid for a contract, providing politicians with a Swiss bank of photo—ops and campaign contributions. If anything, this form of privatization expands the reach of government by making political leaders less accountable. They can increase the power of government while pretending to have nothing to do with the problems the increase creates.

This process also gives rise to "virtual" corporations, which win bids for garbage collection without themselves collecting any garbage or doing any other work but instead issuing their own RFPs for subcontractors to bid on and so, so that three or more parallel bureaucracies are necessary, one to oversee garbage collection, one to manage the garbage collection contract, and one or more to manage the manager of the garbage collection contract, leaving this exile from the academic world with his dizzy head in his hands.

Conservatives are prone to such mistakes as pseudo—privatization because of their simplistic government—bad, private—sector—good ideology when the private sector often commits the same sins the government does. Most dangerous of all is a "cooperative" relationship between government and industry, a "partnership" that combines the monopoly power of government and opportunity for ill—gotten gains.

The Constitution is based on a philosophy of limited government, not weak government or government that disguises its transgression of its limits as private.

Jonathan David Carson, Ph.D., may be reached at jdc@makehasteslowly.com For more information, see http://www.makehasteslowly.com

Conservatives can be wrong about some things, which is not to say that liberals are right about them. A fundamental change for the worse is taking place at all levels of government in the United States with the acquiescence of conservatives, if not their encouragement, assuming they even notice that it is happening. That change is called "privatization," though it could be better termed a "bait—and—switch operation."

There are two models of privatization. Conservatives have in mind the first; what actually happens is usually the second.

Let's say a city decides to privatize garbage collection. The "bait" model is that the city announces that after a certain date, it will no longer collect garbage. Each business or household will have to contract to have its trash hauled off. Private companies compete to sign it up. The city is out of the garbage business.

In the "switch" model, a dozen city bureaucrats spend months drafting a Request for Proposal (RFP) soliciting bids for a contract. A handful of companies respond, first by paying a bunch of lawyers to prepare written questions about the RFP. After additional months of bureaucratic effort, the city publishes its answers. After still more months, the bids arrive, usually only a few minutes before the deadline.

Some poor devil, such as your author, examines the bids to see whether they meet the minimum requirements and discards those that do not. More months pass, and the city decides upon a "negotiating partner," who consults its officers and lawyers and produces a Best and Final Offer (BAFO). Lawyers for the city and lawyers for the company negotiate a contract, which incorporates the sloppily written RFP, questions, answers, and BAFO by reference.

Notice that not a scrap of paper has yet been taken to the dump. To the contrary, many reams of paper have been expended on this cumbersome process.

So the blessed day arrives, and the contract is signed. Perhaps the Mayor or a member of the City Council makes a speech about the wonders of free enterprise and running the government like a business.

Before the contract can go into effect, months after it is signed, both sides discover problems with it and negotiate contract amendments. They will continue to negotiate amendments throughout the life of the contract, perhaps even long after the last bit of garbage has gone to its final resting place.
Now the city must "manage" the contract, which means that instead of one bureaucracy overseeing garbage collection, there are two. Actually, the contract manages the city because as soon as it is signed, the city loses its leverage, and all it can do if the company performs unsatisfactorily is to call in the lawyers.

So why would anyone other than lawyers prefer the "switch" model? Don't forget the Mayor and City Council. In the bad old days, an irate constituent would call His Honor and complain that trash was piling up next to his driveway. Now, with the government run like a business and free enterprise working its wonders, trash is still piling up next to the driveway, but the irate constituent, now an irate customer, calls the company! Before piles of trash on the curb were an embarrassment; now they are an opportunity for political grandstanding.

Such "privatization" is becoming ordinary. A few companies bid for a contract, providing politicians with a Swiss bank of photo—ops and campaign contributions. If anything, this form of privatization expands the reach of government by making political leaders less accountable. They can increase the power of government while pretending to have nothing to do with the problems the increase creates.

This process also gives rise to "virtual" corporations, which win bids for garbage collection without themselves collecting any garbage or doing any other work but instead issuing their own RFPs for subcontractors to bid on and so, so that three or more parallel bureaucracies are necessary, one to oversee garbage collection, one to manage the garbage collection contract, and one or more to manage the manager of the garbage collection contract, leaving this exile from the academic world with his dizzy head in his hands.

Conservatives are prone to such mistakes as pseudo—privatization because of their simplistic government—bad, private—sector—good ideology when the private sector often commits the same sins the government does. Most dangerous of all is a "cooperative" relationship between government and industry, a "partnership" that combines the monopoly power of government and opportunity for ill—gotten gains.

The Constitution is based on a philosophy of limited government, not weak government or government that disguises its transgression of its limits as private.

Jonathan David Carson, Ph.D., may be reached at jdc@makehasteslowly.com For more information, see http://www.makehasteslowly.com