Paul Krugman: Outsourcer in Chief

Paul Krugman looks at the problems arising from the privatization of government services under the Bush administration:

Outsourcer in Chief, by Paul Krugman, Commentary, NY Times: According to U.S. News & World Report, President Bush has told aides that he won’t respond in detail to the Iraq Study Group’s report because he doesn’t want to “outsource” the role of commander in chief.

That’s pretty ironic. You see, outsourcing of the government’s responsibilities — not to panels of supposed wise men, but to private companies with the right connections — has been one of the hallmarks of his administration. And privatization through outsourcing is one reason the administration has failed on so many fronts.

For example, ... Saturday’s New York Times describes how the Coast Guard has run a $17 billion modernization program: “Instead of managing the project itself, the Coast Guard hired Lockheed Martin and Northrop Grumman ... to plan, supervise and deliver the new vessels...” The result? Expensive ships that aren’t seaworthy. ...

In Afghanistan, the job of training a new police force was outsourced to DynCorp International ... under very loose supervision: ... auditors couldn’t even find a copy of DynCorp’s contract... And $1.1 billion later, Afghanistan still doesn’t have an effective police training program.

In July 2004, Government Executive magazine published an article titled “Outsourcing Iraq,” documenting how the U.S. occupation authorities had transferred responsibility for reconstruction to private contractors, with hardly any oversight. ... We all know how that turned out.

On the home front, the Bush administration outsourced many responsibilities of the Federal Emergency Management Agency. For example, the job of evacuating people from disaster areas was given to a trucking logistics firm, Landstar Express America. When Hurricane Katrina struck, Landstar didn’t even know where to get buses. ...

It’s now clear that there’s a fundamental error in the antigovernment ideology embraced by today’s conservative movement. Conservatives look at the virtues of market competition and leap to the conclusion that private ownership, in itself, is some kind of magic elixir. But there’s no reason to assume that a private company hired to perform a public service will do better than people employed directly by the government.

In fact, the private company will almost surely do a worse job if its political connections insulate it from accountability — which has, of course, consistently been the case under Mr. Bush. ...

Underlying this lack of accountability are the real motives for turning government functions over to private companies, which have little to do with efficiency. To say the obvious: when you see a story about failed outsourcing, you can be sure that the company in question is ... run by people with strong G.O.P. connections...

The failure of privatization under the Bush administration offers a target-rich environment to newly empowered Congressional Democrats — and I say, let the subpoenas fly. Bear in mind that we’re not talking just about wasted money: contracting failures in Iraq helped us lose one war, similar failures in Afghanistan may help us lose another, and FEMA’s failures helped us lose a great American city.

And maybe, just maybe, the abject failure of this administration’s efforts to outsource essential functions to the private sector will diminish the antigovernment prejudice created by decades of right-wing propaganda.

That’s important, because the presumption that the private sector can do no wrong and the government can do nothing right prevents us from coming to grips with some of America’s biggest problems — in particular, our wildly dysfunctional health care system. More on that in future columns.

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Previous (12/8) column: Paul Krugman: They Told You So
Next (12/22) column: Paul Krugman: Democrats and the Deficit

Comments

[James Killus]

Thirty years ago, I worked briefly on the nuclear submarine refueling program at the Mare Island Shipyard in Vallejo, California. I remember a briefing where one of the naval officers explained that one of their contracts to a corporation had just been terminated, because the naval auditors didn't think that they were paying enough attention to safety precautions (I was in the QA group, so this was a big deal for us). So they pulled those functions back "in-house."

It occurred to me at the time that the "you can't serve two masters" dictum applied. If a company pays too much attention to the bottom line, it may fail its "secondary" mission, which, in this case, was keeping nuclear contamination out of San Francisco Bay.

I was a pretty ardent believer in market economics at the time, and I still believe that markets and private organizations are often the best method of accomplishing some tasks. But that was a clear example of the limits of "private enterprise," and I've never forgotten it.

[save_the_rustbelt]

Krugman was doing ok until he hit upon fixing the healthcare system, an area where he only knows what he reads in his office.

This should be good.

[elvis]

I'm surprised the California electrical crisis a few years back wasn't mentioned as another example of privitization gone amok.

[elvis]

Krugman was doing ok until he hit upon fixing the healthcare system, an area where he only knows what he reads in his office.

Well, you can learn a lot from reading.

[DJM]

I think a lot of what is wrong with our healthcare system can be explained by economics and politics...but we will have to wait and see if that is where he will go with his thoughts on why it is dysfunctional.

My son is working on some government contracts again through his company so I guess I can't be 100% against all kinds of outsourcing.....ha. I will make it clear that I am only against the contracts that are given to unqualified, unaccountable companies on the basis of partisan loyalty or what seems more like payback or favors.... I think many large "contributions" are just payments for future favors....and that is the problem with privatization as we know it now.....(which seems to be part of the point of this op-ed)

[Movie Guy]

They don't call them Beltway Bandits for nothing.

[anne]

"Krugman was doing OK until he hit upon fixing the healthcare system, an area where he only knows what he reads in his office."

"Einstein was doing OK until he hit upon describing the nature of light, an area where he only knows what he reads in his office."

"Einstein was doing OK until he hit upon describing the nature of matter, an area where he only knows what he reads in his office."

"Einstein was doing OK until he hit upon describing the nature of space-time, an area where he only knows what he reads in his office."

[Movie Guy]

On a different note, I have to wonder how much Krugman knows about Defense Federal Acquisition Regulations Supplement (DFARS) or other government contracting regulations.

Not much, perhaps.

[Movie Guy]

Or Far. Or DFAR for that matter...

[anne]

http://www.nytimes.com/2006/12/09/us/09ship.html?ex=1323320400&en=bc57587b84376dd8&ei=5090&partner=rssuserland&emc=rss

December 9, 2006

Billions Later, Plan to Remake the Coast Guard Fleet Stumbles
By ERIC LIPTON

WASHINGTON — Four years after the Coast Guard began an effort to replace nearly its entire fleet of ships, planes and helicopters, the modernization program heralded as a model of government innovation is foundering.

The initial venture — converting rusting 110-foot patrol boats, the workhorses of the Coast Guard, into more versatile 123-foot cutters — has been canceled after hull cracks and engine failures made the first eight boats unseaworthy.

Plans to build a new class of 147-foot ships with an innovative hull have been halted after the design was found to be flawed.

And the first completed new ship — a $564 million behemoth christened last month — has structural weaknesses that some Coast Guard engineers believe may threaten its safety and limit its life span, unless costly repairs are made.

The problems have helped swell the costs of the fleet-building program to a projected $24 billion, from $17 billion, and delayed the arrival of any new ships or aircraft.

That has compromised the Coast Guard's ability to fulfill its mission, which greatly expanded after the 2001 attacks to include guarding the nation's shores against terrorists. The service has been forced to cut back on patrols and, at times, ignore tips from other federal agencies about drug smugglers. The difficulties will only grow more acute in the next few years as old boats fail and replacements are not ready.

Adm. Thad W. Allen, who took over as Coast Guard commandant in May, acknowledged that the program had been troubled and said that he had begun to address the problems. "You will see changes shortly in the Coast Guard in our acquisition organization," Admiral Allen said. "It will be significantly different than we have done in the past."

The modernization effort was a bold experiment, called Deepwater, to build the equivalent of a modest navy — 91 new ships, 124 small boats, 195 new or rebuilt helicopters and planes and 49 unmanned aerial vehicles.

Instead of doing it piecemeal, the Coast Guard decided to package everything, in hopes that the fleet would be better integrated and its multibillion price would command attention from a Congress and White House traditionally more focused on other military branches. And instead of managing the project itself, the Coast Guard hired Lockheed Martin and Northrop Grumman, two of the nation's largest military contractors, to plan, supervise and deliver the new vessels and helicopters.

Many retired Coast Guard officials, former company executives and government auditors fault that privatization model, saying it allowed the contractors at times to put their interests ahead of the Guard's.

"This is the fleecing of America," said Anthony D'Armiento, a systems engineer who has worked for Northrop and the Coast Guard on the project. "It is the worst contract arrangement I've seen in all my 20 plus years in naval engineering." ....

[anne]

Me, I am too stupid to know about all sorts of things but I know, say, that suppose, say, that you were, say, to make radios, say, for open Coast Guard boats, say, you would make them water proof. Say what, say?

[anne]

http://www.nytimes.com/2006/12/09/us/09ship.html?ex=1323320400&en=bc57587b84376dd8&ei=5090&partner=rssuserland&emc=rss

"This is the fleecing of America," said Anthony D'Armiento, a systems engineer who has worked for Northrop and the Coast Guard on the project. "It is the worst contract arrangement I've seen in all my 20 plus years in naval engineering."

Insufficient oversight by the Coast Guard resulted in the service buying some equipment it did not want and ignoring repeated warnings from its own engineers that the boats and ships were poorly designed and perhaps unsafe, the agency acknowledged. The Deepwater program's few Congressional skeptics were outmatched by lawmakers who became enthusiastic supporters, mobilized by an aggressive lobbying campaign financed by Lockheed and Northrop.

And the contractors failed to fulfill their obligation to make sure the government got the best price, frequently steering work to their subsidiaries or business partners instead of competitors, according to government auditors and people affiliated with the program.

Even some of the smaller Deepwater projects raise questions about management. The radios placed in small, open boats were not waterproof and immediately shorted out, for example. Electronics equipment costing millions of dollars is still being installed in the new cutter, even though it will be ripped out because the Coast Guard does not want it. An order of eight small, inflatable boats cost an extra half-million dollars because the purchase passed through four layers of contractors....

[anne]

There I am, say, sitting at my desk, say, and almost too stupid to know how to spell radio let alone how to make a radio, say, but I know that Coast Guard open boat radios, say, need to be waterproof, say. But, me, I only know what I read at my desk, say, and not much of that, say, and I am not yet an Admiral, say.

[Movie Guy]

Let's not forget the Boeing flap over the replacement U.S. Air Force tanker. The one that McCain raised hell over.

If one were to create a master list of the worst of the worst, it would be long enough. On the other hand, though, there are some good federal contracts out there.

This is the problem with just focusing on the negatives. Always easy to do. Makes better press.

The entire federal acquisition system needs to be retightened. That is the bottom line. And Congress plays a critical role in that responsibility - both for legislation to make it happen and oversight.

Perhaps the next Congress will tackle this one head on. Hope so. The system is pretty screwed up right now. Same story in some respects for federal credit cards issued by contract vendors directly to federal employees. One woman charged a personal car purchase to her federal card. I believe she only charged about $10K on it, though. Could have been worse, right?

[elvis]

I'm not sure it's simply a matter of outsourcing is bad.

In fact, the private company will almost surely do a worse job if its political connections insulate it from accountability

accountability is key, I argue, as well as contracts that deal with cost overruns and place responsibility for fixes with the supplier. The Coast Gaurd ships should be sent back to the manufacturer for free repairs until they are up to snuff.

As for Iraq...
There was a great BBC radio documentary about the waste of Iraq's money by the Coalition Provisional Authority. (here's a similar story)
http://news.bbc.co.uk/2/hi/americas/4266231.stm
20 billion dollars...poof. No one can say they weren't working hard. Those 20 billion in cash weigh a few tons. We're talking heavy lifting, hoisting and heisting.

[anne]

No; the whole point of George Bush's Republicanism is to belittle and besmirch authoriy in any and every field, so as to be able to ignore those who just might know even what they read at desks, say. Like the just appointed lunatic to head family planning at the Department of Health and Human Services; a lunatic who thinks sex before marriage alters a woman's, not a man's but a woman's, brain chemistry. Say what?

[anne]

http://www.nytimes.com/2006/11/24/opinion/24fri3.html?ex=1322024400&en=283885cb21102889&ei=5090&partner=rssuserland&emc=rss

November 24, 2006

Family Planning Farce

It sounds like a late-night parody of President Bush's bad habit of filling key posts with extreme ideologues and incompetents. To head family planning programs at the Department of Health and Human Services, Mr. Bush has tapped Eric Keroack, a doctor affiliated with a group vehemently opposed to birth control and someone nationally known for his wacky theory about reproductive health.

Before his appointment, Dr. Keroack served as the medical director of A Woman's Concern, a network of pregnancy counseling clinics across Massachusetts whose method of trying to dissuade women from having an abortion includes spreading the scary and medically inaccurate myth that having an abortion steeply increases the risk of breast cancer. The group also has a policy against dispensing contraception even to married women. It has stated on its Web site that the distribution of contraceptive drugs or devices is "demeaning to women, degrading of human sexuality and adverse to human health and happiness." ...

[DJM]

Contracts that allow companies to deliver shoddy work and then continue to get government contracts are so completely stupid!
Accountability,Accountability,Accountability!
Why shouldn't these companies have to guarantee their product and services? If they lost money instead of continuing to rake it in.......

[anne]

Authorities, we wonder, people who, say, sit at a deak and study, say, so that they know things. Those are precisely the people that this Administration of George Bush has done everything to belittle and besmirch. People like, say, actual scientists who might, say, actually know something.

[anne]

http://www.nytimes.com/2006/12/11/opinion/11mon3.html

December 11, 2006

Muzzling Those Pesky Scientists

The Environmental Protection Agency disclosed last week that it had revised — stood on their head is more like it — procedures it has used for 25 years to set standards for air pollutants like soot and lead. The administration said the change will streamline decision making. Perhaps it will. It will also have the further effect of decreasing the role of science in policy making while increasing the influence of the agency's political appointees.

This is disheartening, but not surprising. Whether the issue is birth control or global warming or clean air, this administration has already acquired a special place in regulatory history for the audacity with which it has manipulated or muzzled science (and in some cases individual scientists) that might discomfit its industrial allies or interfere with its political agenda.

The E.P.A. is required every five years to review scientific research and set new exposure levels for six pollutants identified as hazardous to human health. Normally, recommendations are first solicited from two groups of scientists: professional staff members inside the agency and independent outside scientists. Those recommendations are then sent to the department's senior officers — nearly all political appointees — who shape departmental policy and then send it to the White House and Office of Management and Budget for clearance.

Under the new process, initial reviews will be done by staff scientists and political appointees, who together will produce a synopsis of "policy-relevant" science — which sounds ominously like science tailored to predetermined policy outcomes....

[anne]

Not to worry though, not to worry about all those desk sitting scientists studying so that they might know, say, something. Not to worry, because the Environmental Protection Agency is busily closing, say, all, say, of it public libraries, say. Surprised, say?

[anne]

The best way, we understand, not to have scientists and the like sitting around at desks criticizing folks building special water-absorbing radios for open Coast Guard boats, the best way, we understand, is to even take away the desks. But, what do any of us really know about buying water-proof Coast Guard radios, especially desk bound me? Libraries, who needs libraries?

[I kind of like the idea of Coast Guard radios doubling as, say, sponges.]

[Movie Guy]

anne - "Like the just appointed lunatic to head family planning at the Department of Health and Human Services; a lunatic who thinks sex before marriage alters a woman's, not a man's but a woman's, brain chemistry. Say what?"

Hmmm...does it make it better or worse?!

It's not likely that it would alter the man's brain chemistry at all. We're pretty far behind women in our development beyond the interests identified by Tim Allen. You know, tools. Craftsman. [Grunt.] Yeah, no hope for altering man's brain chemistry. Locked in centuries ago.

[anne]

We have an Administration that has tragically squandered what will be $2 trillion dollars on the needless and immoral war on and occupation of Iraq. But, while driving us to war and occupation through deception and fear, the Administration has been doing all it could with a joyful Republican Congress agreeing to undermine the sense of public and private responsibility. The idea of course from the beginning was to undermine the legacy of Franklin Roosevelt and the New Deal, and in every possible way this was done. Now, the hope is that a Democratic Congress can stop the further degradation of government by this increasingly more isolated Administration.

[anne]

Imagine commissioning 8 Coast Guard patrol boats at a time of need for attention to national security only to have all 8 boats turn out not to be seaworthy. Shameful, shameful, shameful.

[Elvis]

anne, this is completely off the topic, but when you mentioned Franklin D. I immediately went into compare/contrast mode [it's a teacher thing].

There are the obvious ones, "nothing to fear but..." versus "be afraid!"

after a little of this, my mind turned to Pearl Harbor.
It was Pres. Roosevelt's excuse to get us into WWII and some argue he knew about it before hand. I've heard some of those arguments and I poo-poo them. Who cares? We won a mighty victory.

Then there's Bush's "Pearl Harbor" event. I'd dismissed all the conspiracies out of hand at first. Who needs conspiracies when the bald facts of incompetent actions are reason enough to be angry.

But now, with things sooooo bad, these conspiracy theories sound more and more plausible somehow.

I wonder if the Iraq thing had been handled well and the US was victorious in every respenct, most people would never think twice seriously about 9/11. But now it's clearly a defeat, people will look back a little more closely at 9/11 and want to ask questions...

[save_the_rustbelt]

The False Claims Act (still in effect) was passed during the Civil War because contractors were selling damp gunpowder and sick mules to the U.S. Army. So what is new?

Private companies built the M1A1, the F14, F-15, F-16, the best naval fleet in the world, etc. etc. etc.

On the federal government side, the only civilian agency that is a spectacular success is the Social Security Administration, a marvel of efficiency.

Then again, Bush is still a goofball, surrounded by dingbats, which could be a big part of the current problem.

[evagrius]

For further outsourcing fiascos, examine the trend in social services.

Texas, under a Republican administration of course, with, no doubt, pressure from Bush Co., has basically outsourced its welfare services to private companies.
It's turned into a real disaster. Read the report;

http://www.cppp.org/files/3/CPPP_PrivReport_(FS).pdf

There's also CalWIN, another outsourcing experiment in California.

http://en.wikipedia.org/wiki/CalWIN

And Indiana is proceeding apace with privatizing its welfare obligations;

http://indianalawblog.com/archives/2006/11/ind_govt_govern_14.html

In all three cases, the only ones to actually benefit are the companies involved. Texas has yet to see any "savings", California's 18 counties that adopted CalWIN are in the throes of massive changes too vast to adequately evaluate, and the Indiana governor wants to proceed with no review or oversight of the process.

The public is being ripped off and worse, poor children, families and eldres are receiving less benefits or no benefits at all.

It's this last part that is really galling.

At a time when everyone pontificates about the need of a well-educated work force, the need to prepare for globalization, the need for new technologies etc;etc; the country is basically creating a brand-new population of poor children becoming dysfunctional adults.

Save a penny now and waste a dollar later seems to be the conservative motto.

[anne]

STR

"The False Claims Act (still in effect) was passed during the Civil War because contractors were selling damp gunpowder and sick mules to the U.S. Army. So what is new?"

Clever and important as Teddy Roosevelt came to understand early on and as we need to learn anew for what is new is the turning away from public-private balancing partnerships when necessary as they often are.

[maria]

Anne: the whole point of George Bush's Republicanism is to belittle and besmirch authoriy in any and every field, so as to be able to ignore those who just might know even what they read at desks, say.

Well, if what you know comes to you from your "God" what need have you for mere worldly authorities? Bush had no need for Scowcroft or his father's advice since he was being guided by his heavenly father. At least that is what he said. LOL.

[bailey]

COME ON, PK! When are you going to redress the job Ben B's doing?

[ken melvin]

Back during the Nixon years, a contract was awarded to a donor (private shipyard - They hated Navy Yards)to build a ship. Ship didn't work, so, for years, they towed it from shipyard to shipyard where each took a turn fixing something that was wrong.

[Lafayette]

PK: "It’s now clear that there’s a fundamental error in the antigovernment ideology embraced by today’s conservative movement. "

And, bollocks to you too, Mr. Krugman. When is the last time YOU were a Project Director?

Projects depend upon three crucial elements: Terms of reference (specifying what is to be done), the necessary talent/means (to do it) and execution (of tasks according to project plan).

One can blame this knot-head administration for not knowing how to manage contracts, but let's not blame industry for incompetence in project execution.

Given the right oversight and skilled project management, the taxpayer's dollar can be well spent. But, if you put monkeys in charge of project contracting, then expect peanuts for results.

We did not put a man on the moon with a large sling shot and good aiming.

[anne]

"And, bollocks to you too, Mr. Krugman. When is the last time YOU were a Project Director?"

Say, before or after Iraq, say?

"And, bollocks to you too, Mr. Krugman. When is the last time YOU were a Project Director?"

Say before or after the fine work of ex-patriot Americans struggling all the while to make do in, say, France?

[anne]

"And, bollocks to you too, Mr. Krugman. When is the last time YOU were a Project Director?"

Gee, Paul Krugman will surely have to leave Princeton in shame now. France's reluctant Americans and reluctant French are speaking, hush children.

[anne]

http://krugman.page.nytimes.com/b/a/258105.htm

December 8, 2006

Paying Tribute to the Cassandras

David Lentini, San Francisco: Your list of those who spoke out against this war and endured the jeers of neocons and knee-jerk chickenhawks is gratifying to see, albeit a bit short since most of your readers ,myself included, could be added as well.

But while it would be nice to now ignore the war's supporters, we can't ignore Messrs. Bush and Cheney, Condi, and the rest of the cast that still run the Executive Branch and the war. And Mr. Bush's response to the Iraq Study Group certainly suggests that he has learned little from them or our experiences these past years. If anything, he seems more determined to run the war his way, whatever that means.

Which raises the real problem that we all now face. The anti-war warriors got it right in 2003. But in 2006 how do we get out of Iraq without a complete strategic disaster? To make that happen, we should insist on accountability from those who made the decision to go to war and still run the war. We also must clearly define our strategic needs. Most importantly, we must be willing to do what it takes to meet those needs even if we have to maintain troops and raise taxes. But the latter should only happen if we make the politicians and generals who got us in to this mess take responsibility for their actions.

If the risks are truly as great as Mr. Bush says and our situation as grave as the Iraq Study Group says, then for the good of our country, we should finally make Mr. Bush either do his job as Commander-in-Chief competently or remove him and his cronies from office. We no longer have the luxury of letting the B-team prosecute this war.

Paul Krugman: As Sen. Feingold has pointed out, it's striking that not one member of the Iraq Study Group spoke out against the war before it happened, or even raised doubts in public. One of the truly amazing things about the political and media scene today is this: not only are people who cheered on this grotesque mistake still taken seriously, there seems to be an unwritten rule that ONLY people who supported the war get to make pronouncements on national security. Somehow, the likes of John McCain, who has been wrong every step of the way, are considered more credible on this issue than people like Howard Dean, who has been right at every point. Go figure.

Suzanne Benning, Manhattan Beach, Calif.: Your appreciation for those who opposed the war is most welcome, and so far, seems to be unique. I would like to add a thank you to the millions of Americans, and others in the world, who marched and demonstrated for months to protest the insanity of invading Iraq, only to be labeled as special-interest groups of no import by Bush and his followers. I still ponder over why some of us were able to foresee the total disaster so clearly, while so many others seemed to have blind faith in a victorious outcome.

Paul Krugman: Agreed that many people deserve credit. It is, indeed, a mystery why so many people who should have known better fell in with a war that, as Obama said, was dumb and rash. From watching some of those involved, I'd say that it basically came down to a lack of courage — to question the war was to be labeled as someone who hates America, someone deranged by irrational Bush-hatred, and so on. And very few prominent people were willing to face that.

I'd add to my previous comment about the peculiar way in which those who were right about Iraq are shut out of the current debate that this sad history may be the explanation. The great bulk of the Washington establishment was wrong on Iraq; one way to evade responsibility is to persuade themselves that those who were right are, even now, somehow unsound....

[ECONOMISTA NON GRATA]

This is not an issue of outsourcing. It's an issue of corruption. I happent to be one of those nuts that know for a fact that the private sector can manage projects and achieve results far more efficiently than our government. However, a contract must be enforced in order for it to be effective and all contracts are empowered with their own remedies for non performance. That someone is letting that issue slide is not something that I find astonishing.

It's really not that difficult to figure out. They are liars and being thieves as well, is only complimentary to their characters.

My best regards,

Econolicious

[dissent]

A dismaying yet delicious and funny thread. Thanks anne for all your comments and quotes!

[kharris]

Lafayette,
"Given the right oversight and skilled project management, the taxpayer's dollar can be well spent. But, if you put monkeys in charge of project contracting, then expect peanuts for results."

Absolutely correct. I notice that at no point in those two sentences have you distinguished between public and private sector management and results. So you are absolutely correct.

Anne,

...alters brain chemistry? Man, I miss that!

[calmo]

I misread the title as "Who feeds the breast?" --and did not recover until Economista sobered me up here:However, a contract must be enforced in order for it to be effective and all contracts are empowered with their own remedies for non performance. and with his notes on the distinction between corruption/outsourcing and that government/private sector efficiency thingie.
Of course if you have a government position, it is generally assumed that you have no job security worries (a few exceptions including air-traffic controllers) and that if you are in the private sector, you are cutting edge sharp and need to be...to justify those larger contracts with government that are so competitive...the appearance of non-competitiveness being merely a reflection of so few being qualified to bid or qualifiers having established relationships with that breast.

[john c. halasz]

And just how was it that ole Harry Truman, Boss Pendergast's boy, rose to such national prominence as to be nominated as an inadvertent compromise candidate for V.P.?

A few other stray comments:

1)The Bushevik privatization programs were and are intended for corrupt purposes from the get-go. The aim is to ensure a permanent and ready "donor" base for political funding through access to the public till to ensure political dominance through Pavlovian politicking. It's a return to the Jacksonian spoils system over against "progressive" conceptions of a professional civil service. Brother Jeb had been doing the same down in Florida, though my guess is that there was little need for such scheming down in Texas.

2)The privatization of essential military functions, though I'd guess that started well before the Bushevik's ascendancy as a part of the neo-liberal "rationalization" of the industrial-military complex, is especially dangerous, as undermining both public oversight and integrity of command functions belonging to sovereign military power. In other words, it would tend to undermine the operational reliability of our military forces. Further, the cost-plus system of military contracting, originally rationalized by the need to maintain a military-industrial base for the procurement of technologically advanced, (i.e. overly elaborate and underly supplied), military hardware, provides exactly the wrong incentives to ensure efficiency and accountability.

3) The vogue for privatization of government services and functions as part of "free market", neo-liberal ideology has scarcely been a smashing success. Aside from political corruption problems and loss of oversight, the need for a profit-surplus already adds to costs prior to any alleged gains in efficiencies. Furthermore, economists have cottoned on to the notion of "learning-by-doing" as a source of productive efficiency. (Some have realized this all along, but only more recently has it factored into more formal accounts). While it's true that government bureaucracies can be both rigid and inefficient, (partly due to the "sovereign" need to adhere strictly to rules and regulations), and are susceptible to political influence peddling, it's just as likely that some sectors of government provision have long since developed cohesive , well-managed and professional work-forces with a high degree of competence and efficiency. (Good pay and job security are not necessarily demotivating drawbacks, since most people actually work out of a sense of a job well done and solidarity with co-workers, that is, out of a need for recognition and not merely greed or a sense of entitlement, whereas reductions in pay and rights, though perhaps off-loading public budgets and direct claims on tax revenues, are not necessarily per se realizations of net social surpluses). An empirial case in point would be the Thatcherite privatization of British railways, hardly a smashing success. Privatizations/selling-offs of public functions or enterprises, even if not explicitly politically corrupt, also tend to undervalue the "properties" sold, since both market criteria for valuation and a broad market of bidders are limited or lacking, hence again merely transfering rather than realizing net social surpluses. (The catastrophic Russian case would be the most extreme, "perfect storm" instance).

4)I would assume that most people here are basically in favor of a "mixed" economy, with disagreements and arguments among us concerning the scope, limits and failures of markets, the efficacy of regulation, and the composition of the mix. IIRC, national income accounting, for many purposes, does not include government spending/output, under the assumption that it is constant, non-productive and inefficient, that is, that it makes no contribution to the sustenance and growth of the productive economy. But, of course, not only do government spending/operations provide essential frameworks for the operation of markets and the "private" economy and factor into overall macroeconomic demand, but they provide public goods and utilities and real capital investments that help to sustain the productive economy. Even the claim that government policy and planning must by no means interfere with the beneficent and efficient working of private markets is question-begging dogma, petitio principii. You'd think that this would be a productive area for research for economists, rather than pontificating about the evils of the minimum wage- (snort)! The "Virginia School" type neo-classical analysis, which tries to disaggregate government operations into "markets" subject to analogs to utility-function maximizing agents, not only ignores cynically the constraints involved in the public nature of governmental-political operations, but assumes an exchange-based notion of individual incentives that wishes away the "incentives" involved in institutional stability, organizational cohesion, and collective purposes in achieving productive outcomes. The result, of course, is to "demonstrate" the utter inefficacy and corruption of government operations in the face of the "power" of markets. Perhaps other models and methods would need to be developed to more honestly and fairly access the contributions of government spending/operations to the production and growth of social surpluses.

[evagrius]

Here's a link to the Texas HHS experience with privatization;

http://www.cppp.org/research.php?aid=595

[evagrius]

Another link to Texas;

Texas: Group’s Report Shares State’s Experience with Outsourcing Social Services

(“Updating and Outsourcing Enrollment in Public Benefits: The Texas Experience,” cppp.org, November 2006)

“States should not view outsourcing as a panacea to the problems facing the administration of their public benefits systems” as the risks to the state and the needy families could be greater than the benefits, according to a report released by the Center for Public Policy Priorities (CPPP) and authored by Celia Hagert. The report shares the Texas experience with the social services outsourcing plan. The new eligibility system, run by a private contractor, was supposed to save the state hundreds of millions of dollars and improve services to clients. Instead clients reported difficulty reaching the contractor’s call centers, lost applications, long backlogs, and often being wrongly denied benefits. In May 2006, Texas delayed the further rollout of the new eligibility system indefinitely and asked state staff to take over. “No other state has attempted modernization on such a large scale or turned over so much responsibility for eligibility determination to a private contractor,” reads the report. “As the Texas experience has shown, success requires adequate investment, careful planning, and proper oversight. … It is very difficult to design contracts that will give contractors incentives to improve service to low-income families while protecting program integrity. Hurried or indiscriminate outsourcing can lead to significant problems with program access, integrity, and cost,” concludes CPPP.

http://www.cppp.org/files/3/CPPP_PrivReport_%28FS%29.pdf

[piglet]

That's as good one: "This is the problem with just focusing on the negatives." Good laugh.

[Jenna's Bush]

The False Claims Act (still in effect) was passed during the Civil War because contractors were selling damp gunpowder and sick mules to the U.S. Army. So what is new?

The Republicans were in charge then, too.

[evagrius]

Here's another tidbit on outsourcing social services. I wonder what fiscal conservatives have to say about it;

CBS4) DENVER CBS4 has learned Colorado taxpayers will probably have to pay millions of dollars to solve problems with the state's welfare system. The Colorado Benefits Management System (CBMS), installed more than 2 years ago, has been making more than 11,000 mistakes in an average month.

Critics of the CBMS called the new figures shocking and said it was unlikely taxpayers will ever get the millions of dollars in overpayments back.

"We've always known there were overpayments gong on, but these numbers are new to us also," said Susan Beckman, an Arapahoe County commissioner.

"This is completely unacceptable," said Tom Mayer, a Boulder County commissioner.

CBMS is used to manage the welfare payments for food stamp recipients, the elderly and poor.

"And if we continue to generate claims and overpay people, it's just throwing money away," Beckman said.

CBS4 learned that in the month before the CBMS was installed, there were 349 claims, or overpayments statewide.

In October of 2006, there were 11,300 mistakes and potential overpayments.

State figures show there may have been more than 234,000 suspected overpayments to welfare recipients in the 2 years since CBMS went live. That could account for $98 million lost.

"This system is not fixed, it is not getting significantly better," Beckman said. "We need to pour more resources into it so we stop handing out free money that really people aren't entitled to."

The state said it is unclear how many of the $98 million in claims have legitimate explanations and how many are actual overpayments.

"We will acknowledge we have a major issue to address and we are going to do what federal law requires us to do," said Liz McDonough, spokeswoman for the state Department of Human Services.

Federal law requires the state and counties to seek reimbursements over overpayments. Counties said it will cost millions of dollars to hire more people to sort through claims and figure out what was an overpayment and what was not.

County administrators think it is unlikely they'll be able to collect overpayments from poor and transient welfare recipients.

"If you don't fix the system, it's like pouring water into a bucket with a hole in it," Beckman said. "In 2 years, you'll have paid out another $98 million in taxpayers money and that's not right."

Before CBMS, annual overpayments to welfare recipients in Colorado totaled about $1.5 million a year for 30 years.

County human services departments estimate that over the next 2 years, they will need another $7 million to hire 180 people to work full time to go through the hundreds of thousands of overpayments and figure out which ones are worth trying to collect.