How Privatizing Government Shovels Cash to Parasitic Corporations and Undermines Democracy
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The Constitution prohibits the delegation of significant state powers, but the Supreme Court currently puts few constraints on the government to outsource many of its important duties. What today’s discourse ignores is an understanding of the liberal conception of what public and democracy itself is good for — as a way to check private and government power, and promote accountability and responsiveness.
These blur into dark scenarios where private-public relationships give public agents maximum discretion in exchange for giving private agents advantages over their competition. For example, after FedEx’s CEO announced that his company would be cooperating with the government following the Sept. 11 terrorist attacks, the firm received a number of rewards. Ranging from special access to security databases, to a prize seat on a regional terrorism task force (the only private company represented) and special state licenses, these benefits amplified the firm’s power in the marketplace over noncooperative competitors like UPS, all in exchange for amplifying the power and reach of the state.
Defenders of privatization also argue that the marketplace creates innovation. Competition, the profit motive and the “creative destruction” of the market system can be deployed to increase the efficiency and effectiveness of government services. But what this outsourcing really does is move constraints from one space to another. It transforms the strengths and weaknesses, the limits and the constraints, from government to the market.
Privatization replaces the democratic role of citizens finding solutions to collective problems and transforms it into consumers trucking and bargaining in a marketplace. Finding solutions in a public space emphasizes accountability, voice, transparency, rules and claims through reasoning that goes beyond the self. The market emphasizes cost-benefit thinking, profit-seeking strategies, bargaining and the satiation of individuals’ wants; good things in many circumstances, but not necessarily when it comes to the powers of the state.
A regime of privatization shifts the debate away from the functions of government towards the allocation of those functions. For all the talk about innovation by outside contractors, what privatization largely does is preserve the scope of government services while looking for efficiency gains. And since the scope of what the government does is held constant, the real gains come from minimizing costs.
Take prisons, for example. With the addition of privately run prisons, the debate narrowly focuses on how much to spend on prisoners. Minimizing costs here will often be the result of simply providing less of a good at a worse quality, and the debate will focus on the optimal extent of these privatization contracts. Meanwhile, the greater question of when the state should imprison people fades to the background.
What’s actually public about these responsibilities disappears from the conversation. Privatization assumes that cost quantifying solutions are more fundamental to government than any discussion of ethics or values. The move away from democratic accountability is particularly worrisome because in many of these fields, the ultimate motivator of private markets, the profit motive, is in direct conflict with the public administration. The basic values, concepts and institutions of liberal democracy — political participation, elections, equal distribution of individual liberties, checks on concentrated power — do not work towards economic competitiveness.
The ideology that the government is just one among many providers of goods and services is a seductive one in this age of markets. But the government isn’t simply just another agent in the market, and firms that are empowered to carry out the role of the state can be as abusive as the worst bureaucracy.
We need new arguments for the government, with all its strengths and weaknesses, to be allowed to do its jobs knowing that it won’t always be perfect. The alternative is government by cronyism, delegated marketplace winners exploiting what works about markets with none of the normal checks we expect on a functioning democracy. There are no doubt weaknesses in the current functions of government, but for those who resist privatization, that is a call to political reform rather than one of abandoning the public arena altogether.