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I'm reading a book in which the author asserts that "privatization" is a threat to our liberty. He does not clerly define what he means by privatization. Sometimes he seems to include "contracting out."

How do you define "privatization"? Does it include contracting out?

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Off the top of my head without any research, I always thought that oursourcing was what "privatizaiton" was all about.  Contracting out which leaves the Government with some control over the work and outcome or just turning over a Government function to private industry by selling it or giving it away.   Can't think of what we may have given away or sold though. 

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Vern, 

Loosely constructed I think of three categories of things: private property, public property, and public goods, by which I mean externalities such as air, water, and rights or responsibilities in those public goods (for  notable examples of management of rights and responsibilities look up riparian rights (the story of the West is largely the story of water) and also look up South Coast Air Quality Management District in Southern California).  

Specifically, Privatization is movement from public property to private property or from public goods to private property. Contracts can contribute to this movement.   

Yes, government is capable of getting fleeced and losing some of our freedom for us, especially by misunderstanding the externalities, the longevity of either or both resources or needs (call them requirements if you will) or by pursuing short term solutions  to the long term problem of the commons. In a keen sense, every ethical issue in government is really a concern over privatization. In this way, it constantly looms as an agency problem (to borrow a term from economics) where if unchecked public officials may pursue interests that run counter to the trust and public interest unless carefully managed and subject to ethical standards and review. 

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I think of privatization as transferring a public service or industry (government operated) to a private service or industry (operated by commercial markets). It includes outsourcing through contracts. 

Housing, medical, prisons, and education have been privatized to some degree.

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DoD is privatizing their Installation utility infrastructure. I expect it to look like that of Puerto Rico eventually.  

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I found these definitions from a 1999 GAO Report:

"Outsourcing refers to the transfer of an existing federal business or administrative function to the commercial sector, with the government remaining responsible for the affected services.  Privatization refers to the transfer of a federal business or administrative function, including the responsibility for the affected services, to the commercial sector."

OUTSOURCING AND PRIVATIZATION: Private-Sector Assistance for Federal Agency Studies GGD-99-52R: Published: Mar 26, 1999. Publicly Released: Mar 26, 1999.

http://www.gao.gov/products/GGD-99-52R

 

 

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Let me elaborate on the book and author's thesis. The book is Constitutional Coup: Privatization's Threat to the American Republic by Jon D. Michaels (Harvard, 2017). Michaels is a professor of law at the UCLA School of Law. I learned of the book from a review by Steve Schooner of the GWU Law School that was published in the October 25 issue of The Government Contractor, (59 GC ¶ 319).

Michaels' argument goes like this:

  • The separation of powers--legislative, executive, and judicial--as provided for in the Constitution, protects us from tyranny at the hands of any single branch of government and is an essential feature of our Republic. (The separation of powers was threatened in the 20th Century by the rise of the administrative state, in which agencies made rules, enforced them, and judged accused violators. This was corrected by the Administrative Procedures Act, which required public rulemaking, provided for public comment, and provided for court review of agency adjudication, thereby establishing a separation of powers of sorts within the regime of the administrative state.)
  • Privatization eliminates or attenuates the separation of powers by putting government functions in the hands of private parties. (Privatization gives businesses the power of rule-making, execution, and adjudication, subject only to market forces and ordinary government business regulation. Among other things, this undermines the civil service, which functions to restrain presidential appointees.)
  • Therefore, privatization is a threat to our liberty.

The author urges an end to privatization and the rebuilding of the civil service in numbers and quality. He makes very specific and extensive recommendations for rebuilding the civil service.

Obviously, the arguments validity depends on the nature of privatization. What kind of activity is that? The author defines it as follows (on page 106):

Quote

I define privatization broadly. By my lights, privatization involves government reliance on private actors to carry out State responsibilities; government utilization of private tools or pathways to carry out State responsibilities; or government "marketization" of the bureaucracy, converting civil servants into effectively privatized commercialized versions of their former selves and relying on them to carry out State responsibilities.

The author makes no mention in the book (that I have found) of OMB Circular A-76, the FAR, or the definition of inherently governmental function. This raises the question of what actions does he include in privatization? What functions does he consider to be "State responsibilities"? On page 111 her refers to what he calls "deep service contracting," which includes "the outsourcing of sensitive policy design and policy-implementing responsibilities." He also includes "military privatization," which encompasses activities such as drone piloting, detaining and interrogating prisoners, protecting government officials, and managing bases.

Michaels advocates an end to privatization and the rebuilding and upgrading of the civil service, about which he makes extensive and detailed recommendations.

Steve Schooner ends his review with this challenge:

Quote

Whether you agree or disagree, Constitutional Coup identifies important issues that shape our field, our work, our profession, our Government, our markets, our nation, and, frankly, our future. We ignore these issues at our peril. At a minimum, Michaels opens the door for us to start a meaningful conversation. Read the book. Then let's talk.

I'm taking him up on that, which is why I have asked members of the Wifcon Forum what they understand "privatization" to be.

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It looks like the author considers privatization to mean outsourcing to a non-governmental entity.  I agree with this definition.

It's unclear if the author thinks all government business is inherently governmental.

I believe we should privatize whatever is not inherently governmental but only when doing so is in the people’s overall best interest.

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1 hour ago, jwomack said:

It looks like the author considers privatization to mean outsourcing to a non-governmental entity.

Privatization, outsource and outsourcing, and contracting out are interesting terms.

OMB Circular A-76, Supplement D, defines privatization as follows:

Quote

Privatization. A federal agency decision to change a government-owned and government-operated commercial activity or enterprise to private sector control and ownership. When privatizing, the agency eliminates associated assets and resources (manpower for and funding of the requirement). Since there is no government ownership and control, no service contract or fee-for-service agreement exists between the agency and the private sector after an agency privatizes a commercial activity or enterprise. Moving work from agency performance with government personnel to private sector performance where the agency still funds the activity is not privatization.

According to the last two sentences of that definition, privatization clearly does not involve contracting.

The terms privatize and privatization are not defined in FAR and, according to a search of the ecfr, do not appear in the FAR System.

Outsource and outsourcing are not defined either in OMB A-76 or in FAR.  According to a search of the ecfr, outsource does not appear in the FAR System. Outsourcing does not appear in the FAR itself, but appears in ten places within agency supplementsf.

The terms contract out and contracting out are not defined in OMB A-76 or the FAR System. According to a search of the ecfr, the term contract out appears in four places in the FAR System, but not in the FAR itself. The term contracting out does not appear in the FAR System.

The Government Contracts Reference Book, 4th ed., defines outsourcing as follows:

Quote

The transfer of activities that are being performed by federal employees at federal facilities to private contractor employees at federal or private facilities.

However, it describes privatization as a form of outsourcing, which is inconsistent with OMB A-76.

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Not to be trite, but the Agency Problem is no less a "threat" to good government than privatization is.  Privatization at least requires  a satisfied customer prior to money changing hands.

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When monopoly status is a grant, it should be done wisely, even warily. Some monopolies are necessary (regulated utilities and some functions at various levels of government are examples). Some monopolies I view as inherently good (marriage, private property,  patents are examples). All monopolies require special care as they are largely exempt from corrective mechanisms of the marketplace.

All too often government enjoys an enduring, unearned, and implicit exemption from cares and concerns over its own largely unrecognized monopoly status....And at what cost? I don't think the author has taken this one question seriously and it's the one most worth asking. 

 

 

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13 hours ago, FAR-flung 1102 said:

I don't think the author has taken this one question seriously and it's the one most worth asking. 

FAR-flung, have you read the book?

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14 hours ago, FAR-flung 1102 said:

I plead guilty. No, I have not read the book. 

Then how can you make statements like:

On ‎10‎/‎31‎/‎2017 at 5:23 PM, FAR-flung 1102 said:

 I don't think the author has taken this one question seriously and it's the one most worth asking. 

Vern, I have the book on order and I plan to read it while I'm stuck on planes this month flying around to a couple honeymoon destinations.  I look forward to engaging in the discussion when I return at the end of the month.

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Matthew Fleharty,

You're right...i can see that it's sloppy speculation on my part...I took the small excerpt to be a thematic and ran wild with that comment.  I hope my speculation proves wrong, and  also hope to repair the damage I've done. 

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Thanks, @REA'n Maker.  PepeTheFrog enjoyed that Guardian article, but there is zero chance she will read the author's book.

 

from the Guardian article:

"For now, it is best to remember (and remind others) that bureaucracy was never a swamp but rather a deep reservoir of talented, loyal, and devoted experts, whose effectiveness turned in considerable part on their political independence."

PepeTheFrog fears the author actually believes the nonsense written in the article. 

 

"deep reservoir of talented, loyal, and devoted experts"

:lol: :lol: :lol: 

So talented that they had to ditch the Civil Service Exam. The author might be fondly remembering the bureaucracy prior to the 1970s.

So devoted that you can be trampled while standing in the lobby of any federal building during the stampeding waves at 3:00, 3:30, 4:00, and 4:30.

So expert that industry recruiters and hiring managers know to be prejudiced against anyone who sticks around longer than a decade.

 

"All of a sudden, we’re no longer primed to think of federal employees as lazy and lackluster, an all-too-frequent characterization in the 1980s, 1990s, and 2000s...Now we think of them as stellar scientists, lawyers, and diplomats—the very best this country has to offer"

Uhh, who do you mean "we," Kemo Sabe? 

 

"political independence"

Federal bureaucrats are aligned with the political party which fills and protects the food bowl of federal jobs and the bureaucracy. This keeps federal bureaucrats dependent, politically. In the 2016 election, 95% of donations from federal employees went to one political party (Justice: 99%;State: 99%; IRS: 94%). 

 

The author is clearly suffering from an acute case of T.D.S., which is fogging his brain, and likely believes that only businessmen are subject to the weaknesses of human nature. In his secular religion, academics, bureaucrats, and others who extract resources from productive citizens have achieved apotheosis by vocation and political alignment.

 

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On 11/7/2017 at 3:45 PM, PepeTheFrog said:

"deep reservoir of talented, loyal, and devoted experts"

As a proud former GS-er and 1102 who has gone on to work for  firms such as IBM and PriceWaterhouse, I can confidently state that some of the people I worked with in the government are, in fact, some of the most talented and devoted people I have ever worked with.  The problem is that the "reservoir" Michaels describes is more like a "catch pond" which is evaporating with each passing day.  Good people get fed up and leave, and the poor performers just burrow in deeper as they are passed around from agency to agency like a bad cold.

Michaels' idealization of government employees is almost cute (how he is able to impart such sterling qualities on people he has never met and has no experience with* is anybody's guess), but it's ultimately a shame that he has shoehorned his strident politics into such an important topic.  The fact he hangs his entire argument on the valor and integrity of people he knows nothing about simply because he believes in the inherent primacy of the public sector,  has caused me to lose interest in anything else he has to say.  

(* https://law.ucla.edu/faculty/faculty-profiles/jon-d-michaels/)

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