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Thursday, September 27, 2007
Privatization: Is It All About Accountability?
Prof. Ellen Danin has an interesting paper arguing that much of the debate about privatization is really about accountability, in one form or another. Here's the abstract:
The popular view is that the debate on privatization is about cost and efficiency. This was true at one time when most of the discussion involved battling theories concerning markets versus social and economic justice issues. At the extreme, those who advocated privatization argued that markets and competition could always be relied upon to provide the highest quality services at the lowest cost. They preferred letting individuals decide how best to meet their own needs, rather than ceding that role to politicians or bureaucrats. Unions and those concerned with economic and social justice issues often took a "just say no" approach to contracting out.
Today, it is easier to see that arguments for or against privatization are actually about accountability. This is not to say that markets, cost, efficiency, individual liberty, and social and economic justice are issues absent from today's discussions; rather, it means that they are most often ways of talking about accountability. Those who prefer markets argue that markets best provide meaningful accountability. Those concerned about social and economic justice believe that those values are better protected by public rather than private methods of accountability. That this was the case has been somewhat obscured by the fact that the battleground over privatization has most often been on turf defined by the language, thoughts, and values of economics.
If this insight is correct, the central issue for privatization is accountability. That is, issues of accountability may subsume all arguments about the merits and wisdom of privatization. What, then, are the accountability arguments made by proponents and opponents of privatization? What do private and public sector methods for ensuring accountability tell us about the allocation of providing services? Does public accountability have a deeper function than merely ensuring that value for money is received? If public provision and public accountability are part of the fabric of a participatory democracy, what then is the impact of removing those functions from public provision?
In the paper, Danin also challenges the assumption that markets provide sufficient pressure to hold contractors accountable. Privatization promoters often argue that the market is essentially a cost-free way of making service providers perform efficiently, while governmental "red tape" is a costly way of doing the same thing to government workers. There's a trade-off between accountability and efficiency for government workers, but not for private sector workers.
But without proper contract management and administration, Danin shows that contractors have been found to perform inefficiently. So if "red tape" is necessary to hold contractors accountable for cost containment, perhaps the trade-off isn't quite so large, or in some cases, non-existant. The cost-savings to privatization cannot be taken for granted.
And quick tangent: it looks like Josh Marshall of Talking Points Memo is getting into cost issues vis-a-vis military contractors. Awesome!
Posted by Matt Lewis
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