Hybridization of government

[Belsnickel]

So, I'm currently working on a paper, mostly still in the research phase, about accountability in hybrid-organizations. What is this? Well, hybrid organizations go by many different names. We like to call then government sponsored enterprises here in the US. A lot of the rest of the English speaking world calls them quangos (quasi-autonomous non-government organizations). But they can also be called quasi-government organizations, gray sector organizations, and on and on. The main point is that these organizations exist in many different forms and straddle the public and private sector. Some are a part of the private market, some are government run monopolies, some are private organizations with public funding, some have government appointed boards, etc., etc. This is a trend that has been going on for decades all over the world, and we have thousands of these GSEs in this country, including several at the federal level. You may have heard of a few of them (Freddie, Fannie, Sallie just to name three) and it's likely you deal with at least one or two on a regular basis.

Public sector organizations face accountability through the legislature. The traditional model of public administration suggests that the administration is accountable to the elected officials, who are then accountable to the public. The reality is more complicated as the administrators can often be directly accountable to a number of different stakeholders causing a multi-dimensional accountability system (which some see as problematic, causing Multiple Accountability Disorder). But, the nice thing about these layers of accountability is that as administrators, we are stewards of the assets of the citizens within our jurisdiction. There is transparency (more than most people realize, you just have to know where to look) in place that allows the public to know how those assets are utilized.

The issue is that 15-30% of GSEs in this country aren't even registered as hybrid organizations. It isn't easy to tell they are hybrids. They don't have the direct accountability and it is extremely difficult to understand how the partnership exists and to verify the best interests of the public are being served.

Now, this is a much more complex issue than I could obviously lay out here. Even just trying to describe the nature of GSEs/quangos would take a lot of space on here. But given the examples at the federal level, you can get an idea for the type of thing to which I am referring. The continued privatization of our government, which has been going on for about 30 years, is going to just increase there hybrids as we rely on the private sector to provide public goods. What are your opinions on this? Are you in favor of this hybridization/privatization? What steps do you think would be good to insure accountability exists for these hybrid organizations?

I'm just kind of curious what people that don't necessarily look at this academically or from the inside think about all of this.

[fredtoast]

Here is the problem.

Every private business in a capitalist society is controlled by profit motive. This tends to make the business run more effciently, but it also moves away from "public service". How do you keep the benfit of privatization while still being designed to setve a publiuc purpose instead of make profit.

Here in Tennessee the State provides free legal services to any persontrying to collect child support. Back in the late 90's the state decided that these Child Support Offices were noit very effective so they contracted them out to private firms who could get paid a percentage of collections. I actually worked for a while for a private firm who had contracted with the state to do this. In that situation it worked alright because there was no real conflict between collecting as much as possible and serving the public. It did not work out well in small rural areas where there was not enough to collect to justify a private company being involved. But it must have worked out well in the larger cities becaue they are still doing it. So the key in some of these efforts to "privatize" may be to make sure there are still government offices to pick up the slack in places where a private company may not be able to make any profit.

BTW this has been going on for a long time. Most people do not realize that NASA is a private company instead of a government agency.

And the State of Tennessee is currently having a HUGE debate over Governor Haslam's plan to privative many state positions in education and elsewhere.

[Belsnickel]

(03-12-2017, 11:17 AM)fredtoast Wrote: Here is the problem.

Every private business in a capitalist society is controlled by profit motive. This tends to make the business run more effciently, but it also moves away from "public service". How do you keep the benfit of privatization while still being designed to setve a publiuc purpose instead of make profit.

Here in Tennessee the State provides free legal services to any persontrying to collect child support. Back in the late 90's the state decided that these Child Support Offices were noit very effective so they contracted them out to private firms who could get paid a percentage of collections. I actually worked for a while for a private firm who had contracted with the state to do this. In that situation it worked alright because there was no real conflict between collecting as much as possible and serving the public. It did not work out well in small rural areas where there was not enough to collect to justify a private company being involved. But it must have worked out well in the larger cities becaue they are still doing it. So the key in some of these efforts to "privatize" may be to make sure there are still government offices to pick up the slack in places where a private company may not be able to make any profit.

BTW this has been going on for a long time. Most people do not realize that NASA is a private company instead of a government agency.

And the State of Tennessee is currently having a HUGE debate over Governor Haslam's plan to privative many state positions in education and elsewhere.

I was thinking more about this all last night and thinking how hybrid organizations would be more susceptible to multiple accountability disorder because of the accountability to the market and potentially profit (NGOs would still be accountable to the market). It is definitely an interesting trend and one that we should all be cognizant of.

As for NASA, it is an independent federal agency, the extent to which it is a hybrid I do not know. But, not all independent agencies are hybrids.

[Dill]

(03-11-2017, 05:03 PM)Belsnickel Wrote: The continued privatization of our government, which has been going on for about 30 years, is going to just increase there hybrids as we rely on the private sector to provide public goods. What are your opinions on this? Are you in favor of this hybridization/privatization? What steps do you think would be good to insure accountability exists for these hybrid organizations?

I'm just kind of curious what people that don't necessarily look at this academically or from the inside think about all of this.

I suppose I could be persuaded, on a case by case basis, that some privatization is good.

But overall, I am very suspicious of it. I think that when the public sector markets of various types are saturated, it is natural for private corporations to regard the government as a new market sector into which to expand. That is why you have corporations running prisons and HMOs and power plants and using untrained civilians to guard military bases in the Middle East.  It is not clear to me that any of this has been for the public good, though I admit that some businesses and their stockholders have made a killing.

Can you provide a specific example in which the privatization of a formerly public service has benefited the public? Maybe it has happened and I am just unaware of it.

You argue before Congress that government is inefficient and get them to put up tax dollars for the private sector--sometimes with bidding or sometimes not.  Even if waste skyrockets it is still hard to convince the public the move was wrong since, as everyone in this country knows, the private sector is more efficient.

[xxlt]

(03-16-2017, 02:42 AM)Dill Wrote: I suppose I could be persuaded, on a case by case basis, that some privatization is good.

But overall, I am very suspicious of it. I think that when the public sector markets of various types are saturated, it is natural for private corporations to regard the government as a new market sector into which to expand. That is why you have corporations running prisons and HMOs and power plants and using untrained civilians to guard military bases in the Middle East.  It is not clear to me that any of this has been for the public good, though I admit that some businesses and their stockholders have made a killing.

Can you provide a specific example in which the privatization of a formerly public service has benefited the public? Maybe it has happened and I am just unaware of it.

You argue before Congress that government is inefficient and get them to put up tax dollars for the private sector--sometimes with bidding or sometimes not.  Even if waste skyrockets it is still hard to convince the public the move was wrong since, as everyone in this country knows, the private sector is more efficient.

Wait, are you arguing that just because virtually every single time a government service has been privatized the cost has gone up and the quality of service has gone down that privatization of government services is a bad idea and the promise that the private sector can do everything better is the biggest lie since the serpent in the Garden talked Eve into doing something fruity?


Sometimes I worry about you Dill!

[Belsnickel]

(03-16-2017, 02:42 AM)Dill Wrote: I suppose I could be persuaded, on a case by case basis, that some privatization is good.

But overall, I am very suspicious of it. I think that when the public sector markets of various types are saturated, it is natural for private corporations to regard the government as a new market sector into which to expand. That is why you have corporations running prisons and HMOs and power plants and using untrained civilians to guard military bases in the Middle East.  It is not clear to me that any of this has been for the public good, though I admit that some businesses and their stockholders have made a killing.

Can you provide a specific example in which the privatization of a formerly public service has benefited the public? Maybe it has happened and I am just unaware of it.

You argue before Congress that government is inefficient and get them to put up tax dollars for the private sector--sometimes with bidding or sometimes not.  Even if waste skyrockets it is still hard to convince the public the move was wrong since, as everyone in this country knows, the private sector is more efficient.

I can get what you're saying, especially for certain types of hybrids and for privatization. I can certainly point to some examples of hybrid organizations that are doing well. The quasi government is monstrous and reaches all over the place. There are different types of these organizations and to take it all as one broad thing can be a bit difficult.

I, for one, am in favor of public goods being provided by the public sector. I do not have an issue with a premium service that goes beyond being available in the private sector. For example what you see in many single payer health care systems with higher priced private markets available to those who can afford it. What's interesting, though, is much of the NHS in the UK is made up of quangos. So even there we are wading into the whole hybridization issue.

In case anyone is interested, and unless you're a policy/administration wonk like me it's doubtful you will be, here is the 2011 CRS report on the quasi government: https://fas.org/sgp/crs/misc/RL30533.pdf

[*michaelsean*]

Does this include private companies doing a service? For example for our garbage pickup it's a private company, and I have no complaints, but I am against any sort of private prisons. On something massive like federal agencies, I have no idea.

[Belsnickel]

(03-16-2017, 10:15 AM)michaelsean Wrote: Does this include private companies doing a service? For example for our garbage pickup it's a private company, and I have no complaints, but I am against any sort of private prisons. On something massive like federal agencies, I have no idea.

So that would be privatization. MSW collection is a public service, and the trend for a couple of decades has been for municipalities to contract that out (where I live is a dying breed where we actually still do it in house). Depending on the structure of the contract, this can create a hybrid organization, but usually with that situation it is not.

[*michaelsean*]

(03-16-2017, 10:22 AM)Belsnickel Wrote: So that would be privatization. MSW collection is a public service, and the trend for a couple of decades has been for municipalities to contract that out (where I live is a dying breed where we actually still do it in house). Depending on the structure of the contract, this can create a hybrid organization, but usually with that situation it is not.

OK then I don't think I get the hybrid thing.  I know Fannie and Freddie, but I don't really understand how they work.  

[Belsnickel]

(03-16-2017, 10:25 AM)michaelsean Wrote: OK then I don't think I get the hybrid thing.  I know Fannie and Freddie, but I don't really understand how they work.  

I'll use some snippets from that report I linked:

Quote:A brief review of executive branch organizational history is followed by a description of entities with ties to the executive branch, although they are not “agencies” of the United States as defined in Title 5 of the U.S. Code. Several categories of quasi governmental entities are defined and discussed: (1) quasi official agencies; (2) government-sponsored enterprises (GSE); (3) federally funded research and development corporations; (4) agency-related nonprofit organizations; (5) venture capital funds; (6) congressionally chartered nonprofit organizations; and (7) instrumentalities of indeterminate character.

And I will post more later, something came up and I need to drop this browser.

Addition: So, as you can see, there are different types of these entities and as such, defining what one is can be difficult. Some are completely severed from government other than they are created by Congress, some have government appointed advisory boards, some are funded in part by public funding but also engage in the market, and there can be any combination thereof. One very common version is what is called a foundation. The National Park Foundation is a big one at the federal level, but then there are also foundations tied to public schools all over the country as a way to bring in donations that a public organization could otherwise not account for. Most of the athletics departments at public universities would also be quasi government/hybrid.