Janine Wedel - Shadow Elite - How the World's New Power Brokers Undermine Democracy, Government, and the Free Market

However reasonable these reforms may sound, the fact is that making government more like business constituted a full-frontal challenge (without necessarily declaring it), to the qualities of government and business, in which government operated for the public good and was accountable to the public, and business, ostensibly based on competition, made money. Imbuing government with the character of business could not help but unsettle the accountability frameworks that depended on the clear demarcations that had evolved within many modern democratic states. Graham Scott, the softspoken treasury secretary of New Zealand who implemented sweeping “performance-based management” reforms there beginning in the 1980s and an astute student of government reform, is emphatic on this point. “The complexity and networks [brought about by the management reforms] create the demands for old-fashioned accountability. . . . More than ever, we must be vigilant,” he told me. 15

Whatever the benefits of these reforms, they introduced issues of accountability—that of the state to its citizenry. The problem is not only the complexity injected into governing via the increase in entities and actors involved—and not subject to the same rules as government employees—but the necessity to “perform” for the public that has accompanied neoliberalism. Mission-driven government that emphasizes outcomes, particularly government that is outsourced (thus literally, removed from the source), demands, above all, showing that the mission has been accomplished. Like teaching to the test, simple story lines, “metrics,” and pseudo-quantitative indicators must be contrived to convince an audience far from the context in which the mission is being carried out. Demonstrating how the mission is progressing thus evolves into a performance for those holding the purse strings, one all about the appearance of doing a good job, as John Clarke, a cultural analyst of bureaucracy, has observed. Appearing to accomplish the mission is rewarded, sometimes at the expense of actually accomplishing it, not to mention that the “mission” may not lend itself to a set of discrete tasks or simple metrics. Anyone who has labored in the international development and “project” world, where work has long been outsourced to private providers, is familiar with the formulaic “success stories” touted in donors’ reports and the show-and-tells of testimony before congressional committees. That very term, now used to justify a variety of government programs, captures the need to perform for the public. 16

The spin inherent in success stories, however, pales in comparison with long-standing narratives—narratives that work to mask ground-level realities of neoliberal reform. In the United States, for instance, the practice of railing against “big government” in fact leads to the creation of still bigger government—and of a less accountable sort (as detailed in Chapter 4). That is because, while federal government was officially being contained in size—as measured in terms of civil servants and others employed directly by government—“shadow government” was getting ever bigger. The 1976 book The Shadow Government , published five years before Reagan took office, details the vast off-the-books government workforce already entrenched. Since then, the shadow government has done nothing but grow. Its ranks include all manner of consultants, companies, and NGOs, not to mention entire bastions of outsourcing—neighborhoods whose high-rises house an army of contractors and “Beltway Bandits.” Largely out of sight except to Washington-area dwellers, contractors and the companies they work for do not appear in government phone books. They are not dragged before congressional committees for hostile questioning. They function with less visibility and scrutiny than government employees would face. Most important, they are not counted as government employees, and so the fiction of limited government can be upheld, while the reality is that of an expanding sprawl of entities that are the government in practice. 17

Alongside the narrative of limited government is the idea that government remains in control and accountable even when transferring its functions and legitimacy to the private sector. Officially, only government officials carry out “inherently governmental” functions—the government’s term for work that only federal employees should do; they also monitor the contracting process and ensure the quality of work performed by contractors. Yet investigations of on-the-ground operations indicate otherwise. For instance, in a twenty-five-year contract awarded in 2002 to a joint venture of two mega defense companies, Lockheed Martin and Northrop Grumman, to upgrade the United States Coast Guard, key decisions were made by contractors rather than civil servants. On some crucial issues, Coast Guard officials had “limited influence over contractor decisions,” according to the inspector general at the Department of Homeland Security. Commenting on this state of affairs to the Wall Street Journal (in a front-page article titled “Is U.S. Government ‘Outsourcing Its Brain’?”), the inspector general remarked, “Our ignorance [that of the government] is their gain.” Just who is minding the government store? While it was subsequently announced that the Coast Guard would gradually begin to assume a leading role (with the two companies continuing their involvement), it will take an estimated three years for this branch of the U.S. Armed Forces to refederalize the operation’s intellectual capability and to reassert control. 18In such an arrangement and many others like it, new forms of governing are created. Yet the façade of a government in control and accountable prevails.

Neutrality is another narrative that accompanies neoliberal-inspired changes nearly everywhere they are implemented. Deregulation and the privatization of state-owned enterprises and services, which became standard international development fare in the 1980s, are presented as technical projects, designed to achieve greater efficiency. The public face of these policies—the legions of fly-in, fly-out economists, accountants, and planners—reinforce that narrative. Clad in the personality and language of efficiency, neoliberal principles, spun off in various forms, have circled the globe, with the international financial institutions as frequent sponsors and sometimes local economists trained in elite American schools playing leading roles, such as ministers of the economy. Yet where neoliberal policies took hold outside the Anglo-Saxon world—and they did not always do so—the charade of neutrality is often unmasked. Privatization and deregulation are, at their core, ideological, value-laden endeavors that stimulated reorganizing, and often came on the heels of unpopular macroeconomic restructuring at the behest of the international financial institutions. Whatever their economic rationale and results, and however democracy-challenged the countries into which the policies were introduced already were, these policies did not tend to mesh well with the encouragement of checks and balances, state-private demarcation, or democratic participation. Moreover, implementing privatization and deregulation often required an expanding executive—backed up, of course, by the power of the relevant international financial institutions—that crowded out checks and balances offered by legislatures and courts. Thus, privatization and deregulation restructured governing and power, forging flex-friendly environments, and were hardly neutral. 19

Further challenging these three neoliberal narratives is another staple of the neoliberal policy sweep—the establishment of nongovernmental bodies that carry out government functions. Such bodies have the potential to create the ultimate flex-friendly environment. Initiated by international development agencies, these hybrid entities—variously called “quasi-government organizations,” “para-governmental organizations,” “parastatals,” and state-created “NGOs” (all with somewhat different meanings)—might recall the quasi-nongovernmental organizations of the United States and the UK (sometimes called “quangos”) that are outside the civil service but funded by the state. But there are differences. Supposedly set up to bypass bureaucratized government, these bodies are sometimes endowed with more authority than the relevant government agencies and enable private players to create and carry out government functions. Whatever efficiency might come from such arrangements, they inspire flex activity because the players who empower them can avail themselves of the best of both worlds—the authority and ability to allocate resources of the state, combined with the profits of the private sector—while weaseling out of both accountability to the state and private-sector competition. Such arrangements put the lie to the neoliberal narratives and lend themselves to governing via fusions of state and private power or simply to its privatization. 20