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

Poland in the 1990s is an important case, for it developed a market democracy—despite this substantial appropriation of the state and the institutional nomads and other networks that underwrote it—and avoided the excesses in these dimensions that characterized many countries further east during the same period. Moreover, Poland so far this century offers some examples of harnessing earlier excesses. Journalists and public-minded servants at institutions such as NIK have played no small part. 44

LIKE MAMA AND ELA skillfully dealing with the 1982 search of Mama’s apartment, people who rise to become such effective players are extraordinarily accomplished at dealing with the unexpected. Their interactions with guardians of the system allow them to adeptly toy with it. During the search, many features that would later characterize the top players and flexians of the coming era were on display: versatility, quick-wittedness, improvisational talent, propensity to personalize relationships, and shrewdness in swiftly selecting and adopting appropriate roles.

On a systemic level, signature features of both communism and postcommunism would find steady footing in the new system of power and influence that began to crystallize in the early to mid-1990s. The personalization of bureaucracy; the lack of loyalty to official institutions; the performance of overlapping roles that fuse state and private power; and the scarcity of should-be public information available to the public and the snaring of it by private players—all these features, among others, displayed themselves as the system ensconced itself widely in both the East and the West. In fact, nowhere else in the developed world would the four transformational developments, and the new system of power and influence they ushered in, ensconce themselves more thoroughly than in the United States, infecting the heart and mind—perhaps even the soul—of its governing.

CHAPTER FOUR

U.S. Government, Inc.

IN AUGUST 2008, ABOVE THE FRONT DOOR OF THE SPRAWLING Health and Human Services headquarters in Washington, D.C., hung a giant streamer proclaiming: CONGRATULATIONS HHS / FOR OUTSTANDING PERFORMANCE ON THE PRESIDENT’S MANAGEMENT AGENDA / GREEN ACROSS THE BOARD (green being the highest performance category). George W. Bush instituted the President’s Management Agenda in 2001. One of its hallmarks was “competitive sourcing,” which mandates competition with the private sector and encourages the outsourcing of government work. 1

The agency’s Web site bragged that, in 2004, HHS was “one of the first of three agencies to receive a green status score for the Competitive Sourcing Initiative” (later renamed Commercial Services Management Initiative), a key component of the Agenda. At first glance, the HHS streamer recalls the annual May Day ritual in communist countries, where banners applauded diligent workers. But at least the communists’ banners celebrated what workers themselves had supposedly accomplished. What does it mean when the government’s highest performance award is given to an organization for handing work off to others? 2

Competitive sourcing has redefined the notion of “government work.” Government agencies are now faced with justifying not contracting out a government program, project, or function, rather than the other way around. How could an institution be less encouraging of loyalty and commitment to itself?

HHS’s award followed a 2003 Bush administration initiative that was even more stunning in its willingness to deplete government of government. That directive, buried in an Office of Management and Budget circular, ate away at the long-established norm that “certain functions are inherently Governmental in nature, being so intimately related to the public interest as to mandate performance only by Federal employees.” The new mandate, in a subtle language shift, fundamentally weakened the definition of “inherently governmental” functions, going from activities requiring “the exercise of discretion in the application of government authority,” to “the exercise of substantial discretion” (emphasis added). In effect, the directive expanded the definition of commercial activity and established the legal basis for more contracting. It thus provided justification for practices that were already routine: private companies performing inherently government functions, including crafting and practically directing policy. 3

While some might perceive these initiatives as mere excesses of the Bush years, tectonic movement in the state-private relationship began long ago and continues under the Obama administration. This movement, whatever its pace, has been largely invisible to the public. For many Americans, the first inkling of governing beyond government happened when reports surfaced about the extent to which private companies were prosecuting the war in Iraq. In fact, the slow overhaul of American federal governing has been taking place for years, speeding up over the past decade and a half. And while companies like KBR Halliburton (the two split in 2007) and Blackwater (which changed its name to Xe in 2009) have come to symbolize the perils of contracting out, these firms, whatever their excesses, have largely provided routine services. 4Meanwhile, corporations like Booz Allen Hamilton, Science Applications International Corporation (SAIC), Raytheon, and Lockheed Martin routinely stand in for the U.S. government in making policy and performing inherently government functions, sometimes even becoming , for all practical purposes, the government. This is far more threatening to the national and public interest than farming out supply and security services. 5

Today, a host of nongovernmental players do the government’s work, often overshadowing government bureaucracy, which sometimes looks like Swiss cheese: full of holes. The Clinton and Bush II administrations took this trend to new lengths through such means as contracting out and quasi-government boards. The financial crisis has caused the Obama administration to intensify this interdependency of state and private power as financial and political policy deciders “coincide” at the highest echelons of power. The result is that, in the established democracy of the United States, who and what constitutes “the government” has become murkier. New institutional forms of governing join the state and the private, permeating virtually all arenas of government. The economic arena now vies for the “excellence in blurring” prize with intelligence, military, and “homeland security” enterprises, where so much action has taken place since 9/11. Ironically, grand narratives exulting democracy, free markets, and the information revolution that accompanied the four transformational developments help obscure these new forms. Meanwhile, private players are afforded fresh opportunities to make governing and policy decisions without meaningful government involvement. Whether for profit or to advance an agenda, they can privatize policy beyond the reach of traditional monitoring systems. These changes are so systemic and so sweeping that they cannot simply be rolled back. The institutional forms that intertwine state and private are the body and soul of federal governing today—the ground upon which any future changes will occur.

Some changes in federal government that contribute to the current institutional landscape are quantifiable and well documented: the great upsurge in contracting government work, including crucial government functions; the rise in awarding contracts without competition; the climbing number of contractors (who are subject to more lax conflict-of-interest regulations than government officials) with proportionately fewer civil servants to monitor them; the proliferation of quasi-government organizations and advisory boards; the fortification of executive power. Other changes pertaining to mutated processes, such as newly convoluted or nonexistent chains of command, also are well documented. Other trends are evident in new popular terms, such as the “blended workforce.” Certain other changes are more difficult to document systematically but have been identified by long-term government observers: the greater politicization of parts of government, as well as a drain of brains, information, prestige, and authority away from government. Still other trends are even more difficult to pin down, yet they are undeniably part of the culture. Notable among them is “performing for the public,” which makes reliable information harder to sift out. Specific government programs are trotted out by their sponsors—bureaucrats and contractors alike—as “success stories” and provide subject matter for upbeat “show and tells” for government and congressional overseers. 6