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

The U.S. presidency, which had been intensifying its power throughout the twentieth century, stepped up this process in the wake of 9/11. (Indeed, in countries throughout the world, executive power has grown as a result of the post-9/11 adaptation of international security law. In addition to their rearranging bureaucracy through the empowerment of shadow government, Presidents Clinton and Bush II took several means of exercising executive power to new levels. One means was the toolbox of unilateral power that includes executive orders, proclamations, and other instruments. Another means, the presidential “signing statement,” has been used in ways that directly challenge the system of checks and balances laid out in the Constitution, as the American Bar Association and presidential scholars have argued. 74

A signing statement is a pronouncement about a provision of a law passed by Congress and signed by the president. Presidents beginning with James Monroe have occasionally issued such statements. Once they tended to be only rhetorical and usually demonstrated presidential backing of the legislation in question. Recent statements, however, have been used to challenge or reinterpret the provisions of the law, and in some cases, to function as a virtual veto of the law or provisions of it. President Reagan greatly escalated the number of signing statements and suggested he might not be duty-bound to enforce parts of the law with which he disagreed. 75While Presidents Carter, Bush I, and Clinton all signaled their objections from time to time through constitutional challenges contained in signing statements, Bush II increased the number of such challenges more than tenfold compared with Clinton. By the end of his second term, Bush II had issued more than 1,100 constitutional challenges to provisions of law. Further, he employed them in an unprecedented way: to effectively curtail the power of the legislative branch by threatening (via the challenge) to not enforce a law passed by Congress. In effect, Bush claimed to accomplish what the Supreme Court has deemed unconstitutional—a line item veto. Just as presidents have been afforded leeway during wartime in the interest of protecting the nation, Bush used 9/11 as justification to expand presidential powers, often keeping the legal justifications secret. 76

Such precedents leave an enduring legacy, which may be why in early 2007 a distinguished panel of the American Bar Association determined that the ways that signing statements were used by Bush II are “contrary to the rule of law and our constitutional system of separation of powers.” This strengthening of executive power, of course, corrodes the system of checks and balances. 77

Executive power has also been enhanced through the increasing exposure of civil servants to politicization. The rules that have governed civil servants for the better part of a century have come under attack. Bush II, for instance, relaxed the application of long-standing civil service rules in the Departments of Defense and Homeland Security on a limited basis and slated other departments to follow suit. The work of civil servants may have become more open to network- and politics-influenced decision making. According to Paul Light, who studies the presidential appointment process, a “thickening” occurred under the Bush administration in which political appointees filled more management layers in government. One related practice for federal employees, says Light, was “very tight coordination from the White House on down to the political appointees.” 78

How President Obama will use the various tools of executive power and the precedents he has inherited, as well as the extent to which the civil service will continue to be politicized, remains to be seen. The tendency, of course, would naturally be not to relinquish such power when one is its beneficiary. 79

Privatizing Policy

While the grand narrative that followed the end of the Cold War trumpeted the worldwide triumph of democracy and free markets, it is ironic that the United States has led the developed world in its unannounced merging of state and private, thus rendering government less accountable and relevant markets less competitive—all the while emulating transitional eastern Europe in this regard and perhaps even eroding its own sovereignty. Many building blocks of the new forms of intertwined state-private power are reminiscent of that region: from the heightened discretion afforded American bureaucrats in the contracting process and politicization of think tanks, to the dearth of loyalty to institutions. Equally ironic is enhanced executive power. So is the privatization of information, expertise, and institutional memory and the advent of truthiness when we are in a supposed era of access to information. When information, expertise, and institutional memory are relocated more to corporate America than government—and when players can perform their way out of the reach of accountability—sovereignty is surely challenged.

Meanwhile, today’s premier operators can co-opt policymaking and ultimately alter regulations and government structures in ways that generate both the policies they prefer and those that provide them with a favorable environment. In reorganizing relations between state and private, bureaucracy and market, they help forge new institutional forms of power and influence—forms that take on a life of their own and enable players to further concentrate power and influence. Not unlike their institutional nomad and clan cousins of transitional eastern Europe, these footloose operators pursue coincidences of interest, travel through the evolving door, and master the art of flex, in the process helping to fashion ambiguous authority and institutions.

Who or what can slow the players down? The mechanisms to hold them accountable to either democratic or free-market principles that applied not long ago largely do not effect these players’ machinations. Moreover, they are attractive because they get things done: Swiss-cheese bureaucracy needs networks to shore it up and “get the ball rolling”—in short, to be personalized. Flexians and flex nets do that in spades, and they appeal to authorities and the public because they are effective and their appearances of the moment are taken at face value.

As new institutional fusions are invented and replayed when bureaucrats and contractors collaborate to get things done, these players put the lie to the façade of limited government. They also test the idea that outsourcing mobilizes competition, that signature feature of the free market, so heralded with the so-called “end of history.” Moreover, they challenge the contention that the reforms necessarily spring from concern about efficiency.

Meanwhile, unaccountable government grows its base, and the playing field becomes evermore open to the operators who fuse state and private power to achieve their own agendas.

CHAPTER FIVE

The Privatizers

THE CITY WAS MOSCOW, THE YEAR 1994, AND THE PLANS GRAND: to transform the new Russia. The old communist system lay in ruins, but the new capitalism existed only in hectic possibilities amid a high-octane world of hope. The myth of the “Evil Empire” was officially dead, felled by the breakup of the vast Soviet state at the end of 1991. America nurtured a new myth about its former adversary: Russia was reforming into a vibrant market democracy, one the West could do business with. Of course, we in the West were helping—not only with aid and loans, but also with our indispensable expertise.

I had been invited to sit in on what was billed as a routine “closed” meeting about the West’s aid: nine or ten people, most already acquainted with one another, mapping the next phase of a particular privatization effort. We sat around an oblong table in a nondescript conference room, presided over by an American in his early thirties, Jonathan Hay. I had heard Hay’s name probably a dozen times in Moscow that summer. Barely out of law school, he was a consultant to the “Harvard project,” a U.S. government-funded brainchild of the Harvard Institute for International Development (HIID) whose stated mission was to reform Russia’s economy. The other Westerners in the room were consultants—mostly high-priced senior associates with the “Big Six” accounting firms—whose companies were also paid by Western assistance.