Government as administrator vs. government as purchaser: do rules or markets create greater accountability in serving the poor?

• Author: Riemer, David R.

INTRODUCTION: THE WONDERFUL WORLD OF ACCOUNTABILITY

We are immersed in a sea of accountability. The bed we crawl out of each morning (unless it was manufactured decades ago) meets the safety standards set by the U.S. Consumer Product Safety Commission. We brush our teeth with water that meets U.S. Environmental Protection Agency ("EPA") standards; and as the wastewater flows down to the treatment plant, it must meet conveyance and treatment requirements of both the EPA and the state's department of natural resources. Want eggs and a piece of toasted rye bread for breakfast? The U.S. Department of Agriculture regulates the practices of the farmer whose chickens laid the eggs and monitors the pesticides used on the wheat that the miller turned into the flour that the baker transformed into bread. The U.S. Food and Drug Administration, meanwhile, oversees the safety of the final food products. Teeth brushed and well fed, we find our way to the garage, climb into the family car, and head for work. City police officers--public employees trained to follow the protocols of their chief and comply with the rules of the police commission--keep an eye on us to make sure we do not exceed the speed limits or fail to signal when changing lanes. If we are typical of the American workforce, we likely will ride on a local street paid for by a municipal government but built by private contractors according to the terms of lengthy purchasing processes. (1)

It is not even 9:00 a.m., and already we have swum through a sea of accountability: federal, state, and local accountability; regulatory accountability, administrative accountability, and procurement accountability. As the day proceeds, many of our daily activities bring into play one type of accountability or another. Switch on the computer? A state public utility commission regulates the price of the electricity we consume. Cross the street for a bite of lunch? The city traffic light, maintained by the municipal department of public works, ensures that the cars on Main Street do not run us over as we walk from curb to curb. Get stuck behind a school bus on the way home? The public school district has the bus company under contract to take kids home from afterschool basketball practice. Different levels and types of governmental accountability dog us every step of the way.

The thought of which model of accountability works best has never entered our minds. Most of us simply assume that, whichever level of government exercises whatever type of accountability, it is the appropriate level of government and the proper type of accountability. In the academic world, however, and even more in the day-to-day world of public administration, the question of what type of accountability works best for different forms of governmental activity is a hot topic. (2)

Much of the debate centers around so-called privatization. If government takes a classic government function (like sanitation, library operation, administration of welfare benefits, and most controversial of all, public education) and shifts responsibility for "delivering" the function from public employees to private firms under contract, is it possible to preserve accountability?

PRIVATIZATION: LESS THAN MEETS THE EYE

The debate over privatization masks the fact that, whether government provides services with its own employees or buys the same services from private vendors, government remains in charge. In the case of delivery of services to the poor, be they service job placement or health care or education, the decisions about whether a particular service will be delivered in the first place, when the service will start (and end), to whom the service will be delivered, how much of the service will be delivered, and what type of service will be delivered are all made by government officials, whether the service is delivered by government employees or private companies.

The threshold decision is whether government should provide a service at all. For example, should government offer low-income adults the opportunity to work in community service jobs if they fail to obtain private-sector employment? Government clearly decides this question. There is no privatization issue at all.

Once government has decided whether to provide a service, the next question is when, i.e., under what circumstances, government should provide the service. For instance, should subsidized health insurance for poor, uninsured, working parents be offered as soon as they lose employer-sponsored coverage, or should coverage be delayed for a fixed waiting period (e.g., three months after the employer's coverage ceases) in order to discourage employers from canceling their health insurance? This is a classic policy question. On the one hand, government wants to meet the unmet public need. On the other hand, in situations in which private firms may voluntarily assume responsibility for employees' welfare, government does not want to give the private sector an incentive to shift costs to taxpayers. But notice who is making the "when" decision: government, through law or regulation, decides upon the point in time when it will start to insure the uninsured. There is no privatization issue.

Indeed, in carrying out public policy, government makes virtually all of the important decisions, without privatization even coming into play. After deciding whether and when government should provide a typical service, e.g., the provision of health care to the poor, government also decides what categories of poor will be entitled to coverage (the "who" question), what levels of health care will be provided (the "how much" question--in this example, determining whether the plan will cover not just hospitalization and medical care, but dental care or vision care as well), and what degree of health care services will be provided (the "what type of service" question--in this context, resolving the matter of whether dental care, for instance, means only treatment of dental problems or also includes preventive check-ups and cleaning or orthodontia). However government answers these questions, only government is authorized and equipped to make the final decisions. The issue of privatization simply does not crop up.

So what is privatization about? After all the key decisions listed above have been made by government itself--whether to provide a service, when to provide it, whom to provide it to, how much to provide, and what type of service to provide--one narrow question remains: What kind of organization should provide (or, in the argot of public administration, "deliver") the service? That is, should government utilize its own employees to deliver the service, or purchase it from private firms?

THE REAL ISSUE: CHOOSING BETWEEN Two TYPES OF ACCOUNTABILITY

The decision whether to use a traditional administrative structure to deliver a service or instead purchase it from a private vendor--a choice that Professor John D. Donahue calls "the privatization decision" (3)--in fact raises two distinct issues. What type of organization should deliver the service? What kind of accountability structure is most effective in producing a successful program? That the privatization decision raises the question of who will deliver a service--government employees or private firms--is undisputed. But the proposition that a privatization decision also raises the issue of what kind of accountability framework is most effective is not self-evident.

It can be argued that privatization inherently destroys accountability by removing traditional administrative oversight of a public function. Once government strips away from its own organization and employees the power to operate a program and confers that power on private organizations and their employees, the argument goes, government loses the capacity to hold the program accountable for either process or outcome. Where government organizations generally can be trusted to weed out criminals, cheats, and others who cannot be trusted to conduct public business, private organizations are free to hire anybody regardless of qualification. Where government employees generally can be relied upon to refrain from discrimination based on race or ethnicity, private employees can...