The changing shape of government.

• Position: Symposium

MS. METZGER: Hello. I am very pleased to be moderating this first panel on "The Changing Shape of Government." How to secure government accountability in the context of the expansion of privatization in government is a question central to our discussion today. Some aspects of this question pertain to political accountability: Does privatization lead to the undermining of traditional controls, in terms of either requirements or methods for participation in government decisions, because the entities that were providing government services are now outside of those regimes? Or, does it actually provide, for example, an opportunity to increase accountability by bringing private citizens into government and developing new methods of delivering services and in other ways transcending the public/private divide?

This first panel will provide background on that question by discussing some of the changes we are seeing in government institutions and in the ways government operates. The panelists will describe ways in which the move toward privatization and the expansion of the gray area between public and private is occurring, but also will talk about changes we may see as being particularly useful in dealing with some of the challenges this expansion of privatization presents.

On this panel we have five scholars who have written extensively on public administration and administrative law generally, as well as privatization, specifically. We will begin with Dean Alfred Aman of the Indiana University School of Law. Our second panelist will be Professor Steve Savas, who is a Professor of the School of Public Affairs at Baruch College; then, Professor Elliott Sclar, who is a Professor of Urban Planning and Public Affairs at Columbia University; then, Professor Lester Salamon of The Johns Hopkins University and Director of the Johns Hopkins Center for Civil Society Studies; and, finally, Professor Charles Sabel of Columbia Law School. After each presentation, we will have a few minutes for brief comments and then questions.

DEAN AMAN: Thank you very much. It is a great pleasure to be here.

In my paper I analyze the privatization of traditional government services by placing these changes in governance in a global context. (1) The connections between private prisons and globalization may appear, at first glance, somewhat tenuous. What do such intensely domestic institutions as prisons have to do with the global economy? I address that question in a three-part discussion.

Part I of my article argues that privatization of governmental services is very much of a piece with deregulatory trends in the United States and elsewhere, in which state-centered approaches to a variety of regulatory problems increasingly have given way to markets and market discourses at all levels of government. (2)

The reasons for the shift from states to markets are many and complex, but they involve much more than simply a cyclical swing of the regulatory pendulum from liberal to conservative. Rather, the shift in perspective in the fundamental ways in which government conceives of and then carries out its responsibilities is closely tied to how decision makers at all levels of the public and private sectors conceptualize globalization. The privatization of governmental services is part of an economic conception of globalization, one based on markets and the competition that they engender.

These various markets differ, however, and some of them can be seen as more metaphorical than real. Some markets are more of an alternative form of regulation of public responsibility than a substitution of something wholly private for something that once was wholly public.

In Part II of the article, I consider the effects of such privatization trends on the public/private distinction itself and its implications for democracy in general. (3) The democracy problem under globalization--namely, the diminishing of transparency, the diminishing of opportunities for public participation, and, in particular, the diminishing of information flows that make public participation meaningful--is one of the most significant externalities of globalization. This externality arises from the disjunction between global economic and political processes, on the one hand, and local processes of democratic participation, on the other.

The global economy and the competition it engenders encourages cost-cutting on the part of both private and public sectors. (4) When cost-cutting occurs by way of privatization in the public sector, the democracy problem intensifies. (5) In effect, this gives regulation or public responsibility over to the market. It is a kind of delegation of administrative authority to the market, which is usually treated as private, meaning that the public is no longer collectively involved in the decision making processes.

There are many types of markets and various forms of democracy. One of the goals of this article is to match the different types of markets with different types of democracies, different types of accountability and participation--including administrative democracy as well as contractual democracy. To this end, I discuss some of the reforms I think are worth considering. (6)

First, we need to privatize the Administrative Procedures Act. (7) We need not take it out of government; rather, we need to extend some of its principles and approaches to the private sector and to those public/private entities that are carrying out public-related functions. In so doing, we need not reinvent the wheel. It is important to devise cost-effective procedural approaches appropriate for the global era of administrative law.

Second, we need to get beyond the state action/due process kinds of rationales, partly because we are in this gray area, as Professor Diller pointed out, (8) and also because public law protections have diminished, especially as they relate to prisoners and the poor.

Third, and most important, we need to reconceptualize the way we think about the administrative process. We must focus on participation and transparency in ways that go beyond the simplistic labeling of an actor as public or private. Rather, it is more important to look at the power relationships between the parties--public or private--and the kinds of information flows that we, as citizens, need to understand whether our public functions are being carried out in humane and effective ways. To this end, my paper focuses on different markets and different forms of democracy. To make these points, I develop the concept of "global currency." (9)

The more metaphorical markets become, the greater the risk we run that certain kinds of global currencies may be illegitimate. We need to have public input into such outcomes. Investment is essentially mobile. To attract investment to a particular place or to raise political capital, by appearing to be cost-effective and efficient or actually by being cost-effective and efficient, governments at all levels need to create global currency. Global currency is the means by which governmental units at all levels--local, state, and national--create competitive advantages to attract investment, to retain the means to achieve sustained economic growth in their respective jurisdictions. Global currency is, in effect, the price government is willing to pay to remain economically competitive on behalf of the residents already living in the area and investing in the jurisdiction, as well as to attract new investors of all kinds.

The most common form of currency is money generated from the provision of fewer, or more efficiently provided, governmental services, or both, lower taxes, lower regulatory cost, investments in infrastructure, and the human capital necessary to stimulate economic growth.

Not all forms of global currency are legitimate. If, for example, a competitive edge arises due to a lack of constitutional rights for prisoners in privatized prisons, we, as a body politic, would not think that was an appropriate or a legitimate form of global currency. (10) Child labor, poor wages, and unsafe working conditions also, in various contexts, are illegitimate forms of currency. (11) They provide a competitive advantage to a particular location and to some individuals associated with it, but the cost is usually borne by people who are unable to choose other alternatives or are unaware of the true cost of the "bargain" being struck for them.

Conceptualizing globalization primarily in economic competitive terms easily can reinforce a domestic political discourse that favors markets over government intervention and individualism over communitarian approaches in the public sector. (12) But the move to privatization can be disentangled from these ideological goals and beliefs. To explain more fully why the public/private distinction can be applied in new and democratic ways, I differentiate between different kinds of markets and democracies. (13) Governments at every level can be viewed as territorially-bounded economic units attempting to maximize their resources and to compete effectively with other economic units, whether those are other states, other municipalities, the county next door, or some country halfway around the world.

It does not always follow that the scale of governmentally-run services is efficient. It may be more efficient to provide certain services if the unit of service is larger or if you can combine forces with other government agencies to avoid duplication. Given the territorial constraints of governmental units, private actors often are in better positions to conceptualize problems and implement solutions that are not linked to arbitrary territorial boundaries. (14) This is one reason why, in theory, contracting out certain services to private entities can yield efficiencies beyond what even an efficient governmental unit might provide.

These efficiencies are even greater if a private unit, capable of operating in many...