Category: Political Science
Privatization in Sandy Springs, Georgia
Cities have dabbled for years with privatization, but few have taken the idea as far as Sandy Springs. Since the day it incorporated, Dec. 1, 2005, it has handed off to private enterprise just about every service that can be evaluated through metrics and inked into a contract.
To grasp how unusual this is, consider what Sandy Springs does not have. It does not have a fleet of vehicles for road repair, or a yard where the fleet is parked. It does not have long-term debt. It has no pension obligations. It does not have a city hall, for that matter, if your idea of a city hall is a building owned by the city. Sandy Springs rents.
The town does have a conventional police force and fire department, in part because the insurance premiums for a private company providing those services were deemed prohibitively high. But its 911 dispatch center is operated by a private company, iXP, with headquarters in Cranbury, N.J.
And:
Applying for a business license? Speak to a woman with Severn Trent, a multinational company based in Coventry, England. Want to build a new deck on your house? Chat with an employee of Collaborative Consulting, based in Burlington, Mass. Need a word with people who oversee trash collection? That would be the URS Corporation, based in San Francisco.
Even the city’s court, which is in session on this May afternoon, next to the revenue division, is handled by a private company, the Jacobs Engineering Group of Pasadena, Calif. The company’s staff is in charge of all administrative work, though the judge, Lawrence Young, is essentially a legal temp, paid a flat rate of $100 an hour.
The full story is here. The article has many interesting points, such as this:
Town leaders say race had nothing to do with it. Mayor Galambos said, “A 94 percent vote in favor of incorporation speaks to the broad community support for self-government and a desire to have local dollars remain local.”
And this:
To dissuade companies from raising prices or reducing the quality of service, the town awarded contracts to a couple of losing bidders for every winner it hired. The contracts do not come with any pay or any work — unless the winning bidder that prevailed fails to deliver. It’s a bit like the Miss America pageant anointing the runner-up as the one who will fulfill the winner’s duties if, for some reason, Miss America cannot.
In a stand-alone sense, the town seems to be working quite well.
Sentences to ponder
At Cardiff University, students found it easier to pretend to be gay than Christian.
Here is more, from Evan Selinger, interesting throughout.
*The Twilight of the Elites: America After Meritocracy*
That is the new book by Christopher Hayes, here is one marvelously good review. I was myself very impressed by the level of execution in this book.
In terms of pushback, I would offer two points.
1. The best critiques of meritocracy usually come from those with extreme merit.
2. I wish the book had been more Hegelian. One could well have written a book called *The Twilight of the Non-Elites*, for instance:
“Can’t you’all have some better schools? It’s not mainly about money, rather a school is a collection of parents and children.”
“Get married. And stay married.”
“You didn’t have to falsify your income on that mortgage application; isn’t that a felony?”
“It’s your fault you ended up in jail, don’t blame the elites.”
And so on. What’s interesting about today’s scene is that both “Twilights” seem correct.
A bit of longer term perspective on state and local governments
That is from Matt Mitchell, the source is here. Josh Barro has a very good post on the rising costs of employing public sector workers.
*The Great Divide: Nature and Human Nature in the Old World and the New*
That is the new book by the very active and very smart Peter Watson, due out soon but I bought a copy in the UK.
Why has the New World been so different from the Old World? What a splendid seventeenth and eighteenth century question. Imagine Jared Diamond — and with comparable scope — yet with shamans, peyote, and El Niño playing a role in the argument. I recommend it to everyone who can keep in mind how speculative the argument will be.
If we had to sum up what has gone before and describe in a few words the main features shaping early life in the Old World, those words would be: the weakening monsoon, cereals (grain), domesticated mammals and pastoralism, the plough and the traction complex, riding, megaliths, milk, alcohol. One way to highlight the differences between the two worlds is to perform the same summing-up exercise for the Americas…For the New World the crucial and equivalent words would be: El Niño, volcanoes, earthquakes, maize (corn), the potato, hallucinogens, tobacco, chocolate, rubber, the jaguar, and the bison.
Unlike Diamond, this book assigns ideology a central role in the story. Europe and the Middle East generate the ideas of the shepherd, the New World the ideas of the shaman, some of which may have been picked up or carried from the Chukchi of Siberia. Perhaps my favorite point in the book is the observation that the Old World had a greater diversity of ideologies.
Watson touches on many Hansonian themes about the differences between gatherers and foragers. Here is a Guardian review. Here is an Independent review. Here is a Matthew Price review.
This is an easy book to criticize, see the reviews or for instance take this passage:
…artwork was not developed [in the early stages of the New World] because there was no need to establish either dedicated territories or tribal identities. And/or food was in such plentiful supply that they had no need to keep records that assisted their memory of animal habits.
One really does have to take this book as a scenario, not as science. It is nonetheless interesting if used with care.
This point is not lost on the Germans
“The extremely important discipline of the market would be partially lost. Even more seriously, joint liability for banks would, at least, partially extend to the sovereign bonds of these countries,” she said. “The result would be joint sovereign liability through the back door – without the possibilities for intervention and control, and therefore the protection, of a fiscal union.”
That is from Sabine Lautenschläger, vice-president of the Bundesbank.
The wisdom of Dani Rodrik
Sometimes agnosticism is so…appropriate:
The main lesson I take from all this is the need to avoid easy generalizations that do not respect country peculiarities. Fiscal austerity missionaries are surely off base when they say Latvia’s experience decisively proves Keynesians and advocates of currency depreciation wrong. It is too early to judge the Latvian experience a success. But it is also too early to say Latvia has been a failure. Growth may continue, in which case the country will look better and better.
The full post is here, and it is full of interesting detail.
Thomas Schelling’s Middle East peace plan
With Shlomo Ben-Ami and Jerome Siegal and Javier Solana:
• The U.N. Security Council (or the General Assembly if the United States does not support this approach) will establish a special committee composed of distinguished international figures acting in their own capacity. Possibly it would be headed by a former American statesman or senator.
• UNSCOP-2’s first task would be to determine if there is any possible peace agreement that would be acceptable to a majority of both the Israeli and Palestinian people.
• The committee would go to the region where, over a period of several months, it would conduct a transparent inquiry into the possibility of genuine peace.
First and foremost, it would listen to the Israelis and the Palestinians. Its hearings would be televised. It would conduct public opinion research and study the record of past Israeli-Palestinian negotiations — in particular, the Clinton Parameters and the progress made at Taba and in the Olmert-Abbas round. UNSCOP-2 would seek new ideas for resolving the most difficult issues, such as refugees.
• Assuming the committee concludes that there is sufficient popular support on both sides for a specific peace agreement, it would then develop a draft treaty which it would forward to the Security Council for further action.
• In a departure from 1947, no effort would be made to impose this treaty. Rather, the Security Council would call on Israel and the Palestinians to use the UNSCOP-2 proposal as the starting point for negotiations in which the two sides would seek to determine if they can agree on any mutually acceptable improvements. The United States could be invited into the process to play the role of honest broker.
Here is more. Elliott Abrams doesn’t seem to like it.
*The Oil Curse*
The author is Michael L. Ross and the subtitle is How Petroleum Wealth Shapes the Development of Nations. It is an excellent book, here is the bottom line:
Most social scientists trace the oil curse to the governments of petroleum-producing states…This book, though, shows that the events of the 1970s, especially nationalization, made the problems of the oil states a lot worse.
Recommended, here is the book’s home page.
The culture that is Washington, D.C.
The article is here, or try this link, and it is scary. Here is perhaps the worst bit:
Aside from its wealth, the single defining feature of über-Washington is its youth. Most of the people who have moved to Washington since 2006 have been under 35; the region has the highest percentage of 25-to-34-year-olds in the U.S. “We’re a mecca for young people,” Fuller says. One recent arrival says word has gotten out to new graduates that Washington is where the work is. “It’s a place where a liberal-arts major can still get a job,” she says, “because you don’t need a particular skill.”
Every paragraph in the article is terrifying.
For the pointer I thank Chug.
A Power Vacuum is Killing the Eurozone
That is the title of my latest column, here is one excerpt:
We thus face the danger that the euro, the world’s No. 2 reserve currency, could implode. Such an event wouldn’t be just another depreciation or collapse of a currency peg; instead, it would mean that one of the world’s major economic units doesn’t work as currently constituted.
We are realizing just how much international economic order depends on the role of a dominant country — sometimes known as a hegemon — that sets clear rules and accepts some responsibility for the consequences. For historical reasons, Germany isn’t up to playing the role formerly held by Britain and, to some extent, still held today by the United States. (But when it comes to the euro zone, the United States is on the sidelines.)
THERE appears to be a power vacuum, and the implications are alarming. We may be entering a new world where international cooperative arrangements, in environmental areas as well as finance, are commonly recognized as impossible. If the core European nations cannot coordinate effectively, what can we expect in dealings with China, Russia and other countries that have less of a common background and understanding?
I consider this a big deal, even beyond its immediate macroeconomic ramifications, which of course are a big deal too.
There is a second, more technical point too:
…some of the banking systems in the periphery nations may be too broken for monetary policy to take hold. Imagine the European Central Bank trying to infuse new money and credit into Spain, while bank deposits move quickly to Germany, Switzerland and other safer places. Again, why would anyone want to keep money in the bank of a fiscally troubled nation? That loss of confidence will not be easily repaired.
At this point, probably euro-wide deposit insurance is needed before monetary policy can help in Greece or Spain (that wasn’t true two years ago). Yet creating a eurozone-guaranteed safe asset in those economies ultimately boils down to the eurobond idea, which of course the Germans are reluctant to do.
Here is a related Op-Ed from Mark Mazower, focusing on the theme of a collapse of European and international cooperation. Here is a good article on why plans for tighter political union in Europe will not easily work. There is talk the UK will cut off migrants if the euro collapses. Switzerland may introduce capital controls. What else? I do not see this turning out well.
Falling public investment in the United Kingdom
Paul Krugman draws our attention to the following chart (via Portes):
Maybe that really is worrisome. Still, if I look at the longer run chart — which is on p.14 from this pdf — sorry it will not reproduce — I start thinking that the matter is more complex. After all, in the early 1970s the figure for public investment was well over thirty billion pounds, and it is mostly falling sharply except for the late 1980s and very early 1990s. In the year 2000 it ends up at around five billion pounds, about one sixth the initial level. Yet the 1970s were pretty awful times for Great Britain, with pretty awful economic policies.
Why is public sector investment falling so much over the longer term? Mostly it is the decline in the number of public corporations, a healthy development if you ask me. Check out Figure 2 on p.15 of the same paper, noting the difference between net and gross investment. You also will see that changes in local government have been more important than changes at the national level.
If you read this paper, which runs to 2000 or so, you will see that public investment in health services has been plummeting for a long time, well before Cameron or “austerity,” defense spending seems to be included in these figures, and a lot of transport is not included in these numbers at all. I am happy to take corrections if things are done differently now.
Now what is the recent decline in public investment due to? I do not know, and in part I am asking for your help. I really am willing to believe that the United Kingdom is not investing enough in its future, including in science and education, but we haven’t yet gotten to the bottom of this matter. How much of that decline in the first graph is simply due to defense spending cuts and a shifting composition of expenditure for the national health care service, as higher service bills crowd out investment? How much is driven by changes in the housing market? (Here is a good historical source on changes in public housing policy over the longer term.) How do the recent declines in public investment compare to the longer term trend? How much is driven by a change in the gross rather than the net?
By the way, to cite a separate but related debate, to the extent immediate health care expenditures are pushing out health care investment, should that really count as “austerity”? I don’t think so, however mistaken such a policy may be, and thus I don’t see why “net public investment” is the proper metric for the short-run stance of fiscal policy (for that matter the “gross” figure may be more appropriate for short-run macro).
Inquiring minds wish to know. I hope that inquiring British minds wish to know too, or better yet already do know. I will gladly reproduce the best of what we learn from the comments.
Addendum: Here is a published data series. I am not sure I understand the notation, but my initial reading seems to suggest that current data are not out of line with the longer-term trend, including under Labour.
Sentences to ponder (West Virginia fact of the day)
Those results come two weeks to the day after Keith Judd, a convicted felon incarcerated in Texas, won 41 percent of the vote against Obama in the West Virginia primary.
There is more here.
Driverless car update
Getting lawmakers in the seat of a self-driving Prius has become Google’s M.O., according to Matthew Newton, editor of DriverlessCarHQ.com, a site dedicated to covering autonomous cars. “Google has been giving free rides to policymakers in California, Nevada and Florida,” Newton told Wired from his home base in Melbourne, Australia. “So it makes sense that they would do it in D.C.”
Eric Cantor, for one, was given a ride.
Jared Diamond reviews *Why Nations Fail*
There is much in the review, excerpt:
In their narrow focus on inclusive institutions, however, the authors ignore or dismiss other factors. I mentioned earlier the effects of an area’s being landlocked or of environmental damage, factors that they don’t discuss. Even within the focus on institutions, the concentration specifically on inclusive institutions causes the authors to give inadequate accounts of the ways that natural resources can be a curse. True, the book provides anecdotes of the resource curse (Sierra Leone cursed by diamonds), and of how the curse was successfully avoided (in Botswana). But the book doesn’t explain which resources especially lend themselves to the curse (diamonds yes, iron no) and why. Nor does the book show how some big resource producers like the US and Australia avoid the curse (they are democracies whose economies depend on much else besides resource exports), nor which other resource-dependent countries besides Sierra Leone and Botswana respectively succumbed to or overcame the curse. The chapter on reversal of fortune surprisingly doesn’t mention the authors’ own interesting findings about how the degree of reversal depends on prior wealth and on health threats to Europeans.
Do read the whole review (that is not just the usual cliched command to do so), and I will gladly link to any response by Acemoglu and Robinson. Here is Diamond’s bottom line:
My overall assessment of the authors’ argument is that inclusive institutions, while not the overwhelming determinant of prosperity that they claim, are an important factor. Perhaps they provide 50 percent of the explanation for national differences in prosperity. That’s enough to establish such institutions as one of the major forces in the modern world. Why Nations Fail offers an excellent way for any interested reader to learn about them and their consequences. Whereas most writing by academic economists is incomprehensible to the lay public, Acemoglu and Robinson have written this book so that it can be understood and enjoyed by all of us who aren’t economists.