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Published: Mon, 22 Jan 2018 00:00:00 -0500

Last Build Date: Mon, 22 Jan 2018 15:42:11 -0500


Memphis Privatizes Its Parks to Get Rid of Confederate Statues

Thu, 21 Dec 2017 11:40:00 -0500

(image) A Tennessee city has come up with a novel way to get rid of Confederate monuments: privatization.

Yesterday the Memphis City Council unanimously agreed to sell Health Science Park and an easement at Fourth Bluff Park for $1,000 apiece to Memphis Greenspace, a local nonprofit. That same night, Greenspace removed the statue of the Confederate general and Ku Klux Klan grand wizard Nathan Bedford Forrest.

Tennessee's Heritage Protection Act, you see, forbids the removal of historic statues from public land. Passed in 2013, the act states that "no memorial regarding a historic conflict, historic entity, historic event, historic figure, or historic organization that is, or is located on, public property, may be removed, renamed, relocated, altered, rededicated, or otherwise disturbed or altered."

The law was itself a response to Memphis' attempt simply to change some parks' names. (Among them: Confederate Park, Jefferson Davis Park, and Forrest Park). The council voted in 2015 to remove the statue of Forrest but was blocked by the state law. The city then applied to the Tennessee Historical Commission for a waiver to remove the statue, but in October the commission declined the request.

With no other option for removing the statues, the city opted to privatize the parks. As the statue removal was getting underway, Memphis Mayor Jim Strickland tweeted: "All of this is privately financed—the purchase of the parks, the removal of the statues, and Memphis Greenspace's future maintenance of the park."

With the removal of Forrest's statue, Memphis joins a number of other cities, including New Orleans, Baltimore, Austin, and Lexington, that have removed statues of Confederate leaders this year.

The presence of Confederate statues, memorials, and flags has become increasingly controversial in recent years, culminating in lethal violence at an alt-right rally in Charlottesville, Virginia, this year. By selling off its statues, Memphis demonstrates how private spaces can minimize this kind of social conflict.

Public spaces are expected to reflect the views and feelings of the general public. When such spaces memorialize things where public opinion is hotly divided, conflict will erupt as different groups will push their mutually exclusive claims on that public space. But private spaces aren't expected to represent the views of anyone but their owners. If you don't like Greenspace's removal of the Forrest statue, you're free to buy a place to put up a statue of your own.

The Fourth Circle of Helvetica

Fri, 15 Dec 2017 13:58:00 -0500

Swiss newspaper Il Caffè writes about American private prisons: "Quando il carcere è un affare privato", by Marta Valier. I'm quoted in it a couple of times. Check it out if you read Italian!

Here are some quotes:

Proprio nel 2014 però, grazie a politiche contro il costo crescente dello stato carcerario e il sovraffolamento penitenziario, il numero dei detenuti era cominciato a scendere. Poco dopo, ad agosto del 2016, in seguito a un report del dipartimento della Giustizia che denunciava problemi di sicurezza nelle prigioni private e una generale peggiore qualità delle condizioni di vita dei detenuti rispetto alle prigioni pubbliche, l'allora ministro della Giustizia [SV note: some Italian sites called her "il vice procurate generale", which might be more accurate -- she was the deputy AG], Sally Yates, aveva annunciato lo smantellamento del settore chiedendo di sospendere il rinnovo dei contratti. L'annuncio aveva fatto piombare le azione del settore, che scesero ulteriormente quando, durante un dibattito presidenziale, anche la candidata Hillary Clinton s'era mostrata contraria alle prigioni private. I giochi sembravano fatti.

"Inaspettatamente però ha vinto Trump e ha capovolto tutto, o meglio, è continuato tutto come prima", spiega a Il Caffè Alexander Volokh, professore di giurisprudenza alla Emory University. Subito dopo le elezioni presidenziali infatti, il nuovo ministro della Giustizia, Jeff Session[s], ha annullato le linee guida del suo precedessore. Secondo Usa Today, la Cca e la Geo hanno ringraziato con un versamento di 250mila dollari ciascuna al comitato inaugurale di Trump.

I blogged about that aspect at National Review and on this blog (see also here). Later, I'm quoted on the need for better contracting, which I've written about in Emory Law Journal -- next to a quote from my grad school professor, economics Nobel laureate Oliver Hart:

Nel corso degli anni sono stati effettuati diversi studi. Quasi sempre la conclusione è che, per quanto riguarda i costi, il settore privato è più competitivo. Ma sulla qualitá non c'è accordo unanime. "Per quel che ne sappiamo, non possiamo dire che siamo di fronte a una crisi umanitaria nelle prigioni private", ha detto Volokh. " Le condizioni nelle prigioni private non sono buone, ma non lo sono nemmeno in quelle pubbliche". A suo parere si dovrebbe cominciare a scrivere contratti migliori, con precisi incentivi a migliorare la qualitá di vita nelle prigioni. "Purtroppo non ne siamo ancora stati capaci".

Anche Oliver Hart, premio Nobel e professore di economia all'università di Harvard, pone l'attenzione sul tipo di contratto. "Se non è scritto bene l'azienda privata, soprattutto se si tratta di un'azienda il cui scopo è il profitto, potrebbe non comportarsi nell'interesse pubblico", ha detto Hart in una email. "Ma a quel punto è troppo tardi".

For extra credit: You've probably already guessed what font is appropriate for Switzerland. What about for southern Switzerland, where Il Caffè's readers probably hail from?

Trump Just Made Two National Monuments Smaller. How Big a Deal Is That?

Tue, 05 Dec 2017 14:40:00 -0500

President Donald Trump issued proclamations yesterday reducing the sizes of two national monuments in southern Utah. Bears Ears is being shrunk from 1.35 million acres to just over 200,000; Grand Staircase/Escalante is being brought down from 1.7 million acres to 1 million. President Barack Obama proclaimed the creation of the Bears Ears National Monument just three weeks before the end of his administration, and President Bill Clinton similarly created the Grand Staircase/Escalante National Monument in 1996. In both cases, many local Utahns and their representatives in Congress fiercely opposed the changes, arguing that the designations would bar their access to the mineral, timber, and grazing resources needed to support their communities. Earlier this year, the state legislature voted overwhelmingly in favor of a resolution urging the president "to rescind the Bears Ears National Monument designation." "The goal of the designations had been to convert multiple-use public lands into de facto national parks and wilderness areas, preventing traditional uses such as recreation, grazing, and any other economic uses of natural resources," says R.J. Smith, a senior fellow at the D.C.-based National Center for Public Policy Research. "It usurped the authority of Congress to designate parks and wildernesses, and it disenfranchised the people of the affected states—especially those in rural counties and communities. Worse, it accelerated the War on the West—destroying the economic well-being of much of rural America while undermining the tax base of county and small town governments and turning thriving communities into ghost towns." "National monuments are largely recognized as a stepping stone on the way to the creation of new national parks – a stepping stone that Utahns are all too familiar with," adds Matt Anderson, director of the Coalition for Self-Government in the West project at the Salt Lake City–based Sutherland Institute. "Four out of Utah's five national parks began as national monuments. Once a national park is created, hunting, ATV riding, rock collecting, and a host of other recreational opportunities are prohibited." According the management plan, the designation of the Bears Ears National Monument would not affect existing oil, gas, and mining operations, but it would prohibit new mineral leases, mining claims, prospecting or exploration activities, and oil, gas, and geothermal leases. In addition, its creation would not affect the State of Utah's jurisdiction over fish and wildlife management, including hunting and fishing. Livestock grazing would be allowed continue within the monument lands. Back in 1997, shortly after Clinton established the Grand Staircase/Escalante National Monument, the Utah State Geological Survey estimated that coal deposits within the affected area could be worth as much as $312 billion when the real price of coal was $30 per ton. Although the demand for coal in the United States as fallen in recent years, coal from the nearby Uinta Basin region is now at $60 per ton. Bear Ears, on the other hand, does not seem to hold significant energy development potential. Does Trump's reduction really return management of the lands withdrawn from Bears Ears and Grand Staircase/Escalante to local control? Not really. Both proclamations essentially restore control to the U.S. Forest Service and the Bureau of Land Management. The main change is that those federal agencies would now have the power to approve greater economic development of natural resources in those regions. Utah's state House of Representatives passed a resolution this year urging that the state try to buy the Bears Ears National Monument from the federal government and manage it itself. But it is politically unlikely that the federal government will sell the tens of millions of acres that it manages. So what else might be done to increase local control and stewardship? There have been several innovative proposals for how to give local people greater say in how federal[...]

Are Private Military Contractors a Solution to U.S. Quagmires Overseas?

Wed, 25 Oct 2017 00:15:00 -0400

We've fought in Afghanistan for 16 years now. Are we making progress? After 9/11, we invaded, overthrew the Taliban, killed Osama Bin Laden and—stayed. Afghanistan is now America's longest war, ever. President Trump's solution? He'll send several thousand more soldiers. Erik Prince says he has a better idea—fight terrorists with only 2,000 American Special Operations personnel, plus "a contractor force" of 6,000. Prince is the founder of Blackwater, the private military contractor. The military uses contractors to provide security, deliver mail, rescue soldiers and more. Private contractors often do jobs well, for much less than the government would spend. "We did a helicopter resupply mission," Prince told me. "We showed up with two helicopters and eight people—the Navy was doing it with 35 people." I asked, "Why would the Navy use 35 people?" Prince answered, "The admiral that says, 'I need 35 people to do that mission,' didn't pay for them. When you get a free good, you use a lot more of it." Prince also claims the military is slow to adjust. In Afghanistan, it's "using equipment designed to fight the Soviet Union, (not ideal) for finding enemies living in caves or operating from a pickup truck." I suggested that the government eventually adjusts. "No, they do not," answered Prince. "In 16 years of warfare, the army never adjusted how they do deployments—never made them smaller and more nimble. You could actually do all the counter-insurgency missions over Afghanistan with propeller-driven aircraft." So far, Trump has ignored Prince's advice. I assume he, like many people, is skeptical of military contractors. The word "mercenary" has a bad reputation. But private contractors have fought for America since America began. Jamestown, Plymouth and Massachusetts Bay colonies all hired private security. During the Revolutionary War, the Continental Congress authorized "privateers"—privately owned boats—to fight British ships. Before America officially entered World War II, some American pilots made money privately fighting the Japanese. Those "Flying Tigers" were called heroes. John Wayne made a movie about them. "Markets have a way of providing things when government can't," says Prince. But contracting is no panacea. The Congressional Budget Office says that although they save the government money during times of peace, during war "costs of a private security contract are comparable with those of a U.S. military unit." Economist Tyler Cowen points out that private contractors may make the real pain of war less apparent. In Iraq, says Cowen, "use of contractors may have helped to make an ill-advised venture possible." And in Iraq, Prince's employees killed civilians. Four Blackwater employees were eventually convicted of voluntary manslaughter. Prince replied, "The guys did more than a hundred thousand missions, protective missions, in dangerous war zones. In less than one half of 1 percent of all those missions did the guys ever discharge a firearm." Government has its own record of mistakes, civilian deaths and war crimes, too. In 2010, Prince sold his security firm and moved on to other projects. He persuaded the United Arab Emirates to fund a private anti-pirate force in Somalia. The U.N. called that a "brazen violation" of its arms embargo, but Prince went ahead anyway. His mercenaries attacked pirates whenever they came near shore. His private army, plus merchant ships finally arming themselves, largely ended piracy in that part of the world. In 2010, Somali pirates took more than a thousand hostages. In 2014, they captured none. Did you even hear about that success? I hadn't before doing research on Prince. The media don't like to report good things about for-profit soldiers. Commentator Keith Olbermann called Blackwater "a full-fledged criminal enterprise." One TV anchor called Prince "horrible ... the poster child for everything wrong with the military-industrial complex." When I showed that to Prince, he replied, "the ha[...]

Why We Should Privatize the Postal Service

Fri, 06 Oct 2017 13:30:00 -0400

What's the best way to make the Post Office faster and cheaper? Pull the government's tendrils out of it and let it loose in the private sector. That's what countries like Britain, Germany, and the Netherlands have done as email and social media eclipse traditional snail mail. In the latest Mostly Weekly Andrew Heaton explores why the Post Office is leaking money and stamps all over the place, and the best way to it get it on track.

As communication technology has grown by leaps and bounds, the Post Office struggles to remain relevant. More importantly, it's struggling to remain fiscally solvent. Its unfunded liabilities are at a staggering $70 billion. Meanwhile, it's losing money every year–it's lost $50 billion in the last decade, and is pushing up against the credit limit allowed by Congress. A day of reckoning is on the way, and when that happens, it will either need a massive taxpayer bailout, or private sector flexibility.

Mostly Weekly delivers the answer to America's mail problem. And it does so quickly, without long lines, and without losing billions of dollars in the process.

Mostly Weekly is hosted by Andrew Heaton with headwriter Sarah Rose Siskind. Watch past episodes here.

Script by Andrew Heaton with writing assistance from Sarah Rose Siskind, Brian Sack, and David Fried
Edited by Austin Bragg and Sarah Rose Siskind.
Produced by Meredith and Austin Bragg.
Theme Song: Frozen by Surfer Blood.

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The Afghan War Doesn't Need to Be Privatized—It Needs to Be Ended

Thu, 10 Aug 2017 14:48:00 -0400

(image) Blackwater founder Erik Prince says the Trump administration has been considering a plan he pitched to "privatize" the war in Afghanistan, an approach he claims could save the U.S. upwards of $30 billion a year.

Under the Prince plan, we would no longer have more than 8,000 U.S. troops in Afghanistan. Instead, more than 5,000 private contractors, mostly Special Ops veterans, would advise Afghan forces. A private air force made up of 90 planes would replace U.S. air support. The cost would be $10 billion a year rather than the $40 billion we pay annually now.

"At what point do you say a conventional military approach in Afghanistan is not working?" Prince asked USA Today.

Opponents of the war have been asking that for more than a decade. But the deeper issue here isn't what kind of military approach Washington should take; it's what "working" means in the first place.

The Authorization for the Use of Military Force (AUMF) for Afghanistan, passed in 2001, targeted the perpetrators of the September 11 attacks and their "associated forces."

Yet the core of Al Qaeda, the terror group responsible for 9/11, has been defeated in Afghanistan. The Taliban government, which provided Al Qaeda with a safe haven, was toppled within weeks of the American invasion. For years, the U.S. war in Afghanistan has been more a nation-building exercise than a counter-terrorism operation. The radical Islamist extremists most often currently targeted by U.S. forces don't bear much resemblance to the perpetrators of 9/11—an entire generation has passed.

Further, in 2001 Afghanistan was virtually the only safe haven for groups like Al Qaeda. Today such havens exist across the Muslim world. Most recently, U.S. forces have been sent to the Philippines to assist in the fight against ISIS there. (ISIS and Al Qaeda, for those keeping track at home, are bitter rivals.)

The debate over Afghanistan has largely centered on which "strategy" could be successful, but the fundamental problem is that success has never been clearly defined.

A proposal to privatize the fighting could spur Congress to renew the authorization for the war in less expansive terms. Ron Paul has suggested the use of letters of marque and reprisal, a constitutionally prescribed instrument, for counter-terrorism. This would authorize private individuals and organizations to go after Al Qaeda or other enemies of the country. Such letters offers a far narrower framework than an AUMF, and thus are less likely to fuel a virtually endless worldwide war against an ill-defined ideology (extremism) and tactic (terror).

According to USA Today, National Security Advisor H.R. McMaster and Defense Secretary James Mattis are skeptical of Prince's plan. They want Trump to order a surge in Afghanistan, something the president appears skeptical of. Congress has offered little input outside of "it's time to win," allowing a deleterious status quo to continue in Afghanistan.

Privatization sounds better than that. But if there's no reason to stay in Afghanistan in the first place, then there's no reason to privatize a war that shouldn't be continuing at all. End it, don't mend it.

California Union Bill Looks to Ban Outsourcing Public Services

Fri, 28 Jul 2017 00:15:00 -0400

Municipal governments exist to provide essential services, such as law enforcement, firefighting, parks and recreation, street repairs and programs for the poor and homeless. But as pension, health-care and other compensation costs soar for workers and retirees alike, local governments are struggling to fulfill these basic functions. There's even a term to describe that situation. "Service insolvency" is when localities have enough money to pay their bills, but not enough left over to provide adequate public service. These governments are not insolvent per se, but there's little they can afford beyond paying the salaries and benefits of their workers. As a city manager quoted in a newspaper article once quipped, California cities have become pension providers that offer a few public services on the side. It's a sad state of affairs when local governments exist to do little more than pay the people who work for them. Not surprisingly, the union-dominated California state legislature has been of little help to local officials dealing with such fiscal troubles. The state pension systems have run up unfunded liabilities, or debts, ranging from $374 billion to $1 trillion (depending on the financial assumptions one makes). But legislators have ignored meaningful pension reform. This has forced local governments to cut back services or raise taxes to meet their ever-increasing payments to California's pension funds. It's one thing to ignore the plight of hard-pressed cities and counties, but now legislators are trying to make the problem a lot worse. Assembly Bill 1250 would essentially stop county governments from outsourcing personal services (financial, economic, accounting, engineering, legal, etc.), which is a prime way counties make ends meet these days. The legislation originally also applied to cities, but recently was scaled back. It now applies to all 58 counties except for San Francisco (which is exempt because it also is a city) and the authors plan to exempt Santa Clara County also because of its hospital contract. The bill is sponsored by the Service Employees International Union and authored by Assemblyman Reginald Byron Jones-Sawyer, a Los Angeles Democrat who previously was an SEIU vice president. It's a shameless effort to force county governments to beef up the size of their full-time, unionized workforce. Ultimately, the bill views county governments as employment agencies rather than service providers. It's what one would expect from a public-sector union that exists to protect jobs (even duplicative ones) and the public employees who fill them. But this bill passed the full Assembly in June and cleared a Senate committee this month. Legislators are supposed to balance the demands of special interests with the broader needs of all Californians. The legislation "would make it costlier and in many cases nearly impossible for counties to contract out for vital services," opined a July 24 editorial in the East Bay Times. As a result, counties would "have to stop providing the services or, as union leaders hope, hire permanent county workers, replete with their costly retirement benefits." The bill's supporters gussy up this atrocity by claiming it would save money and improve services in the long term. "While cheaper services and employee layoffs may appear to save dollars in the short term, the savings are often illusory with hidden costs that are not accounted for and diminished services or contractor failures that require cities and counties to ultimately re-hire and/or re-train staff to provide the outsourced service," Jones-Sawyer explained in the bill analysis. Of course, not every instance of outsourcing is successful, but the idea that this is about helping taxpayers is laughable. Elected county boards of supervisors are best able to decide how to handle their own resources. They often find that contracting-out improves the provision of serv[...]

DOJ Report Highlights Problem of Solitary Confinement of Mentally Ill. Is Privatization a Solution?

Wed, 19 Jul 2017 15:30:00 -0400

The federal prison system abuses its use of solitary confinement of prisoners, particularly those identified as mentally ill. A new inspector general's report (PDF) from the Department of Justice (DOJ) illustrates how little oversight there is of the Bureau of Prisons (BOP). The report demonstrates the need for some measure of privatization, with the appropriate priorities, to establish clear guidelines for solitary confinement in contracts with the federal government. The Reason Foundation's Lauren Krisai and Leonard Gilroy have written about public-private partnerships in healthcare in corrections helping control costs, improve performance, and increase accountability. You can read the study here (PDF). There is, however, little political will to do it. According to the report, the BOP's "guidance and policies do not clearly define 'restrictive housing' or 'extended placement'." The inspector general noted that BOP "houses inmates, including those with mental illness, for long periods of time isolated from other inmates and with limited human contact," conditions which could constitute solitary confinement under definitions used in DOJ Civil Rights Division investigations and by the United Nations. The Office of the Inspector General (OIG) found one inmate, for example, who spent 19 years in a "restrictive housing unit" before being sent to a residential treatment facility. "Although the BOP states that it does not practice solitary confinement, or even recognize the term, we found inmates, including those with mental illness, who were housed in single-cell confinement for long periods of time, isolated from other inmates and with limited human contact," the report said. The OIG provided numerous examples of the misuse of confinement. BOP didn't have adequate policies to address the needs of mentally ill inmates in restrictive housing, and did not limit how long inmates could spend in restrictive housing (limiting instead how short stays could be). The federal prison system as the largest number of people in solitary and "they're also isolating people, putting people in solitary at a higher percentage rate" than state counterparts, Jean Casella, co-executive director of Solitary Watch, says. The OIG found it was 7 percent in the federal system compared to between 4 and 5 percent at the state level. The national average is "way higher than it needs to be to begin with," Casella says. "I think this report was pretty thorough and pretty hard hitting and we probably will not see its like again for quite a while," Casella says. The OIG found federal prisons kept mentally ill inmates in "Special Management Units" (SMUs), a form of restrictive housing for an average of 896 consecutive days. Inmates with mental illness spent "disproportionately longer periods of time" in restrictive housing than other inmates. And 13 percent of inmates with mental illnesses in the OIG's sample population were released directly from prison after spending nearly 29 months in a special management unit before their release. While the Obama administration imposed a new policy in 2014 increasing the standards of mental health care for federal inmates, the "the total number of inmates who receive regular mental health treatment decreased by approximately 30 percent, including 56 percent for inmates in SMUs, and about 20 percent overall for inmates in" restrictive housing, according to the report "Based on our review, it appears that mental health staff may have reduced the number of inmates, including those in… [restrictive housing], who must receive regular mental health treatment because they did not have the necessary staffing resources to meet the policy's increased treatment standards," the report found. "In the few states that have actually banned the placement of mentally ill in solitary at all, including New York and Colorado and a couple of others, s[...]

Rural Senators and Private Jet Operators Threaten Air Traffic Control Reform

Fri, 23 Jun 2017 14:30:00 -0400

A bi-partisan group of senators is attempting to scuttle reform with a Federal Aviation Administration reauthorization bill that leaves the agency in charge of America's costly and outdated air traffic control system. Much of the blame for this quick retreat rests with the National Business Aviation Association (NBAA)—which represents the business jet operators who benefit immensely from the current broken system—and its well-funded effort to lobby rural lawmakers, Bob Poole, Director of Transportation Policy at the Reason Foundation (the non-profit that publishes this website) says. The NBAA has spent $750,000 on lobbying, hiring three different lobbying firms in the first quarter of 2017 alone to make their case directly to Congress. Business jet operators, are getting "a pretty sweet deal," Poole says. "[They] pay a tiny fuel tax that amounts to…one percent of the total aviation tax revenue that goes to FAA," while using up to 15 percent of air traffic control services. The NBAA has also covertly mobilized rural mayors and pressured rural senators to block changes to the current system with front groups like the Association for Aviation Across America (AAAA), Poole says. Among them is Sen. John Thune, (R-S.D.), chairman of the Commerce, Science, and Transportation Committee, who said there was not sufficient support in his committee to privatize air traffic control. In numerous policy briefs and open letters, the AAAA (chaired by NBAA president Ed Bolen) has peddled the claim that air traffic control reform would decimate rural air service by empowering big airlines to spend resources at only the most profitable urban hubs. The House version of FAA reauthorization (which includes air traffic control reform), however, requires air traffic control service to be maintained for rural airports, Poole says. The House bill also gives smaller regional airlines who service those rural airports the same voting power in its proposed independent air traffic control corporation as larger commercial airlines. By keeping the FAA in charge of operations, these senators are leaving in place a bad model "that every other civilized country has eliminated by separating air traffic control from safety regulation," Poole says. Poole has since the 1970s advocated, in the pages of Reason and on Capitol Hill, spinning off air traffic control into an independent, non-profit corporation managed by industry stakeholders and funded by user fees, not tax dollars. About 60 countries have already adopted this model. In early June President Trump kicked off his "Infrastructure Week" throwing his support behind air traffic control reform. That was followed up by a House FAA reauthorization bill which closely follows Poole's model for reform. Even people responsible for running the air traffic control system have gotten behind the idea. "Five or six former Secretaries of Transportation and the current one, Elaine Chao, all support this. All three of the people who have been in charge of running the FAA's Air Traffic Organization…say we've got to do this," says Poole. Poole also mentions the example of NavCanada, Canada's privatized air traffic control system, whose charter requires it to service numerous airports in vast rural north of the country. Canada's private air traffic control system has also been able to adopt new and safer technology far quicker than the FAA. Air traffic control reform might still survive the Senate, Poole says. The House version of the bill has the support of several Democrats on the Transportation Committee, as well Republican Rep. Sam Graves of Missouri, who had previously been opposed to the idea. Only a system independent of FAA management and congressional appropriation can bring U.S. air traffic control into the 21st century, Poole says. "You can't run this thing as a high-tech business, which it[...]

Trump Proposes Major Overhaul of Outdated U.S. Air Traffic Control System

Mon, 05 Jun 2017 17:40:00 -0400

President Trump, in a speech Monday, promised to replace the current government-owned and operated air traffic control system with a private "self-financing, non-profit organization" relying on user fees, not taxes, to fund itself. The idea is not new. Canada, the U.K., and Germany are among the roughly 50 countries that privatized air traffic control. It has been a long-fought goal of libertarians like Bob Poole, senior transportation analyst for the Reason Foundation (the nonprofit that publishes this website). Poole has argued since the 1970s the "high-tech 24/7 service business" that is air traffic control "is a poor fit for a tax-funded bureaucracy housed within a safety regulatory agency." Poole proposed what Trump is now embracing, dumping the Federal Aviation Administration-run system with a nonprofit air traffic control entity less bureaucratic, more cost-effective, and ultimately more responsive to consumer needs. As a 2016 Office of the Inspector General (OIG) report found, the FAA has done a pretty terrible job managing and modernizing a system upon which some two million air travelers every day rely. Despite repeated attempts by Congress to reform the FAA's management, personnel, and organizational practices, its "costs continue to rise while operational productivity has declined," the report concluded. The FAA's budget had increased 95 percent, from $8.1 billion to $15.9 billion from 1996 to 2012 while maintaining the same number of air traffic control facilities . Personnel costs also doubled from $3.7 billion to $7.3 billion over the same time period while the number of overall FAA personnel declined by four percent. The OIG puts the blame squarely on the agency, saying bluntly the "FAA's disappointing reform outcomes are largely the result of the Agency's failure to take full advantage of its authorities when implementing new personnel systems, and not using business-like practices to improve its operational efficiency and cost effectiveness." This and organizational culture "resistant to change" produced spiralling costs and the sandbagging of many the tech modernization efforts the agency undertook. Of the fifteen major FAA systems upgrades examined in the report, eight were both behind schedule and over budget, costing taxpayers $3.8 billion in cost overruns, and delaying the average project by more than four years. These results are in stark contrast to the performance of other nations' far more commercialized air traffic control systems which Poole says have seen "safety either improved or remained the same; that costs were reduced and efficiency increased, and that investments were made in new technology. " New Zealand, the first country to take the privatization route in the late 1980's, saw its air traffic control system go from losing $5.5 million a year to turning a $2.3 million profit in just a year after privatization. A recent Department of Transportation (DOT) study looking at the commercialized air traffic control systems of Canada, Germany, France and the U.K. found that all but France's were self-funded. Privatized systems have also proven nimbler at modernizing their air traffic control technology. "In lieu of developing large and multi-year modernization systems and software," commercialized European air traffic control systems instead adopted new technologies as they came on line, often modifying "commercial off-the-shelf products to meet their operational needs," according to the DOT study. This in contrast with the FAA's slow and unwieldly procurement process to modernize its systems which, according to one analyst, "virtually ensures that any planned "new" technology will be obsolete by the time it is operational." So while Canada and the U.K. are rapidly moving toward satellite guidance and high-altitude digital communications, the U.S. is[...]

How Trump's Trillion-Dollar Infrastructure Plan Could Succeed

Wed, 17 May 2017 11:00:00 -0400

"We're at a really interesting moment where public-private partnerships could blossom in a pretty dramatic way," says Stephen Goldsmith, former mayor of Indianapolis and professor at Harvard's Kennedy School of Government. "If we have technologies that are highly refined…we can anticipate a problem and fix it before it occurs." Goldsmith, author of 2014's The Responsive City: Engaging Communities Through Data-Smart Governance, was the recipient of the Reason Foundation's 2017 Savas Award for promoting public-private partnerships. (The nonprofit Reason Foundation is also the publisher of As mayor of Indianapolis from 1992 to 1999, Goldsmith trimmed $100 million from the city budget mainly by requiring departments of the municipal government to compete with private companies. "The ideas...frankly, were from Reason," states Goldsmith. "[Director of Transportation Policy] Bob Poole spent I don't know how many lunches in Indianapolis when I was running for mayor and after I got elected kind of going through A to Z on how to privatize." Goldsmith states that one impediment keeping struggling cities from embracing public-private partnerships is a basic understanding of the goal. "[It] isn't to monetize assets," explains Goldsmith. "The goal is efficiency." At the national level, Goldsmith says public-private partnerships could be key to making President Donald Trump's one trillion dollar infrastructure investment program successful. "Regardless of how much money it is that Washington ends up [spending]… it can't be done effectively without public-private partnerships," Goldsmith states. "Both for purposes of paying back the money and for purposes of maintaining the asset." Edited by Alexis Garcia. Hosted by Nick Gillespie. Camera by Jim Epstein and Kevin Alexander. Streetbeat Heat by Podington Bear is licensed under a Attribution-NonCommercial 3.0 International License ( The Dirty by Podington Bear is licensed under a Attribution-NonCommercial 3.0 International License ( ________ Subscribe to our YouTube channel. Like us on Facebook. Follow us on Twitter. Subscribe to our podcast at iTunes. **This is a rush transcript—check all quotes against the audio for accuracy.** Stephen Goldsmith: Regardless of how much money it is that Washington ends up doing. Donald Trump: We're gonna start spending on infrastructure big. Stephen Goldsmith: It can't be done effectively without public/private partnerships. Nick Gillespie: Hi. I'm Nick Gillespie with Reason. Today we are talking with Stephen Goldsmith, the former mayor of Indianapolis, who has won the newest Reason's Savas Award for pushing public-private partnerships. Mayor Goldsmith, thanks for talking to us. Stephen Goldsmith: Sure. Nick Gillespie: You were mayor of Indianapolis from 1992 to 2000, Special Advisor to George W. Bush, Deputy Mayor of New York, and you're now a professor of government at Harvard's Kennedy School, and most recently the author of The Responsive City, which came out in 2014, and we'll talk about that in a second. At your time in Indianapolis you save taxpayers about $400 million by privatizing. What was the impetus for that? Where did the ideas come from? Stephen Goldsmith: Right. Right. Well, I think we can answer that in two different ways. First, I became mayor. We had a structural deficit in the budget, and we had a Chamber of Commerce report saying we need a billion dollars in infrastructure and our property taxes were higher than our suburbs, but you can't raise taxes. It's not good for the economy. We need to rebuild the infrastructure. So what do you do? Well, you become as efficient as you can. The goal, then, w[...]

Federal Infrastructure Spending Is a Bad Deal

Thu, 09 Feb 2017 06:00:00 -0500

In his first address as president-elect, Donald Trump repeated his campaign promise to invest in America's infrastructure. "We are going to fix our inner cities and rebuild our highways, bridges, tunnels, airports, schools, hospitals," he said. "We're going to rebuild our infrastructure, which will become, by the way, second to none. And we will put millions of our people to work as we rebuild it." His plan is for the federal government to entice private investors with $137 billion in tax credits. The idea is that this will unleash up to $1 trillion worth of infrastructure investment over 10 years, spur economic growth, and create countless American jobs. Politicians' love affair with infrastructure spending isn't new. Hillary Clinton, Bernie Sanders, Barack Obama, George W. Bush, and many before them have paid their respects to the idea. Economists have long recognized that roads, bridges, airports, and canals are the conduits through which goods are exchanged, and as such, infrastructure can play a productive role in economic growth. But not all infrastructure spending is equal. Ample literature shows, in fact, that it's a particularly bad vehicle for stimulus and does not, in practice, boost short-term jobs or economic growth. To work that way, government spending would have to be used quickly to put the unemployed to work on shovel-ready projects. But as Obama discovered in 2009 when he tried to spend $47 billion from the American Recovery and Reinvestment Act on infrastructure, there aren't that many shovel-ready projects lying around. And since job seekers rarely have the skills needed to start building a bridge or highway right away, employers are forced to poach workers from their existing jobs. Publicly funded infrastructure projects often aren't good investments in the long term, either. Most spending orchestrated by the federal government suffers from terrible incentives that lead to malinvestment—resources wasted in inefficient ways and on low-priority efforts. Projects get approved for political reasons and are either totally unnecessary or harmed by cost overruns and corruption. For example, we know that infrastructure investment produces the highest returns when it supports already-expanding cities and regions. Yet politicians' tendency is to spend in declining areas, where dollars can't help as many people, such as Detroit and Cleveland. Government statistics show that our infrastructure isn't actually crumbling. While conditions vary from state to state, the most recent data on highway quality (from 2012) classify 80 percent of urban highways as either good or acceptable. For rural highways, the figure is almost 97 percent. Meanwhile, the quality of bridges has improved as well. In 2004, 5.7 percent of bridges were classed as structurally deficient, meaning that the bridge isn't unsafe but that it could suffer from a reduction in its load-carrying activities. By 2014 that number had declined to 4.2 percent. Still, our infrastructure could use some work. Recently, in a debate at the Aspen Ideas Festival with former National Economic Council Director Lawrence Summers, the economist Robert Barro noted that he was "glad that Larry and I can agree that fixing potholes is the most productive activity in government." Unfortunately, the political process is biased against dull but valuable projects, such as basic road maintenance, and biased in favor of flashy or grandiose projects, such as high-speed rail, the Big Dig, and the Bridge to Nowhere. The process also systematically overestimates the benefits and underestimates the price of infrastructure projects. On the bright side, Trump wants to address the "mountain of red tape" that slows down construction projects. His plan would link spending to reforms that "st[...]

Will Donald Trump Screw Up V.A. Privatization? Probably.

Fri, 30 Dec 2016 17:00:00 -0500

(image) As my colleague Peter Suderman has pointed out, Donald Trump's rumored privatization plan for the Veterans Affairs hospitals is not much of a plan at all. It seems like some Trump official, somewhere, speaking anonymously said the words system, vets, choose, and private in close proximity and that's really all we know.

But let's assume some kind of privatization plan is, in fact, afoot. Is that good news?

While there's a chance that the right people will be at the helm to craft this plan (I know some smart guys, if anyone's interested) and a robust and carefully considered privatization scheme could be enacted, based on what we know about Trump so far it seems far more likely that we'll wind up with something that looks like a giveaway to private business without the corresponding market mechanisms that are necessary for such a reform effort to show results. At the heart of the idea of privatization is the idea that when providers fail to actually deliver products or services as promised, they no longer get paid. Contracts must be canceled for legitimate (non-political) reasons, and companies must be allowed to fail for privatization to succeed. The V.A. hospitals' immunity to competition and veterans' inability to seek care elsewhere were two of the biggest reasons waiting lists got as long as they did.

True privatization is tricky to do correctly—though not impossible! As the Reason Foundation attests, it happens all the time in the real world on the state and local level in particular. But if the Carrier deal is at all instructive about how the Trump administration is going handle relations between the state and the private sector, some bullying of major market players combined with watered down cronyism and politically expedient favoritism looks like the most likely outcome. Which means that veterans may indeed wind up getting even worse care that the deeply troubled V.A. was providing. What's more, a messy half-assed reform effort with the word privatization slapped on the package will give future efforts at thoroughgoing privatization a bad name.

Those of us who are keen on privatization should take a moment to feel deep empathy for those on the other side of the political spectrum. I can only imagine the anticipatory agony of envisioning Trump-administered faux privatization is similar to what advocates of single-payer health care must have felt as they watched the Affordable Care Act take shape. The might-have-beens are cruel indeed.

I was on Kennedy talking about this very topic yesterday. Check it out:

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Gurgaon: India's Private City

Thu, 15 Dec 2016 12:15:00 -0500

The last time I was in India, it was a familiar scene. The rickshaws rumbling through busy bazaars. Shoppers haggling over everything from gemstones to silk sarees. Pilgrims prostrating their way to salvation. Authentic street food, enhanced by locally-sourced infectious pathogens. This time around, I knew the country had changed. I wanted to see the effects of thirteen years of market reform and hypergrowth since my last visit. So I summoned an Uber (already something new) and headed 15 miles south of my Delhi hotel. As the crumbling roads of the capital city opened up into a 32-lane expressway, the old India I thought I knew, gave way to the future. I'd arrived in the city of Gurgaon. It's hard to imagine, but twenty-five years ago, there was nothing here. No high-rises. No kitschy shopping malls with Vegas-like trompe l'oeil ceilings. No 27-hole Jack Nicklaus signature golf courses. Stretching back to medieval times, Gurgaon was nothing more than a plot of rocky soil with a small marketplace. Until six years ago, it didn't even have a municipal government. So what happened? When Delhi banned private real estate development in the 1950s, Kushal Pal Singh began buying land south of the city limits. His company, Delhi Land and Finance, offered cash and equity stakes to farmers in Gurgaon. Many of these cowherds became instant crorepatis—millionaires, in the local lingo—while KP Singh would become the fifth richest man in India by the turn of the century. The state of Haryana eased land use restrictions, making it easy for developers to use their land as they saw fit. But once land was converted from farmland to commercial use, it was still classified as rural. That's how Gurgaon ended up as a city without a city government. Haryana also allowed women to work past 6pm—a bold policy decision in a socially conservative country. Without flexible labor laws, India would never have been able to develop its famous call center industry, where phone operators must work through the night in order to match times around the world. Maruti was the first to arrive with an auto manufacturing plant in the 1980s. As India stepped back from socialism in the 90s, foreign investment bypassed Delhi, and poured into Gurgaon. When General Electric set up shop, hundreds of multinationals followed. Soon Gurgaon was generating middle class jobs by the hundreds of thousands. Today, it boasts an absurd 30 percent annual GDP growth and the third highest per-capital income in India. Over time, other developers have entered the market, competing with DLF, and diluting its share of Gurgaon. But DLF remains the dominant provider of roads, sewage systems, security, and India's only private fire department. While Gurgaon isn't exactly crime free—the crime rate is on par with Phoenix, Arizona—it doesn't lack for protection. 35,000 private security guards keep a watchful eye on the city, compared with 3,000 public officers. Gurgaon's services and cleanliness are like nothing else I've seen in the country. India's only privately run metro system is fast, modern, and efficient. Employees compulsively sweep floors that already look spotless. It's unclear if Gurgaon's metro turns a profit. But as it increases the value of land owned by DLF and others, it may have already accomplished its mission. I'd like to tell you that Gurgaon has solved all of India's problems. But even here, in the beating heart of hypergrowth, the worst of Old India stubbornly refuses to die. Sixteen percent of Gurgaon's population lives in slums. If that seems like a lot to you, the shocker is that it's less than the average Indian city. There are 150 million fewer poor people in India since my last visit. That's half of the pop[...]

Will Homeland Security Continue to Use Private Prison Companies?

Fri, 19 Aug 2016 12:28:00 -0400

The Justice Department's surprise announcement Thursday that it will phase out its contracts with private prison companies sent shockwaves through the criminal justice world and private prison industry, but the bigger question is whether the decision will pressure the Department of Homeland Security (DHS) to sever its considerably larger ties with private contractors as well. As I noted yesterday, the Justice Department's Bureau of Prisons contracts with private companies to run 13 prisons, which house about 12 percent—or 22,000 inmates—of the federal prison population, most of them foreign nationals. But private prison contractors currently run 46 U.S. Immigrations and Customs Enforcement (ICE) immigrant detention centers, housing about 70 percent—about 24,000 people a day on average—of the detainees held by ICE. While the stocks of major private prison companies were taking a nosedive on the news of the DOJ announcement, The Washington Post reported just this week on a sweetheart $1 billion deal between DHS and Corrections Corporation of America, the largest prison company in the U.S., to build a huge new facility to house Central American asylum seekers. In 2015, CCA made $221 million, 13 percent of its overall revenue, from ICE contracts, according to a Center for American Progress report. Asked if ICE would continue to contract with private prison companies, a spokeswoman said the agency "remains committed to providing a safe and humane environment for all those in its custody. For individuals in its custody, ICE seeks to reduce transfers, maximize access to counsel and visitation, promote recreation, improve conditions of confinement and ensure quality medical, mental health and dental care." Which doesn't really answer the question one way or the other, but an ICE official also noted that ICE's immigrant detention facilities serve very different purposes than Bureau of Prison facilities. ICE detention centers, the official said, are not for punitive or rehabilitative purposes, but exist to hold detainees awaiting resolution of their immigration cases or until their removal order is completed. However, the detention centers, especially ones used to house migrant families, have been accused by watchdogs and critics of inhumane conditions and unethical behavior. GEO Group, a private prison company that runs one of those immigrant detention centers, strongly denied the accusations. The three major private prison companies that the Bureau of Prisons contracts with say the Justice Department's decision was based on a faulty inspector general report that failed to take into account the different populations between their facilities and regular BOP prisons. Their facilities, they argue, house mostly foreign nationals, many of whom are violent gang members. Civil liberties groups and critics of private prisons are already putting pressure on the Department of Homeland Security to follow suit. David Fathi, director of the American Civil Liberties Union's National Prison Project, called the Justice Department's announcement "an important and groundbreaking and decision." "With its announcement today, the Justice Department has made clear that the end of the Bureau of Prisons' two-decade experiment with private prisons is finally in sight," Fathi said. "The ACLU applauds today's decision and calls on other agencies — both state and federal — to stop handing control of prisons to for-profit companies." Rebecca Vallas, the managing director of the Center for American Progress' Poverty to Prosperity Program, said the DOJ decision a "long overdue step with both actual and symbolic value." "Too many for-profit prisons have become havens of br[...]