Last week, I attended a meeting at a federal agency to discuss how one safety-net provider screens for substance abuse. I met with two nonprofits that provide school-based youth development and athletic enrichment services. I hustled to another thing with several agencies and nonprofits working to provide summer jobs for youth. Government and sometimes foundation money financed most of what we discussed. Public purposes were pursued, but through a web of formal and informal arrangements, contracts, and negotiations to leverage many resources inside and outside government.
Public-private collaboration, for better and for worse, is the way of American government. Sometimes this is done very well. Sometimesâ€”see
Fannie & Freddie Mack [Whoops–of course I meant Fannie Mae and Freddie Mac. What a dumb editing mistake.], and private rating agencies in the financial crisisâ€”this is done very badly. Elected officials and public managers need to learn to do this more effectively, because that’s the way their work will get done.
John Donahue and Richard Zeckhauser provide a great starting point to ponder these issues in their new book, Collaborative Governance: Private Roles for Public Goals in Turbulent Times. As they note (about health reform and many other things): “The performance of America’s government depends on its ability to engage private players to accomplish public work.” Donahue is perhaps most famous for writing one of my favorite public management books: The Privatization Decision. Applying agency theory to this critical, then-neglected subject, the privatization decision had a big impact at many levels of government. Zeckhauser is perhaps most famous for helping with my least-favorite book: my own doctoral dissertation….
Aside from that overshadowing accomplishment, Richard has written hundreds of articles, co-invented the term “QALY,” is a fellow of the Econometric Society and the Institute of Medicine, and won the 2007 U.S. National Mixed Pairs Championship in contract bridge. It’s daunting to have such an advisor. I don’t always agree with Richard (or he with me), particularly on political matters. I always learn from his unsentimental intelligence and genuine concern for people. I am grateful to him for many things.
Collaborative Governance describes a wide variety of government arrangements with for-profit and non-profit partners. Through a variety of case studies, they consider what government must do in monitoring and motivating private partners to make such arrangements a success.
Success stories range from the clean-up of Colorado’s Rocky Flats nuclear waste site to the Coast Guard’s efforts in port security to a variety of partnerships for parks and charter schools. The authors also admire the FDA’s Prescription Drug User Fee Act (PDUFA). Donahue and Zeckhauser count such partnerships as successes because these leverage public oversight with private-sector nimbleness and innovation, and because private partners bring to bear high-quality personnel and financial resources that government often cannot match.
There are less-successful stories here, too. NASA delegated massive operational responsibilities for the Space Shuttle to a joint venture between Lockheed-Martin and Boeing called United Space Alliance (USA). Predictably, NASA’s ability to oversee USA’s operations eroded. Moreover, NASA became over-dependent on USA, which faced little realistic competition over time. Bette Midler rallied impressive philanthropic resources for a fancy boathouse in Harlem that was probably ill-suited to local needs. Donahue and Zeckhauser recount the boondoggle for private lenders created within the guaranteed student loan program. In 2009, the Obama finally addressed this egregious form of corporate welfare, rechanneling $80 billion in unmerited corporate profits into aid for low-income students.
More chilling, the United States Enrichment Corporation (USEC) was a private for-profit company established to purchase weapons-grade nuclear materials from the former Soviet Union. This arrangement also sought to provide Soviet-trained technicians and scientists a financially attractive alternative to the nuclear black market. These efforts may be the most important counter-terrorism measures ever mounted by the United States. Yet USEC’s for-profit structure has led the company to strike a much harder bargain with its Russian counterparts. The authors conclude: “Failure to recognize and structure incentives to rectify the conflict between the purpose of the program and USEC’s motives has very likely weakened a bulwark against nuclear terrorism.”
Aspects of this book sadden me, because they reflect basic decisions our society has made to limit the capacities and competence of American government. These incapacities make collaborative governance more necessary and likely, but also less likely to be done well. The authors make clear that effective contracting and collaboration require greater government administrative capacity than actually exists. In the case of charter schools, for example, only 11 states provide funding for proper oversight by local districts or other chartering authorities.
To give one example, agencies at all levels of American government control a wealth of priceless data. In my experience, very few public organizations have the capacity or the incentives to deploy this information well. Outside the arena of health care, few government agencies employ more than a handful of people with the expertise to manage these data. Human subjects concerns combine with bureaucratic incentives to undermine the kind of data sharing we need to improve public policy.
Donahue and Zeckhauser emphasize the need to leverage “tight government budgets” and otherwise limited government efforts with private dollars. They take as a given that the private sector will be more nimble and efficient, with access to generally superior managerial and technical talent.
Business elites and the philanthropic sector sometimes step in to bridge this gap. Not surprisingly, these sectors intervene on matters of greatest interest to these same elites. Some of the most interesting aspects of this book concern collaborations to create, repair, or sustain urban amenities. Donahue and Zeckhauser provide nice accounts of the restoration of New York’s Central Park and the restoration of Bryant Park near the New York Public Library. They also describe Mayor Daley’s great triumph: Millennium Park, a $400 million jewel right in the heart of Chicago.
As the authors themselves note, there is a decidedly upper-crust dimension to such efforts. These channel great philanthropic political and economic resources to create highly-valued amenities which benefit entire cities, but which are especially valued by some of the most affluent people in America and which are located right at the center of booming urban cores.
Donahue and Zeckhauser include no parkland success stories in New York’s outer boroughs where most city residents actually live. Nor are there similar successes chronicled in Chicago’s massive south or west sides where young people desperately need safe and appealing opportunities for physical activity. The teeming Latino communities of Pilson-Little Village on Chicago’s west side include strikingly few recreational opportunities. Gang boundaries and other obstacles prevent many young people from using existing facilities. Some wonderful initiatives are now occurring. Yet particularly in this time of state and local fiscal crisis, these efforts will not command the resources and attention devoted to Chicago’s lakefront and other areas valued and frequented by the city elite.
Collaborative governance both reflects and is constrained by powerful inequality. This book effectively demonstrate that government can increase public value by properly and carefully collaborating with the for-profit and non-profit sectors. The real energy, determination, and financing must ultimately come from government. Michael Walzer once commented that the thousand points of light will always require a government power line. Right now, we badly need more juice.