Reason Magazine - Topics > Privatization

Pirates and Pinkertons

jwalker@reason.com (Jesse Walker) — Thu, 10 Apr 2008 10:01:00 EDT

The gradual privatization of policework proceeds apace. Piracy -- real piracy, with boats and weapons, not some kid downloading Hannah Montana songs -- has been increasing lately (a result, I assume, of efforts to control global warming). One effect, according to ISN Security Watch: "both states and the private sector are turning to private security companies...to help meet their maritime security needs."

Whole story here. Via IntelFusion.

When "Neocon" Lost its Meaning

matt.welch@reason.com (Matt Welch) — Mon, 17 Mar 2008 16:36:00 EDT

The Washington Post has an odd but interesting profile today of three officials in the Department of Transportation -- Tyler Duvall, D.J. Gribbin, and Mary Peters -- who believe in, and are actively working toward, the use of market forces in improving the nation's transportation system.

When Democrats took control of Congress and stripped most earmarks from last year's federal budget, Peters took $850 million that would have been shipped to hundreds of municipalities and poured it into Urban Partnerships, a pilot program awarded to five cities on the condition that they test congestion pricing. [...]
[T]he goal is not just to combat congestion but to upend the traditional way transportation projects are funded in this country. They believe that tolls paid by motorists, not tax dollars, should be used to construct and maintain roads.
They and other political appointees have spent the latter part of President Bush's two terms laboring behind the scenes to shrink the federal role in road-building and public transportation. They have also sought to turn highways into commodities that can be sold or leased to private firms and used by motorists for a price. In Duvall and Gribbin's view, unleashing the private sector and introducing market forces could lead to innovation and more choices for the public, much as the breakup of AT&T transformed telecommunications.

So how are they viewed by transit advocates and Democrats?

"Tyler Duvall is a little pointy-headed neocon with grand ideas about the future of transportation, and they all involve tolling," [House Transportation and Infrastructure highways and transit subcommittee chairman Peter] DeFazio said. "He's bright, young, energetic -- just totally wrong, and has a bizarre, neocon view of transportation."

reason on congestion pricing here; on toll roads there.

Bank Nationalisation (sic) in Britain

bdoherty@reason.com (Brian Doherty) — Tue, 19 Feb 2008 13:35:00 EST

Cue up talks of pipers and calling tunes: what started as a bailout in September turns into a takeover as Britain's Northern Rock bank is nationalized.

The Financial Times on some of the reaction, from analysts, stockholders, and the private interests who wanted to buy the bank. As the Telegraph reports, the government says it hopes to be able to sell it back to the private sector at a propitious time in the future, "When the market conditions improve and when the housing market comes back."

A 10-Year Energy Plan?

rbailey@reason.com (Ronald Bailey) — Tue, 05 Feb 2008 15:00:00 EST

In November, I commended techno-optimistic environmentalists Michael Shellenberger and Ted Nordhaus for pointing out the intellectual exhaustion of traditional ideological environmentalism. Shellenberger and Nordhaus outlined their scathing critique of special-interest environmentalism in their new book, Break Through: From the Death of Environmentalism to the Politics of Possibility (2007). They pointed out that environmentalism's doomsday predictions and limits-to-growth policy recommendations are political dead ends.

In a world in which billions of people remain mired in poverty and lack access to modern sources of energy, a positive environmental program stressing technological innovation and economic growth is far more politically viable. However, Shellenberger and Nordhaus argue that the threat of potentially catastrophic man-made climate change can only be addressed by massive government research and development initiatives that aim to create low-carbon energy supplies. How massive? To the tune of $300 billion per year over the next 10 years.

Now in a new New Republic article Shellenberger and Nordhaus are calling out "conservatives" for not supporting such initiatives. They note:

At the libertarian reason magazine, Ronald Bailey endorsed our critique of nature-centered environmentalism--which sees regulation as the best solution--but then concluded, "Shellenberger's and Nordhaus' naïve trust in wise government bureaucrats guiding technological innovation is problematic, to say the least." For conservatives to be taken seriously, they'll need to ditch their knee-jerk opposition to government intervention in the economy and recognize that government has long played a critical role in investing in transformational technologies.

Conservative? No. Opposition, yes. Knee-jerk, hardly. What transformational technologies do Shellenberger and Nordhaus claim that the federal government has brought about? They point to the railways in the 19th century, the Manhattan Project during World War II, the Interstate highway system in 20th century, the Apollo moon shots, and the Internet. Most of the technologies they cite were subsidized by government for military reasons, not for reasons of technological or commercial development, much less out of concern for the environment.

In 1862, Congress justified passing the Pacific Railroad Act as a way to forestall a secessionist movement in California during the Civil War. The government subsidized the Union Pacific and Central Pacific railroads at $16,000 per mile over an easy grade and up to $48,000 in the mountains. In addition, the government offered substantial land grants along the right-of-way. Despite these government subsidies, both companies were bankrupt in the early 1870s.

As an example of how government subsidies distort incentives, both railroad construction crews worked past each other building an extra 200 miles of parallel rail ~~lines~~ grades (and some parallel tracks) instead of linking up so their companies could earn more subsidy payments and land grants. The fact that government subsidies were not necessary for building a transcontinental railroad was proved when James J. Hill built the highly profitable Great Northern Railway from Minnesota to Seattle completely without them or land grants.

The Manhattan Project was launched because President Franklin Roosevelt feared that the Nazis were developing their own atomic weaponry. The project was a great success in developing the technologies needed to produce atomic bombs. In the 1950s, President Dwight Eisenhower promoted the "Atoms for Peace" program which aimed to develop civilian uses for nuclear technologies. Under the Power Demonstration Reactor Program, private/public partnerships to build power-generating nuclear reactors began. In 1957, the first nuclear large-scale power reactor began operation at Shippingport, Pa. Two years later, the first nuclear power station built completely without government funding was fired up in Illinois. Today, 109 nuclear power plants produce about 16 percent of all the electricity used in the United States. On the other hand, no new nuclear power plants have been ordered in the last 30 years. Since 1972, orders for 117 nuclear plants have been cancelled. The growth of nuclear power stopped because of regulation, not technical issues. It may yet turn out to be a great commercial success and part of the answer to abating greenhouse gas emissions, but only if regulatory issues are resolved.

Even the Interstate highway system was justified on national defense grounds. As a young military officer, Eisenhower had led an army convoy of 300 men from Washington, D.C. to the West Coast in 1919. The convoy took 62 days to cross the country. He was also impressed by the German Autobahn system. So in 1956, Eisenhower championed the National Interstate and Defense Highways Act. The Interstate highway system was originally estimated to take 12 years and cost $25 billion to construct. It actually took 35 years and cost $114 billion (over $800 billion in current dollars). Building the Interstate system remains the largest public works project ever undertaken in the United States. By most accounts, Interstate highways lowered transportation costs and boosted American productivity. On the other hand, subsidizing highway construction doesn't seem to be a good analogy to subsidizing energy research and development.

The motivation behind the Apollo moon shot program was largely geopolitical. The Soviets had launched the first artificial satellite in 1957 and orbited the first man around the planet in 1961. As a NASA history explains, "First, and probably most important, the Apollo program was successful in accomplishing the political goals for which it had been created. Kennedy had been dealing with a Cold War crisis in 1961 brought on by several separate factors—the Soviet orbiting of Yuri Gagarin and the disastrous Bay of Pigs invasion only two of them—that Apollo was designed to combat." The Apollo program cost $25.4 billion (about $150 billion in current dollars) to land just 12 astronauts on the moon. It is curious that Shellenberger and Nordhaus cite the Apollo program as an example of transformative technologies since it was basically a technological dead end.

Shellenberger and Nordhaus argue, "The fact that some past public investments in energy failed is no more an argument against public investment than the failure of private firms to deliver cheap, clean energy is an argument against markets. It is true that government has made some lousy investments—but it has also made remarkable ones." In fact, with the possible exception of nuclear power, just where are the "remarkable" government-financed energy production breakthroughs? Consider the case of the Synfuels Corporation, which was authorized to spend up to $88 billion dollars on developing energy sources as alternatives to imported oil. It was supposed to be an energy "Manhattan Project" that would produce the equivalent to 500,000 barrels of oil by 1987. Instead, Congress shut it down in 1986. And that's not to mention one failed public/private partnership after another that were supposed to produce automobiles that run on something besides refined petroleum. Just last week, the Bush Administration pulled the plug on its flagship FutureGen demonstration project for capturing and burying carbon dioxide produced by coal-fired electric power plants.

Shellenberger and Nordhaus of course cite the Defense Advanced Research Projects Agency's (DARPA) famous support for communications technology network research that evolved into the Internet. The ARPANET was established as a way to link the defense research community. In the 1980s, the National Science Foundation funded the NSFNET as a way to increase the linkage among a broader community of scholars. The Internet evolved into an open research and commercial environment. That wasn't the way some technosavants preferred things 20 years ago. Remember the Minitel? Minitels were videotext terminals distributed by the millions by the French national telephone company. "The Minitel craze is one case where government intervention, frequently derided as an obstacle to economic change, seems to have helped technological innovation," declared the Washington Post in December, 1986. By 1992, there were 6 million Minitel terminals offering 1,800 information sources. However, the bottom-up Internet handily beat the top-down Minitel. I suspect that the new government-financed energy research would result in technologies more like Minitel and less like the Internet.

Shellenberger and Nordhaus's techno-optimistic environmentalism is still shackled by old style top-down thinking when it comes to technological development. Energy production, especially electricity generation, is one of the least technologically innovative industrial sectors, not least because it is one of the most heavily regulated sectors. The way forward is to encourage bottom up distributed creativity, not top down bureaucratic management. To give them their due, Shellenberger and Nordhaus recognize that throwing government money at energy research and development does not guarantee success. "To be sure, many of these technologies will fail," they write. "But any venture capitalist will tell you that multiple failures are required to reap a single success, and that you can't win if you don't play." The problem with Manhattan or Apollo Projects is that they were "silver bullet" programs aimed at a single technically difficult goal. The problem of developing low-carbon energy is a far more diffuse problem.

Since the problem is diffuse, a far better strategy would be to encourage venture capitalists and other entrepreneurs to finance new low-carbon energy development, rather than a centralized top-down crash research program directed by Department of Energy bureaucrats. One promising technique is to offer substantial prizes for energy production or utilization breakthroughs. A private example of how such prizes might work is the $10 million Automotive X Prize, which aims to promote the development of production-ready vehicles that get 100 miles per gallon of gas. One can imagine big government-financed prizes for various clean energy technologies such as long-lasting powerful rechargeable batteries, super-efficient solar power systems, or bacteria that eat sewage and excrete gasoline. However, the more narrowly the goal of a prize is defined, the more it will constrain the ingenuity of future innovators. In other words, bureaucrats could so narrowly define prizes that they would be engaging in top-down research management by other means.

Shellenberger and Nordhaus are absolutely right in a major way: People simply will not accept limits to growth. So the question is how best to harness human creativity to address the problem of man-made global warming? The simplest and best way to encourage the development of low-carbon energy technologies is to set a price on carbon emissions. Thousands of inventors and entrepreneurs would then have a huge incentive to develop cheap low-carbon energy technologies. The history of government-financed research and development, especially in the area of energy production, is not at all promising. Although Shellenberger and Nordhaus dismiss setting a price on carbon emissions as "a tired old trope," it's a lot less tired than yet another call for a "new Manhattan Project." What's next, an energy policy that's the "moral equivalent of war"?

Ronald Bailey is reason's science correspondent. His most recent book, Liberation Biology: The Scientific and Moral Case for the Biotech Revolution, is available from Prometheus Books.

Pay-As-You-Drive Insurance

kmw@reason.com (Katherine Mangu-Ward) — Tue, 27 Nov 2007 16:16:00 EST

A British insurance company has debuted a system in which you pay as you drive for precisely the coverage you need. It monitors your speed, braking habits, etc. and sets premiums accordingly.

By tracking vehicle journeys [with an in-car "black box], taking into account factors such as route, time of day, braking, age of driver, and so on, Norwich Union [insurance company] promises to be able to reward the best drivers with lower insurance premiums. It maintains this doesn't equate to losing customers paying the highest premiums. These individuals tend to call on their insurance more often and lead to lower margins--far better to leave them to the competition.

The system uses an ultra-powerful database that deals with 1 billion rows of data a day. The existence of this database--and the technology to get data into it, in tiny 2 byte packets transmitted from the cars--puts the longstanding libertarian dream of pay-per-mile highway taxes/road maintenance fees in the realm of the possible. Plus it enables nearly perfect price signaling to drivers about the decisions they make on the road about how to drive, where to drive, and how often to drive. And lo and behold:

The U.K. government is eyeing plans for a pay-as-you-drive system to replace standard road tax discs.

Privatize the roads (or at least read about it) here and here.

So, Uh, Did Rummy Ever Get Back to You?

rbalko@reason.com (Radley Balko) — Mon, 24 Sep 2007 12:22:00 EDT

This Bush Q&A from last April seems rather relevant now.

Waltz Across Texas

jwalker@reason.com (Jesse Walker) — Mon, 24 Sep 2007 10:35:00 EDT

Not all the opposition to the Trans-Texas Corridor is coming from paranoid nationalists. From a Time story on the project:

David Langford, an activist for the Texas Wildlife Association, is organizing farmers and ranchers whose land could be cut in half or condemned by the Trans-Texas Corridor. An early plan for central Texas showed a corridor passing near the homestead Langford's family settled in 1851. With the state's new "quick claim" ability -- granted under TTC legislation -- his family homestead could be gone in 90 days, he says, transferred to private investors operating the corridor. Though he would be compensated financially, he's still steamed. "I can't believe Rick Perry's grandfather would want his house and ranch taken and turned over to Paris Hilton's family to build a hotel on one of these roads," he says.

Opponents argue the roads may require the seizure of "more than half a million acres of private property." Gov. Rick Perry's "Trans Texas Corridor Fact Sheet" doesn't mention a total -- it gets vague whenever the interesting criticisms come up -- but it does claim that the project "will ultimately result in the purchase [sic] of less public land than would otherwise be needed to keep up with growth, and all the needed land will be purchased during one process, instead of on a piecemeal basis as we need to build out infrastructure one project at a time." Apart from the moral issues involved in taking private property, this runs up against the possibility that a process of "piecemeal" evolution is less likely to grab giant chunks of land that aren't actually "needed."

One thing that isn't clear to me, as a fellow who hasn't lived in Texas for years and hasn't been following this story closely: How much is the state planning to spend on the corridor, and how much is coming from private sources? Perry's factsheet says that "The first segment of the corridor...will require no tax dollars up front for construction while ensuring a $7.2 billion private investment in the corridor." The phrases "first" and "up front" imply that Texas taxpayers will be paying money down the road, but somehow a document that can cite the exact amount a private company will be spending doesn't say how much the state plans to kick in.

Iraq: Getting Better All the Time!

bdoherty@reason.com (Brian Doherty) — Tue, 18 Sep 2007 14:20:00 EDT

(It can't get much worse.)

Blackwater USA marked for elimination by the Iraqi government after 10 (says AFP; LA Times says 8) Iraqi civilians shot and killed by Blackwater employees. Blackwater says its men were fired upon and acted in legitimate defense. The State Department says it's "not in a position to assign any blame." How this plays out will say a lot about who runs the game in Iraq.

Rolling Stone on some of the other problems with private contractors in Iraq.

Announcing the 21st Annual Privatization Report

gillespie@reason.com (Nick Gillespie) — Fri, 27 Jul 2007 07:44:00 EDT

Reason Foundation, the nonprofit that publishes reason and reason online, has just released its 21^st Annual Privatization Report.The study says toll road public-private partnerships and airport privatization were two of the year's biggest trends. It also finds existing federal employees and the private sector competed for contracts in 183 instances last year. These competitions produced a savings of $1.3 billion. Since 2002, 12 percent of the federal workforce has faced competition from the private sector and taxpayers have saved $6.9 billion as a result. The full report is online here.

An accompanying Reason Foundation report, Innovators in Action, features columns by Rudy Giuliani , former Florida Gov. Jeb Bush and other officials on how to reduce the size and scope of government.

Mail Privatization in Europe

jsullum@reason.com (Jacob Sullum) — Thu, 12 Jul 2007 06:47:00 EDT

The European Parliament is taking on a libertarian bête noire that Congress so far has been afraid to attack. Under legislation it approved this week, all postal monopolies in member states must be abolished by 2011 (two years later than the European Commission wanted, but who knows how many years before the U.S. has an open market in all forms of mail delivery). Britain, Finland, and Sweden already have opened up all aspects of the market to competition; Germany and the Netherlands are expected to follow suit soon.

FedEx Sends Post Office Death Notice?

kmw@reason.com (Katherine Mangu-Ward) — Tue, 17 Apr 2007 16:22:00 EDT

Congress Daily reports from the sickbed of the U.S. Post Office:

Speaking at what lawmakers called the first congressional oversight hearing for the the Postal Service in nearly a decade, [Postmaster General John] Potter said that changes in the Postal Service's business model -- dictated by new rules set under legislation enacted in December 2006 -- could lead to dramatic changes to its workforce. "I do not believe any law, however well intended, can repair [our] broken model, because mail volume is no longer growing at a rate sufficient to sustain the ever-expanding delivery network," the one-time mail clerk said.

Amen, brother.

Still, they're not going down without a self-defeating fight. Said Potter: "I do not foresee laying off workers" to cut labor costs, which amount to 80 percent of its budget

Back in ancient times, libertarians were obsessed with privatizing/abolishing the post office. Founding documents of this obsession include Lysander Spooner on The Unconstitutionality of Laws of Congress Prohibiting Private Mails (1884), and Milton Friedman in Capitalism and Freedom. It looks like the rise of FedEx and other private mail carriers have taken care of most of the job already with competition--a shrinking market share and a congressionally-mandated cap on prices combine to make the future look grim--but Reason has been predicting the imminent demise of the post office since at least the '80s, so I suppose we'd better not get too cocky just yet.

Wait... Red Means Stop?

kmw@reason.com (Katherine Mangu-Ward) — Tue, 06 Mar 2007 12:13:00 EST

The Seattle Times reports a neat experiment in private roads:

Sgt. P.J. Beaty watches people in this upscale development breaking traffic laws, and sees plenty of them. But he can't pull them over. A man swerved head-on into Beaty's lane, and then back out again and Beaty couldn't lay a glove on him.
For years, he and the department's 10 other sworn officers could have pulled him over.
But the Sunriver Service District, which governs police and fire departments, voted in February to tell officers to make Sunriver's roads, which are private but open to the public, exempt from minor vehicle infractions....
Seator said the association, which owns the roads, told the district that its roads are private, but open to the public.
That means police have limited power in what they can enforce, much like in a supermarket parking lot, Oregon State Police Lt. Carl Rhodes said.

The rest of the article suggests that civilization as we know it will be coming to an end, and a new order will arise in which drunk drivers will rule the streets, terrorizing radar gunless police officers.

More on how to own your own roads here and here.

The Sneeze Rule

rbalko@reason.com (Radley Balko) — Mon, 26 Feb 2007 11:32:00 EST

The 11th Circuit Court of Appeals finds yet another exception to the Fourth Amendment.

The Art of Lunar Community

jwalker@reason.com (Jesse Walker) — Fri, 23 Feb 2007 12:30:00 EST

From a piece co-written by Buzz Aldrin, the second man on the moon:

A base on the Moon does not have to be a permanent government-controlled and owned facility. After it has been fully established, control could be handed over to a private non-profit consortium that would lease space to companies and governments which will then pursue their individual goals, such as energy, research, tourism, or developing the technology and supplies needed for further space exploration.

Before the Lunar anarchists claim Aldrin as one of their own, they should note the phrase "after it has been fully established." Aldrin still thinks the government should subsidize the settlement of space, and he proposes this privatization in the context of endorsing NASA's latest moondoggle. Me, I think any moonbase should be private because I don't want to spend any tax dollars building and maintaining it. If that means we end up with no moonbase, the disappointment won't kill me.

The Evil of Privatization

jsullum@reason.com (Jacob Sullum) — Wed, 24 Jan 2007 11:36:00 EST

Illinois is planning to "privatize" its lottery, which it hopes will go for $10 billion or so. Opinion is divided as to whether this makes good fiscal sense; much depends on the future profitability of the lottery and whether the state could have made more money by hiring a private company to manage it rather than selling it outright. Morally, though, the sale is a disaster. It's bad enough when the government raises revenue by running a business that no one is allowed to compete with, especially the sort of business the government otherwise views as a vice to be discouraged or stamped out. (Liquor sales are another example.) It's worse when the government transfers this monopoly to a private company that will be even less accountable for how the business is run and the money is spent. The value of this "public asset" consists almost entirely of the ban on competition.

"We're heading toward socialism, and nothing and no one can prevent it"

gillespie@reason.com (Nick Gillespie) — Tue, 09 Jan 2007 13:04:00 EST

That's Venezuela's Hugo Chavez, crowing in a Washington Times story. Some snippets:

The nationalization appeared likely to affect Electricidad de Caracas, owned by Arlington-based AES Corp., and C.A. Nacional Telefonos de Venezuela, known as CANTV, the country's largest publicly traded company.
"All of that which was privatized, let it be nationalized," Mr. Chavez said, referring to "all of those sectors in an area so important and strategic for all of us as is electricity."
"The nation should recover its ownership of strategic sectors," he said.

Chavez gets sworn in tomorrow for a third term as president, which will take him through 2013. More here.

Also, Federal Express Is More Reliable Than the U.S. Postal Service

jsullum@reason.com (Jacob Sullum) — Mon, 08 Jan 2007 12:27:00 EST

A Colorado judge who collaborated with two economists on a study of public vs. private representation in criminal cases says he was surprised by the completely unsurprising results: Defendants with private lawyers fare better, as measured by the length of their sentences (and controlling for other variables that might affect punishment), than defendants with government-provided lawyers. The more serious the case, the bigger the advantage of having a private lawyer. The judge, Morris B. Hoffman, says this was the opposite of what he expected because over the years he has been impressed by "the professionalism and competence of the public defenders who handle felony cases for indigent criminal defendants in my courtroom." But the results do conform with popular stereotypes, the general superiority of private alternatives to government services, and the wisdom that you get what you pay for. If Hoffman and his co-authors had found that public defenders were more effective than private lawyers, that would have been surprising.

Hoffman offers an alternative explanation to stave off the responses of 1) better pay for public defenders or 2) privatization (presumably like the first option, but with accountability). Maybe private lawyers aren't better, he suggests. Maybe it's just that "marginally indigent" defendants (those who officially can't afford lawyers but can scrape together the money from "hidden resources" if sufficiently motivated) are especially likely to hire private lawyers when they are innocent and facing serious charges. If so, Hoffman argues, that tendency would make private lawyers look better than public defenders even if they are not any more competent on average. Maybe. It could also be that the discipline of competition among lawyers who need decent reputations to attract clients produces better results than a system that compensates people the same no matter how well they do.

War for Hire

rbalko@reason.com (Radley Balko) — Tue, 19 Dec 2006 23:02:00 EST

Mark Hemingway has a fascinating piece in the Weekly Standard on Blackwater, the nation's largest don't-call-us-mercenaries security firm.

I wasn't really sure where I stood on the privatization of much of the military before I read the article, and I'm not where I stand after having read it. It is very interesting, though, and it's pretty clear there's a major transition going on. Consider this graph:

In the first Gulf war, the ratio of private contractors to military personnel was one to sixty. This time it's approaching one to one. The Washington Post last week reported that the Pentagon counts about 100,000 contractors in Iraq. Private contractors are being used to supply everything from pizzas to porta-potties; still the decidedly larger ratio is no doubt the result of the 20,000 or so serving in a quasi-military role--almost three times the number of British military forces currently in Iraq.

What to make of this? On the one hand, I suppose that if we're going to be getting our war on, the private sector's going to do lots of things better than the military bureaucracy does. On the other, even the most ardent free marketeer in me is revolted at the thought of attaching profit to war. I can't see many net positives in the fact that there's a growing industry that thrives not just on government contracts, but that's especially profitable when we're warring with another country.

One Time To Oppose "Privatization"

jwalker@reason.com (Jesse Walker) — Tue, 19 Dec 2006 12:00:00 EST

When thousands of people have already spent years homesteading the land to be "privatized."

Welcome to the New--and Private--Neighborhood

info@reason.com (Robert Nelson) — Sat, 01 Apr 2006 00:00:00 EST

Local government has been increasingly privatized since the 1960s. I don’t mean government services; I mean government itself. In 1965 less than 1 percent of all Americans lived in a private community association. By 2005, 18 percent—about 55 million people—lived within a homeowners association, a condominium, or a cooperative. Since 1980 about a half of all new housing units in the U.S. have been built within such associations; in California, the figure now is at least 60 percent. Such communities can be as small as a single building or as large as an entire city, but they’re often about the size of a neighborhood.

This shift came as we entered the postmodern era, a time of increased suspicion toward the conventional narratives of scientific and economic progress. There is less convergence of basic beliefs about the best forms of society and less expectation of such a convergence. Instead, there is a preference for pluralism—for multiple, overlapping identities and communities through which individuals can find meaning and comfort.

Such trends augur well for social institutions, such as neighborhoods, that once played a larger role in Western society. Yet these will still have to exist within some broader political and economic framework. It’s far from obvious just what shape such an order might take, but it is likely to mark a return to the local independence that characterized the West before the rise of the modern nation-state.

The Private City

The legal scholar Gerald Frug proposed one postmodern model in 1980. Writing in the Harvard Law Review, he called for “a genuine transfer of power to the decentralized units”—regions, cities, and neighborhoods—of American society. One element of this decentralization, he wrote, would be to recognize “the rights of the city as an exercise of freedom of association.” This recognition would revive the premodern idea that cities were the legal equivalent of business corporations and “there was no difference between a corporation’s property rights and its rights of group self-government.”

For hundreds of years, the corporate legal status of a municipality—often no bigger than a neighborhood—limited attempts by higher levels of government to infringe on local prerogatives. This situation did not change until the 19th century, when the city’s legal status was reconceived to make it a creature of state government. Under “Dillon’s rule,” first formulated by the Iowa judge John Dillon in 1868, a state government could now abolish a municipality, redraw its boundaries, alter its taxing authority, and assign or withdraw public service responsibilities. In his 1980 article, Frug argued that shift should at least partially be reversed.

The business corporation’s private status has given it a large and unfair advantage in meeting many Americans’ needs for community, Frug wrote. To equalize the competition, he proposed that municipal corporations should have many of the same powers that business corporations enjoy. Municipalities should be free, for example, to operate their own local banks, credit unions, insurance companies, and retail food outlets, among other traditional private enterprise roles. More broadly, municipalities should have a new degree of governing autonomy; they should be free from outside governmental meddling in their affairs, as business corporations mostly are. In short (though Frug himself might not go along with this particular characterization), the municipality should have a newly “private” status in American society.

Surprisingly, Frug did not see the rise of the private neighborhood association as a promising step in his plan. Yet current neighborhood associations have much of the autonomy and freedom of action Frug advocated for his postmodern cities. To reconstitute the public municipality along Frug’s lines would require a minor revolution in legal views; a number of Supreme Court decisions would have to be overturned, and laws would have to be rewritten by legislatures. It would be much simpler and easier to build on the existing legal status of private neighborhood associations. Most of them already are established legally as nonprofit private corporations. If neighborhood associations increasingly adopt the political role of public municipalities, it might be possible to achieve a revolution in the role of American local government without drastically changing the U.S. constitutional order.

Writing in the University of Pennsylvania Law Review in 1982, the legal scholar Robert Ellickson proposed just such a course. Ellickson observed that “the private homeowners association…is the obvious private alternative” to enhance the autonomy and defend vigorously the rights of small localities, much as Frug proposed. Ellickson also suggested jettisoning some of the legal distinctions between local governments and private neighborhood associations. He recommended overturning the 1968 Supreme Court ruling in Avery v. Midland County and related decisions “to eliminate the current federal constitutional requirement that local elections be conducted on a one-resident/one-vote basis.” Then public municipalities, like existing neighborhood associations, would be able to adopt “some system that weighted votes by acreage or property value.”

Relegating a large part of U.S. local government to a private status would reflect the fact that much of what local governments do is business-like. The federal government spends most of its funds on two functions: national defense and redistribution of income. Whatever the Constitution might say to the contrary, state governments in many respects evolved in the 20th century to become the federal government’s administrative apparatus, controlled by significant federal funding and requirements. Local governments, however, engage in a much different set of activities—picking up the garbage, policing the streets, running the schools—that could be and often still are provided privately in other circumstances.

Dell Governments

The American computer manufacturer Dell bears little resemblance to traditional industrial giants such as AT&T, General Motors, and General Electric. Dell does not manufacture its own products. Most of the physical tasks associated with the production, distribution, and sale of Dell computers are outsourced, and the computers themselves are mostly made at plants outside the United States. Dell employees work largely to develop ideas and coordinate their implementation by others. The company works with advertising agencies to craft its image and arranges for the various stages of production and distribution of the end-line product. Many firms created in the last two decades operate in a similar “virtual” fashion.

Local government in a postmodern world might follow in Dell’s path. The main tasks of government could be conceptual and coordinating—establishing the “values” and “meaning” of a particular “community.” Issues of neighborhood scale would be left to private neighborhood associations, which in turn might outsource most services to private companies. Local governments would mediate between neighborhoods as needed; where they became involved in direct service provision, it would most likely involve arterial highways, water systems, sewer systems, and other services that require coordination across wide geographic areas and involve major economies of scale.

Neighborhood associations already have demonstrated that even basic governance tasks at this micro level can be undertaken privately. One adviser to neighborhood associations has said that an association is “both a community and a business to meet the expectations of the members” and appropriately functions privately in both these capacities. The result is a radical privatization of many local government functions, both in concept and in execution.

Mergers and Divestitures

The unit owner in a neighborhood association is not only a customer but an investor—indeed, his home often constitutes a significant portion of his total financial assets. In an ordinary business corporation, mergers, acquisitions, and divestitures are a routine part of life; stockholders who disapprove of the way a corporation is managed can exit the organization simply by selling their shares on Wall Street.

The territorial aspect of a neighborhood complicates such processes of entry and exit. In a private community, a split of one group from the association would require a large supermajority vote and perhaps unanimous consent. In the public sector, such a rift would amount to an act of secession. Most states have provisions for “detachment” from the municipal corporation, but few detachments have occurred over the years, due in part to the high transaction costs associated with getting the state government’s approval.

In principle, the industrial organization of local government could be determined by a process of competition in the marketplace. Indeed, some students of urban affairs believe that a key to improved delivery of local public services rests in much greater flexibility among municipal boundaries. It should be easier, they argue, to assemble new governments covering larger areas and responsibilities from smaller units, or perhaps instead to divest smaller units from larger ones. One increasingly important area of law may be the appropriate provision of voting rules and other procedures for the approval of boundary changes and other structural adjustments to local government.

In the mid-1980s the political scientist Ronald Oakerson directed a study of the structures of local governance across the United States for the U.S. Advisory Commission on Intergovernmental Relations. Oakerson’s report concluded that much wider opportunity for experimentation in local service delivery is needed. As Oakerson put it, “Of central importance is the authority to create, modify, and dissolve [local service] provision units. The structure of the provision side—including the variety of provision units—depends on who can exercise this authority and under what conditions.” In this way, a Darwinian process of natural selection could shape what one might call the local government industry.

Oakerson also argued that we need more neighborhood-level institutions of government. “What is essential,” he wrote, “is that small-scale communities have the capability to organize themselves to act collectively with respect to common problems. This requires that locally defined communities be able to self-govern, exercising the powers of government within a limited sphere—limited in terms of both territory and the scope of authority.” Many goods and services, he noted, can best be “provided on a ‘neighborhood’ scale.” At present, however, the governance structures of metropolitan areas “tend to preclude or inhibit the development of smaller, nested provision units—neighborhood governments—within [wider city] boundaries.” As a result, neighborhood forms of governance are left out of the evolutionary competition to determine the future organization of local governments.

Oakerson said little about the radical political changes necessary to accommodate the formation of new local governments and to simplify the processes of boundary adjustment. Moreover, although he clearly recognized the importance of private associations, he did not necessarily see them as the preferred instrument of improved neighborhood governance. Yet one advantage of the neighborhood association is that its private status allows it greater ease of integration into the workings of a market economy—potentially allowing firms, for example, to buy and sell entry permission for new land uses within the neighborhood, or even to sell the whole neighborhood in one transaction. Properly written, an association’s constitution can allow for the routine expansion, contraction, termination, or other modification of the association and its boundaries as economic circumstances change, with a flexibility that would be more difficult to achieve in the public sector.

It would be helpful, for example, if more neighborhood constitutions provided for private divestitures of association subunits—in essence, for private secessions—should a contiguous subgroup within a given association want to leave. Municipal corporations, by contrast, are bound by state laws governing urban secession. Furthermore, neighborhood constitutions should stipulate a well-defined process for acquisitions of new areas.

Opened up in this manner, the evolutionary workings of a market process can be expected to yield new units of local governance—and not just at the neighborhood level. A larger unit of local government might be able to deliver services such as water and sewer at less cost, and it might have greater access to various forms of specialized professional knowledge. But it would be at a significant disadvantage in other respects. It is difficult to create a system of positive incentives that will motivate a large-city bureaucracy. Larger cities contain a greater diversity of citizens and thus experience greater discrepancies between individual service demands and the common levels of services typically provided citywide.

A very small unit also may not be ideal. The time investments required for full democratic participation and other transaction costs of neighborhood governance may be too large for each homeowner. Economies of scale in service delivery may be impossible to achieve. A neighborhood should, therefore, be large enough to offer a self-contained physical environment of high quality and to limit the democratic costs of governance.

The best way to resolve such tradeoffs, Oakerson argued, would be through an evolutionary process driven by competition among governmental forms within an overall framework of metropolitan governance.

Tiebout World

In 1956 the economist Charles Tiebout famously suggested that competition among units of local government could result in the delivery of public services roughly as efficiently as a market solution. Local taxes would function as prices; each person would choose a local community in which the common level of public services corresponded to his or her service demands at the given local “tax price.” If there were enough communities, and if it were possible to move from one to another at a sufficiently low cost, each person would be able to cluster with others of similar economic means and preferences. Indeed, in a hypothetical world of economic analysis in which there were no transaction costs at all—an assumption typical of economic modeling at the time Tiebout was writing—each person would in theory enter a community with an optimal level of public services and pay a property tax precisely equal to his or her share of the costs of these services. The system of local government would match demands and supplies for common services in a perfectly efficient way, like the market system for ordinary goods and services in economic theory.

The assumptions required to achieve a perfect Tiebout world are heroic, to say the least. It might be possible, however, to realize a very rough approximation, if there were a much wider flexibility in local governmental forms and boundaries than exists at present. Such flexibility could reduce significantly the transaction costs of metropolitan adjustments. Rather than physically moving to a new area at a high cost, a group of people already living in a neighborhood might be free to secede to form their own new unit of local government and thus obtain the collective services they want at this scale without exorbitant transaction costs.

If there were more room for such trial and error in the reorganization of local government, we would not need to prescribe an ideal size or arrangement for such governments. In the absence of such flexibility, a system of metropolitan governance is like a private industry in which the sizes and boundaries of business firms have been fixed by some outside decision maker. In such circumstances, it should not be surprising that metropolitan governance tends toward much less efficient forms. The standard processes of evolutionary change that drive market efficiency in business are absent in a metropolitan system comprising units of governance whose boundaries and other features were set in stone long ago.

There are other obstacles to the trial-and-error movement toward better local governance. Even where it is technically feasible and efficient, local governments are often prevented from selling their services to other towns or to the private sector. As Richard Briffault of Columbia Law School has written, in many cases municipalities “actually lack the authority to provide extra local services and require a special legislative grant of power before they are permitted to project their services across the local boundary line.” Local governments in general are supposed to avoid direct entry into private markets, so as to avoid the appearance of offering unfair competition to ordinary private businesses.

Beyond Monopoly Governments

Bruno Frey, a Swiss economist, has noted that local government historically has held a territorial monopoly over collective service provision within its geographic boundaries. This outcome, he argues, is neither necessary nor desirable. Unitary governments may once have been suited to the collective tasks of the rural village. But modern communications and other developments have greatly reduced the transaction costs associated with divesting functions from unitary local government to a diverse range of service providers.

Frey thus suggests that many current tasks carried out by local government should instead be performed by what he calls “functional overlapping competing jurisdictions.” An FOCJ, unlike a traditional local government, would be more specialized by function and could overlap with the territory of another FOCJ; two FOCJs could find themselves in competition with one another. Consumers would choose among competing jurisdictions in much the same way they now choose between Wal-Mart and Home Depot. But an FOCJ would differ from an ordinary business because it would employ a collective form of purchasing activity; the purchasers would own the business and FOCJ management would be overseen by a democratic process of purchaser/owner decision making. Frey argues that FOCJs, resembling private clubs but extending beyond golf and tennis to include a wide range of local collective services, would be genuinely “governmental,” partly because they would have “enforcement power” and could “levy taxes.”

Frey sees a worldwide proliferation today in the forms of governance. At the global level, the International Olympic Committee might be regarded as a form of “government” that is limited to one particular function—conducting the Olympics every four years. Washington Area Girls Soccer, a private, nonprofit organization, oversees advanced soccer competitions for girls 10 to 18 years of age, crossing many jurisdictional boundaries throughout the Washington, D.C., region. Elsewhere, a similar local soccer league might be organized and coordinated by a large city’s public recreation department. In another domain, education, the school choice movement has adopted an FOCJ stance: the establishment of overlapping jurisdictions for public service providers. Charter schools and private vouchers go farther still, in the first case allowing schools to operate with considerable independence from traditional education rules and regulations, in the second providing for the direct private operation of schools with at least partial public funding.

The evolution of the long-distance telephone industry during the last 20 years shows another transition from a single geographic monopoly to a system of competing and overlapping telephone companies. (Although AT&T, which held the monopoly, was private, it operated under tight government oversight.) The case of the telephone industry illustrates how technological innovation can alter the desirable organizational forms of public service delivery. Yet the first new competitor in long-distance telephone service, MCI, had to struggle long and hard in the courts before it was permitted even to compete with AT&T. Local telephone monopolies survived into the 1990s. Today, the emergence of cell phones and voice-over-Internet technology has further encouraged the proliferation of competitive telephone services.

Already partially realized, Frey’s vision of functionally oriented forms of “local government” that overlap and compete with one another could expand into the territories of other public monopolies. Moreover, although Frey puts FOCJs in the category of “public” government, there is little about them that prevents their functioning as entirely private entities. The rise of the private neighborhood association has shown that even many tasks previously considered exclusively public and governmental can in fact be carried out privately.

The German economist Jurgen Eichberger offered two criticisms of Frey’s vision. First, he argued that some aspects of government involve defining the rules of the game and may therefore require an exclusive territorial jurisdiction. Second, he questioned each FOCJ’s need for “direct election of management by members.” Frey proposed that FOCJ “constitutions” should “encourage members.…to participate actively in the management of FOCJ affairs.” But Eichberger suggested that we need not automatically presume “the general superiority of [a] participatory membership rule,” arguing that “the appropriate form of FOCJs will vary with their functions.”

Another German economist, Wolfgang Kerber, agreed with Eichberger that an “underlying legal order” would still be needed to provide, among other things, “a set of metarules that ensure that a system of FOCJs is really able to enhance the welfare of the citizens.” But Kerber argued that a competitive process could enter the legal order as well; it may be possible, he wrote, for “individuals or firms [to] have the right to choose between legal rules or whole legal orders. This will lead to competition among legal rules or legal orders, a phenomenon that can already be observed. If firms do business on an international level, they have the right to choose which kind of contract law they want to use, e.g., German, British, or U.S. law.” With “the FOCJ concept,” Kerber concluded, Frey revealed that “we do not have ‘the’ government but a multitude of governments.”

A Postmodern World

Put together these trends and speculations—the rise of private communities and Dell governments, the push for more-flexible municipal boundaries, the possibility of FOCJ-style governance—and what picture of the postmodern political order emerges? We’d have a world where the size and functions of local government would be determined by a trial-and-error process of competition. Different institutional forms would contend with one another; rather than following a central administrative plan, the nature and tasks of local government would be determined by a private market. The “governments” themselves would be more private than public, facilitating a routine flow of mergers, breakups, divestitures, and other organizational rearrangements.

Speculating more boldly, we might see the total privatization of American local government. Postmodern local government would fall under a brand-new legal category: the exercise of a collective private property right in the manner of a private club. We would return, in effect if not exact form, to an older model, under which local “governments” were private institutions operating for many centuries under the same basic legal status as private business corporations. Radical though it sounds, such a revolution is already quietly emerging in thousands of condos, co-ops, and homeowners associations across the United States.

Outsourcing City Hall

jwalker@reason.com (Jesse Walker) — Tue, 03 Jan 2006 00:00:00 EST

At the beginning of 2005, Sandy Springs was an unincorporated Georgia suburb with a history of grousing that its taxes were subsidizing the rest of Fulton County rather than funding needed services at home. At the beginning of 2006, it is the seventh largest independent city in the state, population circa 85,000, and has mostly succeeded in crawling out from under the Fulton authorities' rule. The wealthy town's new government consists of a mayor, a city council, and a skeleton crew of public employees. Nearly everything else, from public works to urban planning, will be provided by the private sector, with a reluctant county continuing to cover police, fire, and 911 services in the immediate future.

At first glance, that might look like a radical libertarian utopia. My friend Geoff Segal —director of government reform at the Reason Foundation, the institute that publishes this Web site—has written happily that "they privatized virtually every city function" and has joked about how that might affect the Free State Project. Mayor Eva Galambos certainly sounded like a libertarian as she opened her inaugural address last month, declaring that her town had "harnessed the energy of the private sector to organize the major functions of city government instead of assembling our own bureaucracy." But there's a fly or two in the ointment, problems not just in Sandy Springs but with the way local officials across the country have come to think about privatization and property rights.

Most of Sandy Springs' services are nominally provided by private industry, just as Galambos says. But the consumer is the government of Sandy Springs. For the individual citizen, there will be no competing companies with competing qualities, competing prices, competing anything. Different enterprises will contend for the city's business, but the average resident will still face a municipal monopoly; it's just that the government is negotiating its contracts with companies rather than its own employees.

When city leaders talk about privatization, that is almost invariably what they mean: a government contract, not an open marketplace. If you aren't satisfied with the way the local trash collection agency does its job—or if you are reasonably satisfied, but still think you could get a better deal from someone else; or if you have no plans to switch yourself, but would like the company to face the spine-tickling prospect that you might —then you have no more recourse than you would if your garbagemen worked directly for the city.

Now, sometimes such semi-public services are an improvement, especially when the bidding process is competitive and transparent. Sometimes they're worse, especially when the process is closed or corrupt, or when there isn't a bidding process at all. They're most likely to work well when the favored firm gets most of its profits in a real marketplace, where it has to learn customer-friendly habits to survive. A corporation like Edison Schools, whose business model depends overwhelmingly on government contracts, hasn't done a great job of operating entire schools. There are private restaurants, on the other hand, that have done very well when asked to run a school cafeteria on the side.

In the case of Sandy Springs, the city has outsourced all of its activities, aside from the aforementioned emergency services, to a team of businesses led by Operations Management International (OMI), an employee-owned company based in Englewood, Colorado. (With city hall still under construction, even the government itself is temporarily housed at the firm's local headquarters.) Roughly 80 percent of OMI's revenues come from municipal contracts, not private clients.

The second problem arrives when the city offers a "service" that the citizen would rather forego altogether. If the primary function of government is busybodyism, then Sandy Springs has proven itself adept at statecraft: On December 27, before the new government was even a month old, the Associated Press reported that "the city's code officers have issued 51 written warnings for infractions such as not keeping up with property or having junk cars in full view of neighbors." Councilman Tibby DeJulio explained to The Atlanta Journal-Constitution that "People have property rights, but neighbors have property rights and we need to protect property values." (Rare indeed is the local pol who understands that "property rights" and "property values" refer to two different ideas.) The movement to incorporate Sandy Springs was driven not merely by the benefits of spending tax dollars closer to home, but by the desire to spend that money enforcing a distinct vision of how the neighbors should behave. The result is not merely an increase in code enforcement, but new restrictions on strip clubs and porno shops.

Interestingly, the twin crackdowns are largely aimed at the same place: Roswell Road. In the same inaugural address that invoked "the energy of the private sector," Mayor Galambos declared that the avenue "begs for a higher class of businesses than spas and adult book stores."

Given all that, is there any possible libertarian defense of Sandy Springs? There is, but it's a peculiar one, because it requires you to imagine that the city is a firm itself. Let's suppose, for the sake of argument, that the town was formed by the unanimous consent of its citizens. (In the real world, it came close: When incorporation went up for a vote last year, 94 percent of the electorate endorsed it.) Let's also note that the cost of moving from one town to another, while hardly minimal, is low enough that there's real competition between local governments when it comes to how much they charge to live within their borders, what they offer you in return, and what local rules you have to accept to join the community. Recall also that the distinction between municipal and business corporations didn't really emerge until well into the 19th century, and that even after those formerly semi-private cities became full-fledged arms of the state, there has been a boom in entirely private condos, subdivisions, and, occasionally, full-sized towns. (The latter include Reston, Virginia, population 56,000, and Columbia, Maryland, population 88,000.)

Such contractual communities provide some services themselves, negotiate with other entities to provide other services, and impose rules that are easily as oppressive as the ordinances in Sandy Springs. In general—there are exceptions—libertarians don't complain about this, except perhaps to declare that they would never want to live under such self-imposed regulations themselves. Is it really such a stretch to extend the same tolerance to ordinary local governments? Especially since, while not everyone consented to be ruled by the City of Sandy Springs and Operations Management International, Inc., that's clearly more popular than the previous arrangement?

I don't really buy that argument myself—I'm too attached to the freedoms of that obstructionist 6 percent, not to mention the folks who never voted at all. But it's interesting that the best defense of this town is a federalist one, involving the virtues of competing jurisdictions and local autonomy rather than the fact that it's buying its services from formally private vendors. The best thing about Sandy Springs might not be the fact that you'd want to live there, but the fact that you don't have to.

DIY Sci-Fi

info@reason.com (Jeff Taylor) — Sat, 01 Oct 2005 00:00:00 EDT

When the first "solar sail" vehicle, Cosmos 1, was lost in space last June, it looked like the ship--which uses pressure from sunlight to ply outer space--had joined a long line of cosmic-sized failures. But Cosmos 1 represented a more enlightened way to test far-out theories. The effort was funded not by taxes but by the Planetary Society, a private, California-based space advocacy organization.

Another business-backed group has a 2010 target date for an operational "space elevator." Once merely a plot device in Arthur C. Clarke novels, the idea of a 22,300-mile-long cable car running from the earth's surface into space is now a testable proposition. Should it work, the cost of getting stuff into orbit would plummet.

And last year, space entrepreneur Burt Rutan snagged the $10 million Ansari X Prize for sending his SpaceShip One 100 kilometers above the earth. His ultimate goal is routine space tourism.

Taken together, these efforts suggest a swing back toward individuals and small private entities tackling difficult scientific problems. While governments have long been at the forefront of space exploration, cheap computing power has brought complex design and engineering tasks within reach of small teams of problem solvers.

The government-directed, Manhattan Project�style program diverges from the historic pattern of technological breakthroughs. The bureaucracy-heavy approach is a sad contrast with legions of tinkerers and do-it-yourselfers, each nimble enough to strike out in new directions when faced with inevitable but temporary setbacks. In that spirit, the Planetary Society vows to give solar sailing a second try.

Fifth Columnist

jsanchez@reason.com (Julian Sanchez) — Wed, 14 Sep 2005 00:00:00 EDT

Earlier this year, libertarians greeted with enthusiasm the news that The New York Times' John Tierney had been tapped to succeed William Safire as a voice from the right on the country's most influential liberal op-ed page. A firm libertarian himself, Tierney had broken The New York Times Magazine's hate mail record with an article on compulsory recycling, infuriated fellow train lovers with a feature piece titled "Amtrak Must Die," and riffed on Robert Nozick and the immorality of rent control in his eclectic and entertaining Metro column, "The Big City," which ran from 1994 to 2000.

In the aftermath of Hurricane Katrina, Tierney confounded the big-government pieties voiced by editorialists and politicians, with columns on bipartisan ineptitude in disaster management, why fires are better than floods (hint: it has to do with who insures them), and why magic markers are the secret of efficient evacuation. Assistant Editor Julian Sanchez spoke with Tierney in July.

Reason: I see you've got Reason lying on your side table there; is that like the awful wedding present put out on the mantle when Aunt Millie comes to visit, or are you a reader?

John Tierney: Oh, I came across Reason early on when I was in college in the '70s, and I subscribed fairly early on after college. I was anti-war in college and was pretty conventionally liberal. Although I got sort of uncomfortable—I actually once went to a meeting of the Socialist Workers Party, and it was just so creepy seeing these people with that dogmatic, earnest, religious approach and the desire to run other people's lives because they thought they knew better. The idea of radicalism, of opposing the establishment, appealed to me, but you saw the alternative and felt like these people would be even worse.

I went to Yale, and we did a protest led by [radical theologian and then–Yale chaplain] William Sloane Coffin, and just seeing these self-anointed, holier-than-thou antiwar leaders and how much ego was involved turned me off to the whole movement. If anything, it made me pro-war by the time I came back. Well, not literally. But the movement scared me and I found Reason a real relief, someone talking about individual rights and "free minds and free markets."

Reason: What do you consider yourself now?

Tierney: I consider myself a libertarian. I'm not a card-carrying member, but it's my gut instinct toward things: Keep the government out of your wallet and out of your bedroom. I sort of evolved into it, really through working as a journalist and meeting libertarians that way. I was a science writer and would cover environmental issues, and I started to realize that if you really looked at the science you'd see there was all this dogmatism on one side. But the real influence on me was Julian Simon. I was assigned to do a story in 1985 for Science magazine about the population crisis, and Greg Easterbrook was assigned to do the other part of a double cover-story package out of Africa. It was going to be "The Problem: Population Growth; The Solution: Technology Transfer." And I was going to Kenya, the fastest growing country in history, to do a story about the crisis the country was in, and Greg was going to Tanzania to do a story about some new technology for helping low-income people survive. When we came back, I ended up saying: "Population growth is not the problem." And Greg said: "Technology transfer is not the solution." To the editors' credit, they ran it.

For that story, I had heard about Julian Simon, this kind of iconoclastic economist, and I had read some of his work debunking claims about endangered species. I didn't know much about population growth, but I knew I didn't just want to write yet another story about the "population bomb." I was hoping I could say something fresh about it, so I called him up. And I said to him: "You know, I'm going to Kenya, fastest growing country in history, the average woman is having eight children, the population is doubling every ten years," and I started rattling off all these disasters. And Julian interrupted me, he said: "Yes, isn't it wonderful that so many people can be alive in that country today?" It was just a whole different way to look at it.

His great advice was: "Don't look at it as an isolated problem, a current crisis. Try to look at the long-term trends, the big picture; try to see if things are getting better or worse, not just if someone has a problem." So I went there and there were all these foreign aid workers and the usual people getting money to study the population crisis. And I was trying to find some way to tell a story, and I found this documentary that had been made about ten years earlier called Mara Goli—a village in the fastest growing part of Kenya. It was a great documentary—there was this one woman in a pink dress who wanted to have 20 children. They're all on these very crowded farmlands, and you figure there's no more room to grow, they're all going to starve to death if they all want to have these children. So I thought I'd go back to this village and see what happened ten years later. I found the woman in the pink dress, and she had four kids. She said, "Oh, I don't want to have 20 kids, we can't do it." The interesting thing was that the families that were larger actually were doing better, which is what Julian had found, that there isn't this "more people equals less wealth" relationship.

Reason: Is that because people wait to have more kids until they're more prosperous, or because the kids are helping out with the work, or something else?

Tierney: Well, it's a complicated equation. At the time, I remember thinking it didn't make any sense. You can say that people have more kids when they have more money; when you can afford it you have the kid. Though at a certain point of development, of course, that changes and richer people don't have more kids. Another theory at the time was that having more kids makes you work harder. At the time I was single and childless and it didn't seem to make that much sense, but I have a mortgage now and I see exactly what this does to people and how it spurs them.

Anyway, after that trip Julian really became a kind of mentor to me. I wrote an article about his bet with Paul Ehrlich. I really miss him. When the latest crisis comes up, I just want to call him and say, you know, what do you make of this?" Being a debunker is hard work, because you don't get that much money for it and you don't get a great army of followers. Someone comes up with a crisis, and it takes ten years to knock it down. You can always point out a problem and say it's terrible, but it takes a lot of work to show that things are actually getting better.

Reason: You also read like a Jane Jacobs fan; are you?

Tierney: Yes. I've talked to her about Brooklyn for a big piece saying Brooklyn should have remained a separate city, that it was a huge mistake to merge with Manhattan. I love her sense of just letting cities evolve naturally. I find it ironic that after half a century of the golden age of urban planning, people all want to live in neighborhoods that were built before then—that the planners are now trying to recreate. They were built by private developers and private streetcar companies, and the market guided it. I've heard it argued that urban planning is one area where the market really doesn't work that well, that you find in great cities that there was a lot of central planning of the street grids. I'd like to know more. You obviously need someone to set some rules, but I still tend to think that the really successful cities and neighborhoods are the ones where there's a lot of trial and error, people trying things on their own. I like the analogy of a mountain range: Do you want to plan the right place to go and send the whole army through, or do you want to send a lot of scouts and see which ones find the best way?

Reason: Do you think of yourself as a debunker or a contrarian?

Tierney: I don't want to be just a contrarian, because that's predictable. I think a problem with libertarianism is that it tends to be negative: "Don't do anything." And while I think that's usually the best thing to be said if the government is trying to do something, it's not a terribly inspiring philosophy. Libertarianism tends to be against things; it's nice when I can be for things. That's one of the reasons I liked writing about Mars—I wrote about it for Reason—and the founding of the Mars Society. It was great to be at an event with a bunch of libertarians who are excited about something to be for: We're going to Mars, we're going to create a new society.

I remember I once did a column when I wrote the metro column in New York about a march in support of Capitalism. It was on 5th Avenue, and I agreed with the people, but there was something inherently strange about it. There was a small group of people who wanted to thank the merchants on 5th Avenue, and it was a great idea, but libertarians are not people who get together in masses to stage masses. That's what the religious left and the religious right are good at.

Reason: One could probably sum up in a sentence or two what, generally, Maureen Dowd or Tom Friedman or Paul Krugman do, but you don't seem to have an obvious schtick or beat.

Tierney: I don't really have a beat the way some columnists do. I guess I tend, maybe too often, to write things from a libertarian outlook, but I want to do stuff that isn't really political. I like writing about science and social science; I like trying to do humor, writing about stuff in daily life. I at one point wanted to be a mathematician. My father's a college professor and that kind of life appealed to me. But I ended up in journalism because I just realized I'm too much of a dilettante. I majored in American Studies, so you can do history and English—I'm just not much of a specialist; I like to dabble in different things.

Reason: Your background as a science writer shows up in your columns from time to time—you've mentioned evolutionary psychology several times.

Tierney: I got interested in evolutionary psychology when a friend of mine named Bill Allman did a book called The Stone Age Present around the same time that Robert Wright did his book [The Moral Animal], and to me it's always made a lot of sense. I find interesting the opposition to it. There's something on the left that doesn't like the idea that there are these innate things in us, as Steven Pinker notes in The Blank Slate. I like science a lot, and think science and economics are great tools for understanding the world that are not used often enough in journalism. We tend to focus so much on politics. I love evo psych because it's a scientific way of looking at very interesting social problems. The problem with science is that a lot of the problems being solved don't involve humans and aren't that interesting to most readers.

Reason: How have people reacted to your columns on gender difference?

Tierney: I wrote a column about whether men are more competitive than women, and I expected a lot of angry letters from women saying: "How dare you degrade us," and that sort of thing. And I did get some of them, and the "Oh, you right-wing oppressor of women." But I was surprised that most of the mail was people saying "But of course," or "Yes, I've seen that too." I think a lot of people were glad to see someone say this thing they'd known. We've had this come up with women's sports programs under Title IX and of course the controversy at Harvard this year about why there aren't more women in all these highly competitive positions. Women surely ought to have every chance to have them, but I think it's unrealistic to think you're going to have an equal outcome.

It's tough writing about gender issues as a man. I envy women journalists who write about this, because I think they have more freedom to say "Yes, there are these differences, and we should appreciate what we have and appreciate our strengths." When a guy says it, it's easy to dismiss it: "Well, you're just trying to defend the patriarchy; you're a reactionary who won't accept these things." When I did the one column, I was trying to be conciliatory and observe that many corporations have been set up the way men like to do things, with this competitive structure, climbing the pyramid, and since we have more women college graduates joining the workforce we should think about structures they'd feel more comfortable in. Some people said, "Well, there he is on bended knee to the feminists paying tribute to them." And there's a certain amount of truth to that. When you're a guy writing about this, you're very vulnerable to charges like that.

Reason: What has response to the column been like more generally?

Tierney: I think everyone who starts in this job is surprised by how much animus you can inspire, how many people have the time and energy to tell you what a dolt you are. When I took the job, I ran into Al Hunt from the Wall Street Journal, who has the liberal slot there. He said that it's a great slot to be in, because you're not preaching to the choir, you're trying to reach across the aisle. So you can't just preach at people, you have to actually persuade them, and it's good discipline to have to do that. And then as he was walking away he said: "One thing, don't let the email get you down." Which is good advice.

You can join a discussion group on my columns on the Web site. I look at it sometimes and I'm just surprised by the vehemence of it. I find myself wondering: If you hate me that much, why are you on a discussion group on my site? I mean, I welcome them, I'm glad they're there, but it's curious to see that.

Reason: Are you worried the decision to move op-ed content behind a pay firewall will tamp down discussion?

Tierney: It's hard to say what's going to happen. I'm glad they're trying to find a way to make the Web pay. The libertarian in me thinks you've got to be self-supporting, and just giving away content is not a long term strategy. That said, I'm concerned that conservatives and libertarians may be reluctant to pay for New York Times editorial content and opinion.

Reason: What do people get most exercised about?

Tierney: Anything that is construed as defending Bush really raises people's hackles. When I was at the Times Magazine I wrote a piece about recycling that set the record for hate mail. The mayor of Pittsburgh wrote an op-ed demanding that I apologize to the city after I wrote a column about the problems with eminent domain there that I'd seen. We just have very different views of eminent domain. I was concerned—I am from Pittsburgh and I love it, it's got great neighborhoods that haven't been touched by eminent domain—that people would think I didn't like Pittsburgh.

Criticizing Amtrak too—it was bizarre, I wrote a column criticizing Amtrak after the Acela had broken down again, and there's really a diehard group of people who really like Amtrak. Or just hate the idea of privatizing anything; there's a whole base of people who find the concept just repulsive. There's actually more privatization in a lot of areas going on in these traditionally liberal countries in Europe. But that word is just the devil to a lot of the left here. After defending private accounts for Social Security, I got a lot of: "How dare you, you're just trying to take away people's pensions. Social Security is all of us together and you're just an evil, selfish person."

Reason: What do you see yourself trying to do, if anything, with the column?

Tierney: I'd like to surprise people and expose them to different ways of looking at familiar problems, call attention to new ideas that are floating around. Enlighten, surprise, amuse... it all sounds very pompous, doesn't it?

Reason: But it does seem different from the relentless public policy focus you associate with op-ed pages.

Tierney: Well, I think columns have been changing. The traditional one was just a pundit sitting there, and it evolved so you got more reporting in columns—Bill Safire really did that—and I think there's been more expansion in economics columnists and columnists who are known for taking more of a light touch with things than doing serious public policy. There isn't one mold; I'm just trying to follow the advice that older columnists I admire gave me when I started writing columns in the 90s: Write about what you're interested in and what you feel passionately about. I think you have to pay attention to the market and see what people are interested in, but beyond that you just have to look around and ask, "What am I interested in?"

When I got my first column for the New York Times Magazine, "The Big City," I was on leave at the Freedom Forum, and Sig Gissler, who had recently been the editor at a Milwaukee paper and is now a professor at Columbia, was there. He said to me: "You know what they say about columns. Everyone is born with six columns; the trouble is the seventh." And sure, I don't have seven ideas right now. When I was writing twice a week as a metro columnist and wondering how I was going to fill the space, my consolation was that if you have three ideas, after a while you get a backlog. And thank God there are always things happening.

Reason: With blogs filtering and disseminating free opinion content from a huge variety of people with expertise in various topics, is the op-ed columnist an endangered species?

Tierney: I hope it's not an endangered species. What's impressed me about the Times, which I joined in 1990... I really resented the Times when I was a magazine writer, because I would spend all this time doing my own masterpiece on a topic, and some people would notice it. But then the Times would do a two-day story on it that got noticed. I know that there are all these media out there, and I'm delighted to see all this competition; let a thousand flowers bloom. But there is a need for a sort of bulletin board, a common thing for people to do that. It seems to me that during my career, it's gotten to be even more of a bulletin board as the national edition has grown. I hope it'll stay that way. You see this with global networks, where there are all these different things going on, but there is a tendency for capital cities to get bigger. I think it's called the agglomeration theory. People have been predicting for a long time that cities like New York would start to wither because people could go live in the Rockies and do their job from anywhere, yet these capital cities have kept growing. The more that people everywhere now have access to this information about the culture capitals, so that you can be anywhere and know what the movie grosses are and what the hot thing is, the more that everyone's interested in these topics from the capitals, the more there's a niche for some common ground there. You write a column, and there are all these blogs out there, but you see they're keying off the column to start the debate.

Water Is a Human Right

rbailey@reason.com (Ronald Bailey) — Wed, 17 Aug 2005 00:00:00 EDT

Activists around the world chant the slogan that "water is a human right." Yet more than a billion poor people in the world today lack access to safe drinking water. Twelve million of them die each year from drinking disease-contaminated water.

Among things that would most benefit the world, safe, clean drinking water is clearly a high priority, as pointed out by the Copenhagen Consensus organized by skeptical environmentalist Bjorn Lomborg in 2004.

In 2003 the U.N.'s World Water Development Report estimated an annual shortfall of $110 billion to $180 billion in investments needed to provide access to safe water to the poor in the developing world. The U.N.'s Millennium Development Project has a target of reducing by half the proportion of people without access to safe drinking water by 2015. The economic benefits of halving the number of people without access to safe water—in terms of disease avoided, lives lengthened, and time wasted fetching it—add up to $300 billion to $400 billion annually.

Displaying a surprising lack of imagination, the summary of the Copenhagen Consensus paper on water adopted the conventional wisdom that "water service provision has generally been seen as a government responsibility. This is largely because water is regarded as a public good and its availability as a basic human right, best administered by the public sector." Given the fact that so many of the governments in developing countries have somehow failed to recognize their citizens' supposed right to water, perhaps there is a better way to go?

In his excellent new monograph, Water for Sale: How Business and the Market Can Resolve the World's Water Crisis, Swedish analyst Fredrik Segerfeldt makes the case that water privatization can go a long way toward quenching the thirst of the poor. Segerfeldt points out that public water systems in developing countries generally supply politically connected wealthy and middle class people, whereas the poor are not hooked up to municipal water mains. Segerfeldt cites one study of 15 countries that found that in the poorest quarters of their populations, 80 percent of the people were not hooked up to water mains. Of course, the poor don't just die of thirst; they just pay more—generally a lot more—for their water.

"Contractors often drive tankers to poor districts, selling water by the can, in which case the very poorest of the world's inhabitants are already exposed to market forces but on very unfair terms, because water obtained like this is on average twelve times more expensive than water from regular water mains, and often still more expensive than that," notes Segerfeldt. A survey of major cities in developing countries found that the poor in Lagos, Nigeria pay four to 10 times more for their water than people who are hooked up to water mains do; in Karachi, Pakistan they pay 28 to 83 times more; in Jakarta, Indonesia, four to 60 times; and in Lima, Peru, 17 times more. Essentially, the rich get cheap tap water while the poor pay the moral equivalent of Perrier prices.

So now some countries have turned to the private sector and multinational companies for help in providing their thirsty poor citizens with water. Privatization can mean selling entire water supply and treatment systems to private owners; long-term leases of water supply systems; or contracts to manage public water systems. In practical terms, the usual arrangement is a long-term lease. So far, only 3 percent of the poor in developing countries get their water from private-sector water systems. However, these initial projects have provoked an outcry by anti-privatization activists around the world against a "global water grab" by giant corporations.

Segerfeldt shows that even imperfect privatization efforts have already successfully connected millions of poor people to relatively inexpensive water where government-funded efforts have failed. For example, before privatization in 1989, only 20 percent of urban dwellers the African nation of Guinea had access to safe drinking water; by 2001 70 percent did. The price of piped water increased from 15 cents per cubic meter to almost $1, but as Segerfeldt correctly notes, "before privatization the majority of Guineans had no access to mains water at all. They do now. And for these people, the cost of water has fallen drastically. The moral issue, then, is whether it was worth raising the price for the minority of people already connected before privatization in order to reach the 70 percent connected today." In Cartagena, Colombia privatization boosted the number of people receiving piped water by 27 percent. Even the conflicted privatization in Buenos Aires saw the number of households connected to piped water rise by 3 million and 85 percent of the new customers lived in the poor suburbs of the city. Segerfeldt cites other successful privatizations in Gabon, Cambodia, Indonesia, and Morocco.

But given the often corrupt governments with which corporations must deal, it's not surprising that privatization can be done very badly. Probably the most spectacular case of privatization gone wrong occurred in Cochabamba, Bolivia. Cochabamba is to anti-privatization activists what the Alamo is to Texans. Between 1989 and 1999, the proportion of households connected to the public water system fell from 70 percent to 60 percent. Water was only sporadically available. In the wealthier neighborhoods 99 percent of households were receiving the subsidized water, while in some poorer suburbs less than 4 percent were connected.

The activist myth is that the poor rose up when the evil multinational Bechtel raised the price of water by 43 percent to 60 percent, depending on the customer's income. While it is true that the lucky few of the poorest who were connected to municipal water supplies did see big increases in their water bills, the majority of the poor who stood to be connected for the first time would have paid much less than they were already paying to water vendors. Segerfeldt calculates that piped water prices were already so low that this would mean the poorest 5 percent of the population would be spending 5.4 percent of their incomes on water. Segerfeldt reports that the opposition to privatization was actually lead by middle class and industrial users who had been receiving subsidized water. Opponents also included local water vendors and small farmers who wrongly believed that they were forbidden to access well water.

Under pressure, Bechtel pulled out and Cochabamba's water supply system is once again being run by the old public utility. Segerfeldt claims that water is now available only four hours per day and that no new households at all have been connected to the network since 2000. Meanwhile, the poor are paying 10 times more for their water than are the rich households connected to the system. This is a victory for the poor?

Privatization is not a panacea, but Segerfeldt shows that, when properly done, it can play a huge role in bringing safe clean drinking water to the hundreds of millions of people who still lack it. In the meantime, Segerfeldt wonders, "why anti-privatization activists do not expend as much energy on accusing governments of violating the rights of 1.1 billion people who do not have access to water as they do on trying to stop its commercialization." Good question.

High on Helium

info@reason.com (Ted Balaker) — Wed, 01 Jun 2005 00:00:00 EDT

A year after the helium plant near Amarillo, Texas, started selling the stuff to private buyers, local officials say that levies on the sales have generated enough revenue to justify a cut in tax rates. Residents can thank the Helium Privatization Act of 1996, which authorized the government to sell off its long-derided stockpile of the gas.

The Helium Reserve Program began in 1925, when the War Department longed to create a fleet of fighter blimps. The government eventually concluded that slow, melon-shaped vehicles are not well suited for warfare. Nonetheless, in 1960 the program ballooned to include refining and storage facilities, which grew to hold 32 billion cubic feet of helium.

Under the law, the Bureau of Land Management must sell off the entire stockpile between 2005 and 2015. The total proceeds are expected to be $1.8 billion, ranking this among the largest federal privatizations.�