I just read something very curious:
“Many former government employees make the switch into private contracting, which can serve to drive up the amount they wind up costing the American taxpayer. A 2007 report to the Senate Select Committee on Intelligence found that the average government employee working as an intelligence analyst cost $126,500, while the same work performed by a contractor would cost the government an average $250,000 including overhead.”
Downsizing government and holding back on decent pay for public employees doesn’t really save taxpayer money. In fact, it costs the taxpayers dearly.
And you’d better believe that the same people who are agitating to “shrink government” and promote free enterprise are working hand-in-hand with those who stand to profit mightily from government outsourcing.
So is this one of those cases where nice-sounding words that everybody likes and responds to on a visceral level are used to dupe us to pay more for the same service? Yesterday, we discussed how pretty verbiage is employed to curtail the rights of academics and destroy higher education. Is this something similar? Do all of these bureaucratic positions simply get outsourced to private companies while we sit here stupidly, believing they have been eliminated for good?
Is this the entire purpose behind the “Smaller government now!” slogans?
This feels like somebody is being had.
Clarissa's Blog 
“Is this the entire purpose behind the “Smaller government now!” slogans?”
Not the “entire” purpose, but one of its main purposes.
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Also, the strange libertarian belief that complex policy issues can be solved through the diligent use of bumper-sticker slogans.
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Greetings clarissa 🙂 it has been forever since I have commented.. hope everything is well for you!
So, on this issue there is a cynical angle that the article you reference appears to be indicating, which is partly true. If you outsource an activity, then it definitely will be more expensive on a per person basis often. However, private firms are often much more efficient (again.. not always, but sometimes, perhaps the cost is 2x salary.. but only 50% of the people are needed). Again, this depends on what type of work you are doing (if its defense research.. maybe not.. but if there are financial and administrtive angles that are being contracted to private firms with vast experience costs can go down 30%+ please they are 2-4x more efficient due to vast experience, and very impressive technological solutions).
Seconldy on the point of “small government” argument, sure there are some hypocrites, but in general most argue for less spending… so if they want the budget for agency x to go down from $100M to $80M.. there still is a cost savings. At the same time they would love for that savings to come from contracting to private soruces.. but that still is a savings for us taxpayers :). Also, this is one reason why saying the number of workers hasn’t grown in govt. is a somewhat crappy way of saying big govt. is not happening…
Hope these points are helpful! This is an area i have a pretty detailed perspective so i figured i’d contribute!
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Hi Matt, how are you doing?
“Again, this depends on what type of work you are doing (if its defense research.. maybe not.. but if there are financial and administrtive angles that are being contracted to private firms with vast experience costs can go down 30%+ please they are 2-4x more efficient due to vast experience, and very impressive technological solutions).”
– What company can possibly have a vaster experience than a governmental structure?
“Seconldy on the point of “small government” argument, sure there are some hypocrites, but in general most argue for less spending… so if they want the budget for agency x to go down from $100M to $80M.. there still is a cost savings. At the same time they would love for that savings to come from contracting to private soruces.. but that still is a savings for us taxpayers ”
– What people want and love is not necessarily what happens. If a state job is being contracted out for twice the cost, this is decidedly bad business. Even if the company’s owner has bribed a few politicians into believing that the same job will be done better (for a lot more money) by his employees.
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Doing pretty well.
“- What company can possibly have a vaster experience than a governmental structure?”
To be honest my first reaction was to chuckle at this. Not out of disrespect for you, but just because of the different perspectives of someone in academia and someone like me in the business world (only really been in the high-end business consulting world for 3 years or so.. with other prior business experience). We obviously both have our inherent biases (even just subtly because we are used to who we work around).
But to answer the question, there are probably 6-10 top tier consulting firms that would literally run circles around the government in MANY administrative areas and finance etc. (again, defense intelligence maybe not since not a lot of private sector clients in there). These top consulting firms have worked with literally 1000’s of global companies over the last 10-15 years, and also frankly have more talented minds than the govt. does (top people in these firms make $350k plus pretty easily.. about no one in govt. makes that.. again.. not a perfect proxy.. but in the long-run that attracts better talent). When it comes to making operations/admin more efficient these firms have people who have done it at 20+ companies.. you learn so much when you do it that many times. Between using better technology, process redesign, outsourcing of certain tasks etc. It is not uncommon for a company to over a 5 -7 year period reduce employee levels 50-60% in many areas, and cost 60-80%.
(BTW.. firms like mine also sometimes help companies make more money too by growing into new markets, making better products etc. too 🙂 but corporate america truly is more efficient than the govt. at many things.. certainly not all. Banks generally are just out to fleece you and have way too much power with lawmakers.. but yes, in general corporate america can run things more efficiently than govt. Private prisons is actually one other example i agree that govt. should not outsource (we should just change drug laws and see 50% of prison population declieni n long run)
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“These top consulting firms have worked with literally 1000′s of global companies over the last 10-15 years, and also frankly have more talented minds than the govt. does (top people in these firms make $350k plus pretty easily.. about no one in govt. makes that.. again.. not a perfect proxy.’
– You seem to equate talent with how much a person gets paid. I don’t understand this logic at all.
“top people in these firms make $350k plus pretty easily”
– Are you sure you know who their Mommy, Daddy and Fuck Buddy are? 🙂 ‘Cause that’s how such salaries are normally made.
“When it comes to making operations/admin more efficient these firms have people who have done it at 20+ companies.. you learn so much when you do it that many times. Between using better technology, process redesign, outsourcing of certain tasks etc. It is not uncommon for a company to over a 5 -7 year period reduce employee levels 50-60% in many areas, and cost 60-80%.”
– I keep getting this feeling that you’ve never been to a real company. 🙂 🙂
“but yes, in general corporate america can run things more efficiently than govt.”
– I would be happy to believe it when I see a single example. For now, all you’ve done is list industries where outsourcing governmental work to private companies has been a disaster. Remember, these $350K salaries to somebody’s inept and useless son or daughter are being taken out of your pocket as a taxpayer. If they are private companies, they should be able to make money without getting into the governmental pocket. What is this, the USSR??? In a capitalist system, private business should be capable of making its own money.
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guess we just have to agree to disagree.. i have worked on multiple of these projects with other people who have done it dozens of times… and too be clear i’m not the one making $350k… lol
But..in general the vast majority of people in this job have earned their way their. COMPLETELY agree and understand that many of us have had privellage to grow up in good homes etc.. but to equate that most successful people are only there because of corruption is def. unfair.. and frankly may even apply more to govt. workers! (going back to each of our own individual biases)
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Well, the private firm to which we Mcdonaldized the janitors at our university, for instance, is more “efficient” and not for good reasons. We are also using prison labor instead of paying groundsmen and that is “efficient” but not for good reasons.
At the same time, we are paying top dollar to consulting firms to answer questions faculty would answer for free, and that is not efficient; a lot of outsourcing does in fact technically “shrink government” but really just diverts taxpayer dollars toward private firms, often the same ones who have bought certain public officials. See: private prisons, giving kickback to judges who will supply them with inmates; taxpayer dollars diverted to these; charter schools paid for with my tax money while funding to public schools is reduced, etc.
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“We are also using prison labor instead of paying groundsmen and that is “efficient” but not for good reasons.”
– I don’t get this. Prisoners are brought to work on campus?? This sounds like the times of Gone With the Wind where prisoners were used as cheap labor.
“At the same time, we are paying top dollar to consulting firms to answer questions faculty would answer for free, and that is not efficient; a lot of outsourcing does in fact technically “shrink government” but really just diverts taxpayer dollars toward private firms, often the same ones who have bought certain public officials.”
– Yes! And we are constantly being pushed to use these external companies. Example: we are now to do all of our reports and tenure reviews online on a really half-assed website run by a company I wouldn’t call efficient for any reason. Tomorrow they might go bust, so what will I do for all my documents? And how was the decision to use them as opposed to anybody else or nobody else made? Why wasn’t ANYBODY on campus consulted? Did anybody take a kickback for this decision? Nobody knows but now we all have to use this stupid company.
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Re prisoners, what is is like is the convict lease system, although our prisoners come from parish prison, not from a private facility. Convict lease system started in 1880s and yes, is directly derived from the older system of renting slaves. It’s why you need convicts, so you can get their labor.
http://www.csa.com/discoveryguides/prisons/review2.php
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Are students taking this in their stride? We protested a lot when we discovered that our university was investing in private prisons. And it stopped investing.
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Yes but this is a lot less progressive place, and the chain gangs / etc. are used on a lot of projects. Divest from private prisons, you could get them to do. End a statewide program that seems normal, less easily. If you don’t remember when we didn’t have the convict workers, you won’t notice since they are also fixing the city streets and so on.
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Outsourcing may be useful for things you do rarely, but for things you do regularly and often, even if not your “core business”, it is often cheaper, more efficient and just to keep them in house. Cleaning services often use casual labour to save costs — no pension, no medical aid, no regular work. But universities need to be cleaned every day.
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