Thursday, December 16, 2010

When Outsourcing Goes Wrong

In the never ending quest to commercialize government (the free market, we've been told countless times, is perfect in every way), over the last few decades many government functions have been outsourced to private companies. The most infamous case is that of Blackwater, the private army hired by the Pentagon that fought large parts of the war (badly) in Iraq. Blackwater caused all sorts of problems over there (as if there weren't enough already) including cowboy-like contractors with guns getting drunk and blowing way Iraqi civilians. 

There is very little oversight and transparency with these government contracts. Taxpayer dollars go into the coffers of these private companies while providing services of dubious quality. Needless to say, a lot of this outsourcing of government leads to outright corruption. 

And you don't have to look to Iraq or even Washington, DC for examples of this. Here in NYC, the city government has been rocked by revelations that CityTime, a program hired to automate the city's payroll, has been just one big cesspool of thievery. Apparently a consultant working on CityTime somehow snookered the city government into giving contracts with private shell companies controlled by his cronies and ripped off the city to the tune of some $600 million. This has been going on since 2005 and today several people involved in this scam were indicated. About time.

What fascinates me about this is the politics of it all. Mayor Bloomberg, naturally, is expressing outrage but under whose watch was this disaster hatched? Needless to say the press and political class in this town isn't in anyway linking Hizzoner to this scandal even though its his administration that spearheaded this program. Imagine if this had gone on during a Democratic mayor? Right now all the papers would be calling for his resignation. But the standards are always somehow different when it comes to Mike.

Thankfully the person who has taken the lead in trying to salvage and get to the bottom of this mess is City Comptroller John Liu. His office is going into this and spare no one with his investigation. Mayor Mike, on the other hand, appears to be doing nothing.

This scandal just goes to show that the outsourcing of government and the belief that the free private sector is always superior to government is false. The free market is just organized greed and, if the dire straits of our current economy proves anything, its that greed always gets out of hand and leads to ruinous consequences.

Just ask Mark Madoff. Oh wait, sorry, he's dead.


1 comment:

  1. Just to give firms what they want and still keep jobs onshore, the US is looking to developing rural areas and turning them into outsourcing hubs as well.


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