Tag Archives: International

Special report: Universities

Source: Economist, Vol. 414 no. 8931, March 28, 2015

Mix and match
Both provision and funding of higher education is shifting towards the private sector…

…In most European countries the state pays 80-100% of the costs of tuition. The main advantages of this model are equity and cost control. Where it works well—in northern Europe—graduate education levels are uniformly high. Where it works badly—in southern Europe—they are uniformly low. American uses mixed funding, with individuals paying most of the costs of tuition and the government helping out with loans and grants. In some countries with similar models, such as Japan and South Korea, individuals and families pick up the tab. These systems tend to be better funded and more expensive than the European ones (see chart 4) because people fork out readily, and costs are harder to control…. Another option is to make individuals pay more. In America, retrenchment in state budgets has pushed up tuition fees. In California, for instance, they have tripled over 15 years, and a further 28% rise is proposed. Outside America, the first big shift towards private funding happened in Australia, where tuition fees were jacked up in the late 1980s. A host of other countries followed, including New Zealand, Chile, South Africa, some of the former Soviet republics, Britain and Thailand…. Another source of private funds for universities is philanthropy. Endowments at some American universities dwarf income from fees….

….The biggest provider of higher education that nobody has ever heard of is Laureate, an American for-profit education company with revenues of $4 billion, nearly 1m students and 70,000 staff. It does not promote its brand because it prefers to be known through the names of the 80-plus universities and colleges it owns all over the world….

Four Blackwater guards sentenced in Iraq shootings of 31 unarmed civilians

Source: Spencer S. Hsu and Victoria St. Martin, Washington Post, April 13, 2015

A federal judge Monday sentenced a former Blackwater Worldwide security guard to life in prison and three others to 30-year terms for killing 14 unarmed civilians in a Baghdad traffic circle in 2007, an incident that fomented deep resentments about the accountability of American security forces during one of the bloodiest periods of the Iraq war…. Prosecutors said the four defendants, among 19 Blackwater guards providing security for State Department officials in Iraq, fired machine guns and grenade launchers in a reckless and out-of-control way after one of them falsely claimed that their convoy, called Raven 23, was threatened by a car bomber….. Attorneys for Slough, Liberty and Heard criticized prosecutors’ decision to charge them with using military firearms while committing a felony, an offense that carries a mandatory minimum sentence of 30 years in prison, twice as long as a manslaughter conviction. The charge has primarily been aimed at gang members, rarely against police officers accused of misconduct and never before against security contractors given military weapons by the U.S. government….

Why Public-Private-Partnerships (PPPs) don’t work: The many advantages of the public alternative

Source: David Hall, Public Services International Research Unit (PSIRU), February 2015

From the summary:
The new report Why Public-Private-Partnerships (PPPs) don’t work: The many advantages of the public alternative contains a combination of 30 years of research by David Hall, former Director of Public Services International Research Unit (PSIRU) University of Greenwich, UK.

This report assesses the PPP experience in both industrialised and developing countries.

The many case studies analysed, from United Kingdom to Chile, shows that PPPs have failed to live up to their promise. In most cases, they are an expensive and inefficient way of financing infrastructure and services, since they conceal public borrowing, while providing long-term state guarantees for profits to private companies.

The author proposes a public alternative to this system, in which national and local governments can continue to develop infrastructure by using public finance for investment, and public sector organisations to deliver the service.

Opinion: Designing Private Cities, Open to All

Source: Alex Tabarrok and Shruti Rajagopalan, New York Times, March 16, 2015

….As the world urbanizes, we need to experiment with new urban forms and new forms of urban planning, and privately designed and operated cities — proprietary cities — like Jamshedpur, India, or Reston, Va., may provide answers….. Private cities are also thriving in the United States. Companies created proprietary communities in Reston, Va., and Irvine, Calif., in the 1960s, which were recently ranked by CNN Money magazine as the 10th and 14th best places to live in America, respectively, because of their efficient city services and pleasing integration of business, commercial and residential uses.
Throughout the United States, new housing is governed privately. Millions of Americans live in homeowner associations that often provide security, garbage collection and transportation. Some large cities supplement public police with private security. San Francisco, for example, has had a private police force protecting some downtown areas for almost 170 years…..

Nonprofit contractor sent government $1.1 million bill for parties and retreats

Source: Scott Higham, Washington Post, March 13, 2015

The largest nonprofit contractor working for the U.S. Agency for International Development during the height of the wars in Iraq and Afghanistan billed the government $1.1 million for staff parties and pricey retreats — three of them held at one of the poshest destinations on the East Coast, Nemacolin Woodlands Resort in Pennsylvania. International Relief and Development of Arlington, Va., collected hundreds of millions of dollars to work in the war zones and help impoverished nations around the world. At the same time — between 2007 and 2010 — its executives were using IRD’s government overhead account to fund the parties and retreats, according to financial records provided by IRD to The Washington Post. The previously undisclosed retreats to Nemacolin were the fanciest by far. The five-star spa and resort, 180 miles northwest of Washington, is nestled in the Allegheny Mountains near Fallingwater, the famous home designed over a waterfall by Frank Lloyd Wright. IRD spent $484,338 on those retreats at the height of U.S. war spending, billing the expenses to the government as “training” and “staff morale” items, according to the records and current and former employees….

Top USAID contractor allegedly billed taxpayers for Redskins tickets, alcohol
Source: Scott Higham and Steven Rich, Washington Post, February 9, 2015

Two weeks after being suspended from government work, the leading development nonprofit for the United States in Iraq and Afghanistan has purged numerous longtime senior executives amid a widening investigation of allegations of “serious” financial misconduct. International Relief and Development, headquartered in Arlington, Va., allegedly used taxpayer money for Redskins season tickets, personal travel and meals, and alcohol at company receptions and retreats, according to current and former government and nonprofit officials. Last May, The Washington Post examined allegations of poor performance and excessive pay at IRD, which has collected $2.4 billion since 2007 to undertake some of the most ambitious projects in the war zones and elsewhere for the U.S. Agency for International Development…..

Big budgets, little oversight in war zones
Source: Scott Higham, Jessica Schulberg and Steven Rich, Washington Post, May 4, 2014

…After the United States launched the wars in Iraq and Afghanistan, the mom-and-pop nonprofit corporation boldly ramped up, undertaking some of the federal government’s biggest and most ambitious projects in the battle zones, everything from building roads to funding wheat production. In doing so, International Relief and Development increased its annual revenue from $1.2 million to $706 million, most of it from one corner of the federal government — the U.S. Agency for International Development. IRD has received more grants and cooperative agreements from USAID in recent years than any other nonprofit relief and development organization in the nation — $1.9 billion. Along the way, the nonprofit rewarded its employees with generous salaries and millions in bonuses. Among the beneficiaries: the minister, Arthur B. Keys, and his wife, Jasna Basaric-Keys, who together earned $4.4 million in salary and bonuses between 2008 and 2012….. In the world of humanitarian NGOs — nongovernmental organizations — those kinds of salaries are unusual. Rarer still are bonuses of any kind….It is not unusual for government officials to move into the private sector for higher salaries. Before joining IRD, the officials received letters from USAID requiring them to pledge not to take part in any programs that may conflict with the responsibilities they had at the agency. IRD officials said they hired the USAID employees for their expertise, not their connections. As acting director of USAID, Alonzo Fulgham made $199,418. As vice president of IRD, he received $330,000. Jeffrey Grieco made $185,000 as the top public affairs official at USAID. As chief of public affairs at IRD, he received $225,000……

If the Government Competes Against the Private Sector, Everybody Wins

Source: Eric Schnurer, The Atlantic, March 11, 2015

When civil servants are pitted against businesses, they actually secure most of the contracts put out for bid. … Chicago is not alone in pursuing managed competition. It is ubiquitous in the United Kingdom, which has had at least 3,500 such competitions. In this country, cities including Phoenix, Charlotte, Indianapolis and Philadelphia have pursued managed competition as a strategy for cutting cost and improving service. ….

…Construction workers repairing sidewalks were working the standard eight-hour shifts, five days per week. Pouring a load of cement, though, takes about five hours to complete, meaning they could only pour one load per day, or five per week. If the city went to a 10-hour, four-days-per-week schedule, however, as the unions suggested, the crews could pour two loads per day, eight per week—a 60 percent increase in productivity at no additional cost and with savings on fuel and equipment rental. … The Phoenix trash-hauling operations have become legendary as the fountainhead of managed competition…. In 1992, Goldsmith targeted roughly 80 city services for privatization. Again, as public employees began to realize that their futures lay in competing, they began to win more and more of the contracts. Indianapolis’ fleet services department got so good at what it did, in fact, that it started expanding its “business” to service other quasi-governmental entities….

…..It may surprise some people to know that, in most instances where such “managed competition” has been tried, the in-house government workers have almost always beaten out the private sector. …In sum, there’s no good reason why the private sector shouldn’t be allowed to compete to provide many, if not most, government services—but there’s no good reason why government shouldn’t, and can’t successfully, compete back….

Where Does Privatization Work? Understanding the Heterogeneity in Estimated Firm Performance Effects

Source: J. David Brown, John S. Earle, Almos Telegdy, George Mason University School of Public Policy Research Paper No. 15-6, December 9, 2014

From the abstract:
Why do the reported effects of privatization on firm performance vary so much? This paper re-estimates these effects and tests potential explanations for heterogeneity using comprehensive, long-panel data for 70,000 firms in five East European economies. Estimated average effects are positive, about 5-12%, for measures of profitability, efficiency, and growth, but they vary across countries and time periods. Our analysis of heterogeneity in privatization effectiveness finds little systematic role for firm size, financial dependence, or technological complexity, but shows important variation by fraction privatized, ownership structure, firm quality, and the macroeconomic and institutional environment.

South African prisoners sue G4S over torture claims

Source: Ruth Hopkins, The Guardian, February 13, 2015

British law firm acts for inmates alleging they were given electric shocks, forcibly injected with anti-psychotic drugs and held in isolation cells for up to three years. ….A group of South African prisoners are suing G4S over abuse they allege they suffered in a Bloemfontein prison run by the British security company. British law firm Leigh Day, which is representing the 43 prisoners, sent an urgent letter to the company’s UK headquarters in Crawley on Thursday. The inmates claim they were given electric shocks, forcibly injected with anti-psychotic drugs and held in isolation cells for up to three years. The firm is also acting for the mother of an inmate who died in custody…..

Friendly FIRE

Source: Chris Maisano, Jacobin, Jacobin, Issue 15/16, Fall 2014

Social impact bonds offer private interests yet another opportunity to enrich themselves at public expense. …

Goldman Sachs wants you to know that it’s not just about plundering the globe for profit — it wants to do a little good along the way. That’s why the vampire squid has started founding seemingly innocuous philanthropic outfits like the Urban Investment Group (UIG).

Established in 2001, the UIG is the perfect embodiment of what labor journalist Bob Fitch used to call “friendly FIRE,” per the old shorthand for the finance, insurance, and real estate industries. Always attuned to the public-relations value of its activities, UIG promotes itself with a gauzy language of community uplift centered on the buzzword “double bottom line”: the simultaneous pursuit of social change and return on investment.

In a gesture of exquisite irony, its first investment was in the Dorothy Day Apartments, an affordable housing development in Harlem named after the founder of the anticapitalist Catholic Worker movement. Since then, it has invested billions of dollars in projects such as community health centers, charter schools, early childhood education, low- and moderate-income housing units, small business loans, and community development grants. As Alicia Glen, the former UIG chief currently serving as deputy mayor for housing and economic development under Mayor Bill de Blasio, put it: “We’re not all evil squids. We’re nice little calamari.”

Glen’s highest profile deal as head of UIG was a $42 million investment in Citi Bike, the privately funded bike-sharing program whose signature blue bicycles have become ubiquitous throughout Lower Manhattan and the gentrified zones of north-central Brooklyn. But bikes may not be the most important legacy of her tenure at Goldman. The bank, together with some of the biggest names in social policy, philanthropy, and the nonprofit sector, has led the way in establishing the burgeoning field of social impact bonds (SIBs)…..

…The SIB market is still rather small in terms of dollars, but its promoters are intent on achieving rapid growth. The current total value of SIB transactions in the US is estimated at approximately $100 million; sixteen states and Washington, DC either have an active SIB underway or are considering implementing one…..

….Public-sector unions are increasingly aware of the threat SIBs pose and have begun to rally against state-level legislation that would expand their use. AFSCME Council 94 in Rhode Island has been outspoken in its opposition to a bill that would allow the state to implement a $25 million SIB program….

Water Inc.

Source: Even Kuross, Fair Observer, December 10, 2014

The commodification of water supplies around the world reflects a growing trend of the privatization of natural resources. …. A number of other global corporations like Nestlé, Suerz Environment, Veolia Environment, and American Water have made sizeable in-roads into the water industry though the purchase or leasing of water resources for public utility, industrial production, and bottling purposes. These companies are often given privileged access to water sources and tax breaks because they create jobs, even if they compromise local water supplies. ….. The biggest issue will arise when water becomes a scarcity and private corporations will own public utilities and water resources. What will happen when resources dwindle and demand increases to dangerous levels, but large reserves of water are privately owned?