King George's Crumbling Monarchy

By Paul Krugman
The New York Times

Monday 21 August 2006

Paul Krugman responds to readers' comments on his August 21 column, "Tax Farmers, Mercenaries and Viceroys."

Peter Durantine, Hummelstown, Pa.: All of this - the administration's incompetence on domestic and foreign policy, the privatization of tax collectors and soldiers - reflects a fading superpower, an empire in twilight. It's almost as if the administration, unable to find constructive ways for world progress, decided just to dismantle hundreds of years of progressive achievements.

Victoria Dahlgren, Bellingham, Wash. : Your sentence "... privatization provides both an opportunity to evade accountability and a vast source of patronage" is right on the money. By reducing the ranks of civil servants, it also excludes people who may have more progressive/liberal values.

One of the worst offenses to me is the degree to which this administration seems to feel the departments are mere extensions of their will. In the past it seemed to me that there was more autonomy in the various agencies, which can be a good thing. They weren't always made to be in lockstep with the king.

It is not right that this administration is conducting what approaches a revolution in the way our government functions and is not even acknowledging it to our citizens.

Paul Krugman: What's really so disturbing about all this is that it's completely gratuitous. The I.R.S. is actually an effective, professional organization, which is the victim of a grossly dishonest smear campaign; you can read all about it in David Cay Johnston's book "Perfectly Legal." Add a few thousand agents and it could do the job of tax collection just fine. The U.S. military is a superb force, or was until Iraq began grinding it down. Top-level civil servants in America are, in my experience, really very good at their jobs.

But somehow political power has fallen into the hands of people who want to dismantle everything that works, and conduct business as if they were running a medieval duchy - or a third world tin-pot dictatorship. (Yes, contractors in Iraq really did receive duffel bags filled with $100 bills.) And it turns out that they can do immense damage in a very short time. Remember that FEMA was regarded as one of the best agencies in the federal government at the end of the Clinton years.



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Tax Farmers, Mercenaries and Viceroys
By Paul Krugman
The New York Times

Monday 21 August 2006

Yesterday The New York Times reported that the Internal Revenue Service would outsource collection of unpaid back taxes to private debt collectors, who would receive a share of the proceeds.

It's an awful idea. Privatizing tax collection will cost far more than hiring additional I.R.S. agents, raise less revenue and pose obvious risks of abuse. But what's really amazing is the extent to which this plan is a retreat from modern principles of government. I used to say that conservatives want to take us back to the 1920's, but the Bush administration seemingly wants to go back to the 16th century.

And privatized tax collection is only part of the great march backward.

In the bad old days, government was a haphazard affair. There was no bureaucracy to collect taxes, so the king subcontracted the job to private "tax farmers," who often engaged in extortion. There was no regular army, so the king hired mercenaries, who tended to wander off and pillage the nearest village. There was no regular system of administration, so the king assigned the task to favored courtiers, who tended to be corrupt, incompetent or both.

Modern governments solved these problems by creating a professional revenue department to collect taxes, a professional officer corps to enforce military discipline, and a professional civil service. But President Bush apparently doesn't like these innovations, preferring to govern as if he were King Louis XII.

So the tax farmers are coming back, and the mercenaries already have. There are about 20,000 armed "security contractors" in Iraq, and they have been assigned critical tasks, from guarding top officials to training the Iraqi Army.

Like the mercenaries of old, today's corporate mercenaries have discipline problems. "They shoot people, and someone else has to deal with the aftermath," declared a U.S. officer last year.

And armed men operating outside the military chain of command have caused at least one catastrophe. Remember the four Americans hung from a bridge? They were security contractors from Blackwater USA who blundered into Falluja - bypassing a Marine checkpoint - while the Marines were trying to pursue a methodical strategy of pacifying the city. The killing of the four, and the knee-jerk reaction of the White House - which ordered an all-out assault, then called it off as casualties mounted - may have ended the last chance of containing the insurgency.

Yet Blackwater, whose chief executive is a major contributor to the Republican Party, continues to thrive. The Department of Homeland Security sent heavily armed Blackwater employees into New Orleans immediately after Katrina.

To whom are such contractors accountable? Last week a judge threw out a jury's $10 million verdict against Custer Battles, a private contractor that was hired, among other things, to provide security at Baghdad's airport. Custer Battles has become a symbol of the mix of cronyism, corruption and sheer amateurishness that doomed the Iraq adventure - and the judge didn't challenge the jury's finding that the company engaged in blatant fraud.

But he ruled that the civil fraud suit against the company lacked a legal basis, because as far as he could tell, the Coalition Provisional Authority, which ran Iraq's government from April 2003 to June 2004, wasn't "an instrumentality of the U.S. government." It wasn't created by an act of Congress; it wasn't a branch of the State Department or any other established agency.

So what was it? Any premodern monarch would have recognized the arrangement: in effect, the authority was a personal fief run by a viceroy answering only to the ruler. And since the fief operated outside all the usual rules of government, the viceroy was free to hire a staff of political loyalists lacking any relevant qualifications for their jobs, and to hand out duffel bags filled with $100 bills to contractors with the right connections.

Tax farmers, mercenaries and viceroys: why does the Bush administration want to run a modern superpower as if it were a 16th-century monarchy? Maybe people who've spent their political careers denouncing government as the root of all evil can't grasp the idea of governing well. Or maybe it's cynical politics: privatization provides both an opportunity to evade accountability and a vast source of patronage.

But the price is enormous. This administration has thrown away centuries of lessons about how to make government work. No wonder it has failed at everything except fearmongering.